Document:

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                                                                    EXHIBIT 10.1

                                CREDIT AGREEMENT

                            DATED AS OF JUNE 24, 2005

                                      AMONG

                           COVANTA ENERGY CORPORATION,

                         DANIELSON HOLDING CORPORATION,
                                 AS A GUARANTOR,

               CERTAIN SUBSIDIARIES OF COVANTA ENERGY CORPORATION,
                                 AS GUARANTORS,

                                VARIOUS LENDERS,

                                 CREDIT SUISSE,
                             CAYMAN ISLANDS BRANCH,
                AS JOINT LEAD ARRANGER AND CO-SYNDICATION AGENT,

                       GOLDMAN SACHS CREDIT PARTNERS L.P.,
                  AS JOINT LEAD ARRANGER, CO-SYNDICATION AGENT,
                   ADMINISTRATIVE AGENT AND COLLATERAL AGENT,

                              JPMORGAN CHASE BANK,
              AS CO-DOCUMENTATION AGENT, REVOLVING ISSUING BANK AND
                            A FUNDED LC ISSUING BANK,

                               UBS SECURITIES LLC
                            AS CO-DOCUMENTATION AGENT

                            UBS AG, STAMFORD BRANCH,
                           AS A FUNDED LC ISSUING BANK

                                       AND

                             CALYON NEW YORK BRANCH
                            AS CO-DOCUMENTATION AGENT

                  $715,000,000 SENIOR SECURED CREDIT FACILITIES

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                                TABLE OF CONTENTS
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SECTION 1. DEFINITIONS AND INTERPRETATION.....................................................................     2

           1.1. Definitions...................................................................................     2
           1.2. Accounting Terms..............................................................................    40
           1.3. Interpretation, etc...........................................................................    41

SECTION 2. LOANS AND LETTERS OF CREDIT........................................................................    41

           2.1. Term Loans....................................................................................    41
           2.2. Revolving Loans...............................................................................    41
           2.3. Swing Line Loans..............................................................................    43
           2.4. Issuance of Letters of Credit and Purchase of Participations Therein..........................    45
           2.5. Pro Rata Shares; Availability of Funds........................................................    55
           2.6. Use of Proceeds...............................................................................    55
           2.7. Evidence of Debt; Register; Lenders' Books and Records; Notes.................................    61
           2.8. Interest on Loans.............................................................................    57
           2.9. Conversion/Continuation.......................................................................    59
           2.10. Default Interest.............................................................................    59
           2.11. Fees.........................................................................................    60
           2.12. Scheduled Payments...........................................................................    61
           2.13. Voluntary Prepayments/Commitment Reductions..................................................    62
           2.14. Mandatory Prepayments/Commitment Reductions..................................................    64
           2.15. Application of Prepayments...................................................................    66
           2.16. General Provisions Regarding Payments........................................................    67
           2.17. Ratable Sharing..............................................................................    69
           2.18. Making or Maintaining Eurodollar Rate Loans..................................................    69
           2.19. Increased Costs; Capital Adequacy............................................................    71
           2.20. Taxes; Withholding, etc......................................................................    73
           2.21. Obligation to Mitigate.......................................................................    75
           2.22. Defaulting Lenders...........................................................................    76
           2.23. Removal or Replacement of a Lender...........................................................    77

SECTION 3. CONDITIONS PRECEDENT...............................................................................    78

           3.1. Closing Date..................................................................................    78
           3.2. Conditions to Each Credit Extension...........................................................    83

SECTION 4. REPRESENTATIONS AND WARRANTIES.....................................................................    84

           4.1. Organization; Requisite Power and Authority; Qualification....................................    84
           4.2. Capital Stock and Ownership...................................................................    84
           4.3. Due Authorization.............................................................................    85
           4.4. No Conflict...................................................................................    85
           4.5. Governmental Consents.........................................................................    85
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           4.6. Binding Obligation............................................................................    85
           4.7. Historical Financial Statements...............................................................    85
           4.8. Projections...................................................................................    86
           4.9. No Material Adverse Change....................................................................    86
           4.10. No Restricted Junior Payments................................................................    86
           4.11. Adverse Proceedings, etc.....................................................................    86
           4.12. Payment of Taxes.............................................................................    86
           4.13. Properties...................................................................................    87
           4.14. Environmental Matters........................................................................    87
           4.15. No Defaults..................................................................................    88
           4.16. Material Contracts...........................................................................    88
           4.17. Governmental Regulation......................................................................    88
           4.18. Margin Stock.................................................................................    88
           4.19. Employee Matters.............................................................................    88
           4.20. Employee Benefit Plans.......................................................................    88
           4.21. Certain Fees.................................................................................    89
           4.22. Solvency.....................................................................................    89
           4.23. Related Agreements...........................................................................    89
           4.24. Disclosure...................................................................................    90
           4.25. Patriot Act..................................................................................    90
           4.26. Financing Statements.........................................................................    90

SECTION 5. AFFIRMATIVE COVENANTS..............................................................................    91

           5.1. Financial Statements and Other Reports........................................................    91
           5.2. Existence.....................................................................................    94
           5.3. Payment of Taxes and Claims...................................................................    94
           5.4. Maintenance of Properties.....................................................................    94
           5.5. Insurance.....................................................................................    95
           5.6. Inspections...................................................................................    95
           5.7. Lenders Meetings..............................................................................    95
           5.8. Compliance with Laws..........................................................................    96
           5.9. Environmental.................................................................................    96
           5.10. Subsidiaries.................................................................................    98
           5.11. Additional Material Real Estate Assets.......................................................    99
           5.12. Interest Rate Protection.....................................................................    99
           5.13. Further Assurances...........................................................................    99
           5.14. Miscellaneous Business Covenants.............................................................   100
           5.15. Cash Management Systems......................................................................   100
           5.16. Insurance Regulatory Account.................................................................   101
           5.17. Plan of Reorganization Account...............................................................   101
           5.18. Post Closing Matters.........................................................................   101

SECTION 6. NEGATIVE COVENANTS.................................................................................   101

           6.1.  Indebtedness.................................................................................   101
           6.2.  Liens........................................................................................   108
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           6.3.  [Intentionally left blank]...................................................................    110
           6.4.  No Further Negative Pledges..................................................................    110
           6.5.  Restricted Junior Payments...................................................................    111
           6.6.  Restrictions on Subsidiary Distributions.....................................................    113
           6.7.  Investments..................................................................................    113
           6.8.  Financial Covenants..........................................................................    116
           6.9.  Fundamental Changes; Disposition of Assets; Acquisitions.....................................    122
           6.10. Disposal of Subsidiary Interests.............................................................    123
           6.11. Prohibition on Sales and Lease-Backs.........................................................    124
           6.12. Transactions with Shareholders and Affiliates................................................    124
           6.13. Conduct of Business..........................................................................    124
           6.14. Amendments or Waivers of Certain Related Agreements..........................................    125
           6.15. Amendments or Waivers with respect to MSW Notes, MSW Refinancing Notes, ARC Notes, ARC
                 Refinancing Notes, New MSW Notes and New ARC Notes...........................................    125
           6.16. Amendments or Waivers of the Second Lien Credit Agreement and Second Lien Notes Indenture....    125
           6.17. Fiscal Year..................................................................................    126

SECTION 7. GUARANTY...........................................................................................    126

           7.1. Guaranty of the Obligations...................................................................    126
           7.2. Contribution by Guarantors....................................................................    126
           7.3. Payment by Guarantors.........................................................................    127
           7.4. Liability of Guarantors Absolute..............................................................    127
           7.5. Waivers by Guarantors.........................................................................    129
           7.6. Guarantors' Rights of Subrogation, Contribution, etc..........................................    129
           7.7. Subordination of Other Obligations............................................................    130
           7.8. Continuing Guaranty...........................................................................    130
           7.9. Authority of Guarantors or Company............................................................    131
           7.10. Financial Condition of Company...............................................................    131
           7.11. Bankruptcy, etc..............................................................................    131
           7.12. Discharge of Guaranty Upon Sale of Guarantor.................................................    132

SECTION 8. EVENTS OF DEFAULT..................................................................................    132

           8.1. Events of Default.............................................................................    132

SECTION 9. AGENTS.............................................................................................    135

           9.1. Appointment of Agents.........................................................................    135
           9.2. Powers and Duties.............................................................................    136
           9.3. General Immunity..............................................................................    136
           9.4. Agents Entitled to Act as Lender..............................................................    138
           9.5. Lenders' Representations, Warranties and Acknowledgment.......................................    138
           9.6. Right to Indemnity............................................................................    138
           9.7. Successor Administrative Agent and Swing Line Lender..........................................    139
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           9.8. Collateral Documents and Guaranty.............................................................    140

SECTION 10. MISCELLANEOUS.....................................................................................    140

           10.1. Notices......................................................................................    140
           10.2. Expenses.....................................................................................    141
           10.3. Indemnity....................................................................................    141
           10.4. Set-Off......................................................................................    142
           10.5. Amendments and Waivers.......................................................................    143
           10.6. Successors and Assigns; Participations.......................................................    145
           10.7. Independence of Covenants....................................................................    148
           10.8. Survival of Representations, Warranties and Agreements.......................................    149
           10.9. No Waiver; Remedies Cumulative...............................................................    149
           10.10. Marshalling; Payments Set Aside.............................................................    149
           10.11. Severability................................................................................    149
           10.12. Obligations Several; Independent Nature of Lenders' Rights..................................    149
           10.13. Headings....................................................................................    150
           10.14. APPLICABLE LAW..............................................................................    150
           10.15. CONSENT TO JURISDICTION.....................................................................    150
           10.16. WAIVER OF JURY TRIAL........................................................................    150
           10.17. Confidentiality.............................................................................    151
           10.18. Usury Savings Clause........................................................................    152
           10.19. Counterparts................................................................................    152
           10.20. Effectiveness...............................................................................    152
           10.21. Patriot Act.................................................................................    152
           10.22. Electronic Execution of Assignments.........................................................    153
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APPENDICES:   A-1       Term Loan Commitments
              A-2       Revolving Commitments
              A-3       Funded Letter of Credit Commitments
              B         Notice Addresses

SCHEDULES:    1.1(a)    Certain Adjustments to Financial Covenant Definitions
              1.1(b)    Closing Date Excluded Subsidiaries
              1.1(c)    Existing Letters of Credit
              1.1(d)    Closing Date Foreign Subsidiaries
              1.1(e)    Detroit Letters of Credit
              1.1(f)    Transition Costs
              2.4(f)    Allocation of Credit Linked Deposits
              3.1(d)    Certain Closing Date Indebtedness Events
              3.1(h)    Closing Date Mortgaged Properties
              4.1       Jurisdictions of Organization
              4.2       Capital Stock and Ownership
              4.13      Real Estate Assets
              4.17      Material Contracts
              5.15      Cash Management Systems
              5.18      Post Closing Matters
              6.1       Certain Indebtedness
              6.2       Certain Liens
              6.7       Certain Investments
              6.9-A     Certain Permitted Asset Sales
              6.9-B     Foreign Subsidiary Restructuring
              6.12      Certain Affiliate Transactions

EXHIBITS:     A-1       Funding Notice
              A-2       Conversion/Continuation Notice
              A-3       Issuance Notice
              B-1       Term Loan Note
              B-2       Revolving Loan Note
              B-3       Swing Line Note
              C         Compliance Certificate
              D-1       Opinion of Skadden, Arps, Slate, Meagher & Flom LLP
              D-2       Opinion of LeBoeuf, Lamb, Greene & MacRae LLP
              D-3       Opinion of Mr. Timothy Simpson
              E         Assignment Agreement
              F         Certificate Re Non-bank Status
              G-1       Closing Date Certificate
              G-2       Solvency Certificate
              H         Counterpart Agreement
              I-1       Pledge and Security Agreement
              I-2       Holdings Pledge Agreement
              J         Mortgage
              K         Intercreditor Agreement

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                                CREDIT AGREEMENT

            This CREDIT AND GUARANTY AGREEMENT, dated as of June 24, 2005 is
entered into by and among COVANTA ENERGY CORPORATION, a Delaware corporation
("COMPANY"), DANIELSON HOLDING CORPORATION, a Delaware corporation ("HOLDINGS"),
CERTAIN SUBSIDIARIES OF COMPANY, as Guarantors, the Lenders party hereto from
time to time, GOLDMAN SACHS CREDIT PARTNERS L.P. ("GSCP") and CREDIT SUISSE,
CAYMAN ISLANDS BRANCH ("CREDIT SUISSE" together with GSCP, as Joint Lead
Arrangers in such capacities, the "JOINT LEAD ARRANGERS"), as Joint Book Runners
(in such capacities, "JOINT BOOK RUNNERS"), and as Co-Syndication Agents (in
such capacities, "CO-SYNDICATION AGENTS"), GSCP, as Administrative Agent
(together with its permitted successors in such capacity, "ADMINISTRATIVE
AGENT") and as Collateral Agent (together with its permitted successor in such
capacity, "COLLATERAL AGENT"), JPMORGAN CHASE BANK ("JPMC"), UBS SECURITIES LLC
("UBSS") and CALYON NEW YORK BRANCH ("CALYON" together with JPMC and UBSS as
Co-Documentation Agents in such capacities, "CO-DOCUMENTATION AGENTS") and JPMC,
as a Revolving Issuing Bank and a Funded LC Issuing Bank, and UBS AG, STAMFORD
BRANCH ("UBS") as a Funded LC Issuing Bank.

                                    RECITALS:

      WHEREAS, capitalized terms used in these Recitals shall have the
respective meanings set forth for such terms in Section 1.1 hereof.

      WHEREAS, Lenders have agreed to extend certain credit facilities to
Company, in an aggregate amount not to exceed $715,000,000, consisting of (i)
$275,000,000 in aggregate principal amount of Term Loans to be borrowed on the
Closing Date and (ii) $100,000,000 in aggregate principal amount of Revolving
Commitments and (iii) up to $340,000,000 in aggregate face amount of Funded
Letters of Credit. The proceeds of the Term Loans will be used to fund, in part,
the acquisition (the "ACQUISITION") of American Ref-Fuel Holdings Corp.
(together with its Subsidiaries, the "ACQUIRED BUSINESS"), to refinance
approximately $310,000,000 of the Existing Indebtedness of Company and its
Subsidiaries (the "REFINANCING"), and to pay the related fees, commissions,
premiums and expenses. The proceeds under the Revolving Loan will be used, after
the Closing Date, for permitted Consolidated Capital Expenditures and Permitted
Acquisitions to pay MSW Put-Related Costs (any such proceeds used for such
purpose, the "PUT LOANS") in aggregate amount not to exceed $25,000,000, to fund
Restricted Junior Payments permitted hereunder, for Permitted Acquisitions and
to provide for ongoing working capital requirements of Company and its
Subsidiaries and for general corporate purposes. The Funded Letters of Credit
will be used to support obligations of Company and its Subsidiaries under
waste-to-energy projects and other Contractual Obligations of Company and its
Subsidiaries and for other general corporate purposes of Company and its
Subsidiaries.

      WHEREAS, Company has agreed to secure all of its Obligations by granting
to Collateral Agent, for the benefit of Secured Parties, a First Priority Lien
on substantially all of its assets, including to the extent permitted by
existing Contractual Obligations and regulatory limitations binding on Company
or any of its Subsidiaries, a pledge of all of the Capital Stock of each of its
Domestic Subsidiaries directly owned by it and 65% of all the Capital Stock of
each

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of its Foreign Subsidiaries directly owned by it (except to the extent
expressly provided in Section 3.1(i)(iv) and the Pledge and Security Agreement);
and

      WHEREAS, Guarantors, have agreed to guarantee the obligations of Company
hereunder and to the extent permitted by existing Contractual Obligations and
regulatory limitations, binding on Company or any of its Subsidiaries, to secure
their respective Obligations by granting to Collateral Agent, for the benefit of
Secured Parties, a First Priority Lien on substantially all of their respective
assets, including (to the extent so permitted) a pledge of all of the Capital
Stock of each of their respective Domestic Subsidiaries directly owned by them
(including in the case of Holdings, Company) and 65% of all the Capital Stock of
each of their respective Foreign Subsidiaries directly owned by them (except to
the extent expressly provided in Section 3.1(i)(iv) and the Pledge and Security
Agreement) and all intercompany debt.

      NOW, THEREFORE, in consideration of the premises and the agreements,
provisions and covenants herein contained, the parties hereto agree as follows:

SECTION 1. DEFINITIONS AND INTERPRETATION

      1.1. Definitions. The following terms used herein, including in the
preamble, recitals, exhibits and schedules hereto, shall have the following
meanings:

            "ACQUIRED BUSINESS" as defined in the Recitals.

            "ACQUISITION" as defined in the Recitals.

            "ACT" as defined in Section 4.25.

            "ADJUSTED COMPANY OPERATING CASH FLOW" means, for any Fiscal Quarter
and without duplication, (a) Company Cash Flow for such Fiscal Quarter, minus,
to the extent that each is reflected in such Company Cash Flow, (b), the sum of
(i) cash proceeds from Asset Sales, capital contributions or issuances of
Capital Stock (or any other payments from Holdings) or the incurrence of
Indebtedness or any proceeds otherwise attributable to extraordinary gains or
other non-recurring items, plus (ii) Net Insurance/Condemnation Proceeds, plus
(iii) returns of invested capital upon liquidation, sale or other similar
extraordinary return of an Investment, minus (c) any Cash or Cash Equivalents
that are subject to a Lien (other than a Lien created under the Collateral
Documents or the collateral documents relating to the Second Lien Notes
Indenture or the Second Lien Credit Agreement), plus (d) payments (or
intercompany loans) made by Company to or on behalf of its Subsidiaries for
Investments incurred in connection with intercompany loans permitted under
Sections 6.1(d), (e) (other than subsections (i)(A), (i)(B) and (i)(D) thereof)
and (t) or Investments incurred pursuant to Sections 6.7(g) and (n)(ii), plus
(e) (but only to the extent that since the Closing Date the aggregate of all
amounts added to pursuant to this clause (e) does not exceed by more than
$75,000,000 the aggregate of all amounts deducted pursuant to clause (f) of this
definition) to the extent permitted hereunder any out of pocket expenses, costs
and other similar payments made by Company or its Subsidiaries to third parties
in connection with the construction of any Expansion owned by a Subsidiary of
Company, minus (f) any cash received in connection with the construction of any
Expansion owned by a Subsidiary of Company, plus (g) payments made by Company or
any of its

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Subsidiaries for MSW Put-Related Costs, plus (h) any payment of Company Cash
Interest Expense, plus (i) any payment of principal of Company Total Debt.

            "ADJUSTED EURODOLLAR RATE" means, for any Interest Rate
Determination Date with respect to an Interest Period for a Eurodollar Rate Loan
or Credit Linked Deposit, the rate per annum obtained by dividing (and rounding
upward to the next whole multiple of 1/16 of 1%) (i) (a) the rate per annum
(rounded to the nearest 1/100 of 1%) equal to the offered rate which appears on
the page of the Telerate Screen which displays an average British Bankers
Association Interest Settlement Rate (such page currently being page number 3740
or 3750, as applicable) for deposits (for delivery on the first day of such
period) with a term equivalent to such period in Dollars, determined as of
approximately 11:00 a.m. (London, England time) on such Interest Rate
Determination Date, or (b) in the event the rate referenced in the preceding
clause (a) does not appear on such page or service or if such page or service
shall cease to be available, the rate per annum (rounded to the nearest 1/100 of
1%) equal to the rate determined by Administrative Agent to be the offered rate
on such other page or other service which displays an average British Bankers
Association Interest Settlement Rate for deposits (for delivery on the first day
of such period) with a term equivalent to such period in Dollars, determined as
of approximately 11:00 a.m. (London, England time) on such Interest Rate
Determination Date, or (c) in the event the rates referenced in the preceding
clauses (a) and (b) are not available, the rate per annum (rounded to the
nearest 1/100 of 1%) equal to the offered quotation rate to first class banks in
the London interbank market by Credit Suisse for deposits (for delivery on the
first day of the relevant period) in Dollars of amounts in same day funds
comparable to the principal amount of the applicable Loan or Credit Linked
Deposit, for which the Adjusted Eurodollar Rate is then being determined with
maturities comparable to such period as of approximately 11:00 a.m. (London,
England time) on such Interest Rate Determination Date, by (ii) an amount equal
to (a) one minus (b) the Applicable Reserve Requirement.

            "ADMINISTRATIVE AGENT" as defined in the preamble hereto.

            "ADVERSE PROCEEDING" means any action, suit, proceeding (whether
administrative, judicial or otherwise), governmental investigation or
arbitration at law or in equity, or before or by any Governmental Authority,
domestic or foreign (including any Environmental Claims), whether pending or, to
the knowledge of Company or any of its Subsidiaries, threatened against or
affecting Company or any of its Subsidiaries or any property of Company or any
of its Subsidiaries.

            "AFFECTED ENTITIES" shall mean the collective reference to Covanta
Warren Energy Resource Corp. L.P., Covanta Warren Holdings I, Inc., Covanta
Warren Holdings II, Inc. (collectively the "COVANTA WARREN ENTITIES") and
Magellan Cogeneration Inc. in each case only for so long as such Person
continues to be the subject of a proceeding under applicable bankruptcy or
insolvency law.

            "AFFECTED LENDER" as defined in Section 2.18(b).

            "AFFECTED LOANS" as defined in Section 2.18(b).

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            "AFFILIATE" means, as applied to any Person, any other Person
directly or indirectly controlling, controlled by, or under common control with,
that Person. For the purposes of this definition, "control" (including, with
correlative meanings, the terms "controlling", "controlled by" and "under common
control with"), as applied to any Person, means the possession, directly or
indirectly, of the power (i) to vote 5% or more of the Securities having
ordinary voting power for the election of directors of such Person or (ii) to
direct or cause the direction of the management and policies of that Person,
whether through the ownership of voting securities or by contract or otherwise.

            "AGENT" means each of the Co-Syndication Agents, Administrative
Agent, Collateral Agent and Co-Documentation Agents.

            "AGGREGATE AMOUNTS DUE" as defined in Section 2.17.

            "AGGREGATE PAYMENTS" as defined in Section 7.2.

            "AGREEMENT" means this Credit and Guaranty Agreement, dated as of
June 24, 2005, as it may be amended, supplemented or otherwise modified from
time to time.

            "APPLICABLE MARGIN" means

            (i) with respect to Revolving Loans that are Eurodollar Rate Loans,
(a) from the Closing Date until the date of delivery of the Compliance
Certificate and the financial statements for the first full Fiscal Quarter
ending after the Closing Date, 3.00% per annum; and (b) thereafter, a percentage
per annum, determined by reference to Company Leverage Ratio in effect from time
to time as set forth below:

<TABLE>
<CAPTION>
COMPANY LEVERAGE              APPLICABLE MARGIN FOR REVOLVING LOANS
     RATIO                              (EURODOLLAR LOANS)
------------------            -------------------------------------
<S>                           <C>
  > or = 4.25:1.00                            3.00%

  < 4.25:1.00
  > or = 3.50:1.00                            2.75%

  < 3.50:1.00                                 2.50%
</TABLE>

and (ii) with respect to Swing Line Loans and Revolving Loans that are Base Rate
Loans, an amount equal to the Applicable Margin for Eurodollar Rate Loans as set
forth in clause (i)(a) or (i)(b) above, as applicable, minus 1.00% per annum;
and (iii) with respect to the Term Loans that are Eurodollar Rate Loans, and
Funded Letters of Credit and Credit Linked Deposits, 3.00% per annum and (iv)
with respect to Term Loans that are Base Rate Loans, 2.00% per annum. No change
in the Applicable Margin shall be effective until three Business Days after the
date on which Administrative Agent shall have received the applicable financial
statements and a

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Compliance Certificate pursuant to Section 5.1(d) calculating the Company
Leverage Ratio. At any time Company has not submitted to Administrative Agent
the applicable information as and when required under Section 5.1(d), the
Applicable Margin shall be determined as if the Company Leverage Ratio were in
excess of 4.25:1.00 until such time as each failure is cured. Within one
Business Day of receipt of the applicable information under Section 5.1(d),
Administrative Agent shall give each Lender telefacsimile or telephonic notice
(confirmed in writing) of the Applicable Margin in effect from such date.

            "APPLICABLE RESERVE REQUIREMENT" means, at any time, for any
Eurodollar Rate Loan or a Credit Linked Deposit, the maximum rate, expressed as
a decimal, at which reserves (including, without limitation, any basic marginal,
special, supplemental, emergency or other reserves) are required to be
maintained with respect thereto against "Eurocurrency liabilities" (as such term
is defined in Regulation D) under regulations issued from time to time by the
Board of Governors of the Federal Reserve System or other applicable banking
regulator. Without limiting the effect of the foregoing, the Applicable Reserve
Requirement shall reflect any other reserves required to be maintained by such
member banks with respect to (i) any category of liabilities which includes
deposits by reference to which the applicable Adjusted Eurodollar Rate is to be
determined, or (ii) any category of extensions of credit or other assets which
include Eurodollar Rate Loans. A Eurodollar Rate Loan or a Credit Linked Deposit
shall be deemed to constitute Eurocurrency liabilities and as such shall be
deemed subject to reserve requirements without benefits of credit for proration,
exceptions or offsets that may be available from time to time to the applicable
Lender. The rate of interest on Eurodollar Rate Loans or a Credit Linked Deposit
shall be adjusted automatically on and as of the effective date of any change in
the Applicable Reserve Requirement.

            "ARC INDENTURE" means that certain Indenture, dated as of May 1,
2003, between American Ref-Fuel Company LLC and Wachovia Bank, National
Association as supplemented by the First Supplemental Indenture, dated as of May
1, 2003 between American Ref-Fuel Company LLC and Wachovia Bank, National
Association.

            "ARC LLC" means American Ref-Fuel Company LLC, a Delaware limited
liability company.

            "ARC NOTES" means the "Notes" as defined in the ARC Indenture.

            "ARC REFINANCING INDENTURE" means a trust indenture in form and
substance reasonably satisfactory to Administrative Agent pursuant to which any
ARC Refinancing Notes may be issued in accordance with the terms of this
Agreement, as such indenture may be further amended, restated, supplemented,
modified, extended, renewed or replaced from time to time in accordance with
Section 6.15 of this Agreement.

            "ARC REFINANCING NOTES" as defined in Section 6.1(n).

            "ASSET SALE" means a sale, lease or sub-lease (as lessor or
sublessor), sale and leaseback, assignment, conveyance, transfer or other
disposition to, or any exchange of property with, any Person (other than Company
or any Guarantor Subsidiary), in one transaction or a series of transactions, of
all or any part of Company's or any of its Subsidiaries' businesses,

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assets or properties of any kind, whether real, personal, or mixed and whether
tangible or intangible (other than Cash), whether now owned or hereafter
acquired, including, without limitation, the Capital Stock of any of Company's
Subsidiaries, other than (i) inventory (or other assets) sold or leased in the
ordinary course of business, (excluding any such sales by operations or
divisions discontinued), and (ii) Excluded Asset Sales.

            "ASSIGNMENT AGREEMENT" means an Assignment and Assumption Agreement
substantially in the form of Exhibit E, with such amendments or modifications as
may be approved by Administrative Agent and Company.

            "ASSIGNMENT EFFECTIVE DATE" as defined in Section 10.6(b).

            "AUTHORIZED OFFICER" means, as applied to any Person, any individual
holding the position of chief executive officer, general counsel, chief
financial officer, chief accounting officer or treasurer.

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

            "BASE RATE" means, for any day, a rate per annum equal to the
greater of (i) the Prime Rate in effect on such day and (ii) the Federal Funds
Effective Rate in effect on such day plus -1/2 of 1%. Any change in the Base
Rate due to a change in the Prime Rate or the Federal Funds Effective Rate shall
be effective on the effective day of such change in the Prime Rate or the
Federal Funds Effective Rate, respectively.

            "BASE RATE LOAN" means a Loan bearing interest at a rate determined
by reference to the Base Rate.

            "BENEFICIARY" means each Agent, Issuing Bank, Lender and Lender
Counterparty.

            "BUSINESS DAY" means (i) any day excluding Saturday, Sunday and any
day which is a legal holiday under the laws of the State of New York or is a day
on which banking institutions located in such state are authorized or required
by law or other governmental action to close and (ii) with respect to all
notices, determinations, fundings and payments in connection with the Adjusted
Eurodollar Rate or any Eurodollar Rate Loans or Credit Linked Deposit, the term
"BUSINESS DAY" shall mean any day which is a Business Day described in clause
(i) and which is also a day for trading by and between banks in Dollar deposits
in the London interbank market.

            "CALYON" as defined in the preamble hereto.

            "CAPITAL LEASE" means, as applied to any Person, any lease of any
property (whether real, personal or mixed) by that Person as lessee that, in
conformity with GAAP, is or should be accounted for as a capital lease on the
balance sheet of that Person.

            "CAPITAL STOCK" means any and all shares, interests, participations
or other equivalents (however designated) of capital stock of a corporation, any
and all equivalent

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ownership interests in a Person (other than a corporation), including, without
limitation, partnership interests and membership interests, and any and all
warrants, rights or options to purchase or other arrangements or rights to
acquire any of the foregoing from the issuer thereof.

            "CASH" means money, currency or a credit balance in any demand or
Deposit Account.

            "CASH EQUIVALENTS" means, as at any date of determination, (i)
marketable securities (a) issued or directly and unconditionally guaranteed as
to interest and principal by the United States Government or (b) issued by any
agency of the United States the obligations of which are backed by the full
faith and credit of the United States, in each case maturing within one year
after such date; (ii) marketable direct obligations issued by any state of the
United States of America or any political subdivision of any such state or any
public instrumentality thereof, in each case maturing within one year after such
date and having, at the time of the acquisition thereof, a rating of at least
A-1 from S&P or at least P-1 from Moody's; (iii) commercial paper maturing no
more than one year from the date of creation thereof and having, at the time of
the acquisition thereof, a rating of at least A-1 from S&P or at least P-1 from
Moody's; (iv) certificates of deposit or bankers' acceptances maturing within
one year after such date and issued or accepted by any Lender or by any
commercial bank organized under the laws of the United States of America or any
state thereof or the District of Columbia that (a) is at least "adequately
capitalized" (as defined in the regulations of its primary Federal banking
regulator) and (b) has Tier 1 capital (as defined in such regulations) of not
less than $100,000,000; (v) shares of any money market mutual fund that (a) has
at least 95% of its assets invested continuously in the types of investments
referred to in clauses (i) and (ii) above, and (b) has net assets of not less
than $500,000,000; (vi) any repurchase agreement having a term of 30 days or
less entered into with any commercial banking institution satisfying the
criteria set forth in clause (iv) which is secured by a fully perfected security
interest in any obligation of the type described in clause (i), above, (vii)
securities and investments held by Foreign Subsidiaries pursuant to the
requirements of Project documents to which they are a party, (viii) other
investment-grade instruments and securities held by Foreign Subsidiaries, (ix)
auction rate securities or auction rate preferred stock having a rate reset
frequency of less than ninety (90) days and having, at the time of the
acquisition thereof, a rating of at least A from S&P or from Moody's and (x)
such other securities and investments held by Excluded Subsidiaries and Foreign
Subsidiaries as Company and Administrative Agent may agree.

            "CASH FLOW COVERAGE RATIO" means the ratio as of the last day of any
Fiscal Quarter of (i) the sum of (A) Adjusted Company Operating Cash Flow (as
calculated pursuant to the proviso below) plus (B) transition costs of the type
and maximum aggregate amount set out on Schedule 1.1(f) incurred in connection
with integration of the Acquired Business in such four Fiscal Quarter period to
(ii) Company Cash Interest Expense, in each case for the four Fiscal Quarters of
Company ending on such date taken as a single accounting period; provided that
Adjusted Company Operating Cash Flow for such four Fiscal Quarter period shall
be calculated by adding (1) Adjusted Company Operating Cash Flow for the Fiscal
Quarter ending on such date to the sum of (2) Adjusted Company Operating Cash
Flow for each of the three Fiscal Quarters immediately prior to the Fiscal
Quarter measured in (1) above, as set forth in the Compliance Certificate for
each such Fiscal Quarter; provided further that with respect to any

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calculation period ending prior to the first anniversary of the Closing Date,
the foregoing shall be subject to adjustment as set forth in Schedule 1.1(a).

            "CERTIFICATE RE NON-BANK STATUS" means a certificate substantially
in the form of Exhibit F.

            "CHANGE OF CONTROL" means, at any time, (i) Holdings shall cease to
beneficially own and control, directly or indirectly on a fully diluted basis,
all of the economic and voting interests in the Capital Stock of Company; (ii)
the majority of the seats (other than vacant seats) on the board of directors
(or similar governing body) of Company cease to be occupied by Persons who
either (a) were members of the board of directors of Company on the Closing Date
or (b) were nominated for election by the board of directors of Company, a
majority of whom were directors on the Closing Date or whose election or
nomination for election was previously approved by a majority of such directors;
(iii) any Person or "group" (within the meaning of Rules 13d-3 and 13d-5 under
the Exchange Act) other than SZ Investments, LLC, Third Avenue Trust, LLC, D.E.
Shaw Laminar Portfolios, LLC and EGI-FUND (05-07) Investors, L.L.C. or any of
their Affiliates (a) shall have acquired beneficial ownership of 40% on a fully
diluted basis of the voting and/or economic interest in the Capital Stock of
Holdings or (b) shall have obtained the power to control the board of directors
(or similar governing body) of Holdings; or (iv) any "change of control" or
similar event under (a) the MSW Notes, the MSW Refinancing Notes, the ARC Notes,
the ARC Refinancing Notes, the New MSW Notes or the New ARC Notes that would
require Company to tender for or otherwise give rise to an accelerated repayment
of any such notes (except in the case of the MSW Notes to the extent directly
resulting from the Acquisition) or (b) the Second Lien Credit Agreement or
Second Lien Notes Indenture.

            "CLASS" means (i) with respect to Lenders, each of the following
classes of Lenders: (a) Lenders having Term Loan Exposure, (b) Lenders having
Revolving Exposure (including Swing Line Lender) and (c) Lenders having Funded
Letters of Credit Exposure, and (ii) with respect to Loans, each of the
following classes of Loans: (a) Term Loans, and (b) Revolving Loans (including
Swing Line Loans).

            "CLOSING DATE" means the date on which the Term Loans are made.

            "CLOSING DATE CERTIFICATE" means a Closing Date Certificate
substantially in the form of Exhibit G-1.

            "CLOSING DATE MORTGAGED PROPERTY" as defined in Section 3.1(h).

            "COLLATERAL" means, collectively, all of the real, personal and
mixed property (including Capital Stock) in which Liens are purported to be
granted pursuant to the Collateral Documents as security for the Obligations.

            "COLLATERAL AGENT" as defined in the preamble hereto.

            "COLLATERAL DOCUMENTS" means the Pledge and Security Agreement, the
Holdings Pledge Agreement, the Control Agreements, the Mortgages, the
Intercreditor Agreement, and all other instruments, documents and agreements
delivered by any Credit Party

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pursuant to this Agreement or any of the other Credit Documents in order to
grant to Collateral Agent, for the benefit of Lenders, a Lien on any real,
personal or mixed property of that Credit Party as security for the Obligations.

            "COMMITMENT" means any Revolving Commitment, Term Loan Commitment or
Funded Letter of Credit Commitment.

            "COMMODITIES AGREEMENT" means any long-term or forward purchase
contract or option contract to buy, sell or exchange commodities or similar
agreement or arrangement to which Company or any of its Subsidiaries is a party
unless, under the terms of such ordinary course, non-speculative purchase
contract, option contract agreement or arrangement Company expects to make or
take delivery of all of the commodities which are the subject thereof.

            "COMPANY" as defined in the preamble hereto.

            "COMPANY CASH BALANCE" means, for the end of any Fiscal Quarter and
without duplication, an amount determined for Company and its Subsidiaries in
accordance with GAAP equal to (a) cash and cash equivalents reflected on the
consolidated balance sheet of Company and its Subsidiaries, plus (b) Marketable
Securities reflected on the consolidated balance sheet of Company and its
Subsidiaries, minus (c) cash and cash equivalents of Foreign Subsidiaries of
Company, minus (d) Marketable Securities of Foreign Subsidiaries of Company,
minus (e) cash and cash equivalents of Domestic Subsidiaries of Company
constituting part of the Acquired Business, minus (f) Marketable Securities of
Domestic Subsidiaries of Company constituting part of the Acquired Business,
minus (g) cash and cash equivalents of all Other Domestic Subsidiaries, minus
(h) Marketable Securities of all Other Domestic Subsidiaries. For the purposes
of this definition, "cash and cash equivalents" in each of the above references
shall be determined in accordance with GAAP and as set forth on the balance
sheet of Company for the relevant period.

            "COMPANY CASH FLOW" means, for any Fiscal Quarter, (a) the Company
Cash Balance for the end of such Fiscal Quarter minus (b) the Company Cash
Balance for the end of the immediately preceding Fiscal Quarter.

            "COMPANY CASH INTEREST EXPENSE" means, for any period, the sum of
(i) total interest expense that was required to be paid in Cash by Company with
respect to Company Total Debt during such period whether or not paid in such
period, including all commissions, discounts and other fees and charges owed
with respect to net costs under Interest Rate Agreements and (ii) other fees and
charges owed with respect to letters of credit; provided that Company Cash
Interest Expense shall not include Transaction Costs or Related Transaction
Costs.

            "COMPANY LEVERAGE RATIO" means, as of any date of determination, the
ratio of (a) the aggregate amount of Company Total Debt at such date (other than
intercompany Indebtedness that would be eliminated in consolidation) to (b) the
Adjusted Company Operating Cash Flow (as calculated pursuant to the proviso
below), plus transition costs of the type and maximum aggregate amount set out
on Schedule 1.1(f) incurred in connection with integration of the Acquired
Business for the four Fiscal Quarter period of Company ending on such date,
taken

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as a single accounting period (or if such date of determination is not the last
day of a Fiscal Quarter, for the four Fiscal Quarter period ending as of the
last day of the most recently concluded Fiscal Quarter); provided that Adjusted
Company Operating Cash Flow for such four Fiscal Quarter period shall be
calculated by adding (i) Adjusted Company Operating Cash Flow for the Fiscal
Quarter ending on such date to the sum of (ii) Adjusted Company Operating Cash
Flow for each of the three Fiscal Quarters immediately prior to the Fiscal
Quarter measured in (i) above, as set forth in the Compliance Certificate for
each such Fiscal Quarter; provided further that with respect to any calculation
period ending prior to the first anniversary of the Closing Date, the foregoing
shall be subject to adjustment as set forth in Schedule 1.1(a).

            "COMPANY TOTAL DEBT" means, as of any date of determination, the
aggregate stated balance sheet amount (but excluding unamortized premiums) of
all Indebtedness of Company of the type identified in clauses (i) through (iv)
of the definition of Indebtedness (other than Indebtedness owed by Company to
its Subsidiaries) determined in accordance with GAAP. For the avoidance of
doubt, Company Total Debt shall not include, without limitation, Performance
Guarantees, Limited Recourse Debt, the MSW Notes, the ARC Notes, the New MSW
Notes, the New ARC Notes, the ARC Refinancing Notes, the MSW Refinancing Notes
and undrawn Letters of Credit.

            "COMPLIANCE CERTIFICATE" means a Compliance Certificate
substantially in the form of Exhibit C.

            "CONSOLIDATED ADJUSTED EBITDA" means, for any period, an amount
determined for Company and its Subsidiaries on a consolidated basis equal to (i)
the sum, without duplication, of the amounts for such period of (a) Consolidated
Net Income, (b) Consolidated Interest Expense, (c) provisions for taxes, (d)
total depreciation expense, (e) total amortization expense, (f) changes in
unbilled service receivables, (g) minority interests (h) non-Cash compensation
expense from the issuance of restricted stock and stock options, (i) all legal,
accounting and other expenses incurred in connection with the Transactions or
the Related Transactions to the extent deducted in determining Consolidated Net
Income for such period and (j) other non-Cash items reducing Consolidated Net
Income (excluding any such non-Cash item to the extent that it represents an
accrual or reserve for potential Cash items in any future period or amortization
of a prepaid Cash item that was paid in a prior period), minus (ii) other
non-Cash items increasing Consolidated Net Income for such period (excluding any
such non-Cash item to the extent it represents the reversal of an accrual or
reserve for potential Cash item in any prior period); provided that with respect
to any calculation period ending prior to the first anniversary of the Closing
Date, the foregoing shall be subject to adjustment as set forth in Schedule
1.1(a).

            "CONSOLIDATED CAPITAL EXPENDITURES" means, for any period, the
aggregate of all expenditures of Company and its Subsidiaries during such period
determined on a consolidated basis that, in accordance with GAAP, are or should
be included in "additions to plant, property and equipment" or similar items
reflected in the consolidated statement of cash flows of Company and its
Subsidiaries. The following expenditures shall not constitute Consolidated
Capital Expenditures: (i) expenditures that are to be reimbursed by the client
(to the extent actually subsequently reimbursed) of a Project under the
principal lease, service or operating agreement relating to such Project
pursuant to a Contractual Obligation on the part of

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                                       10
<PAGE>

such client to reimburse such expenditures, (ii) expenditures incurred for the
development, construction or acquisition of Projects after the Closing Date and
expenditures on Projects existing on the Closing Date for the purpose of
increasing waste through-put or power output, in each case, to the extent
financed with the proceeds of Limited Recourse Debt expressly permitted pursuant
to Section 6.1(p) or Investments expressly permitted pursuant to Section 6.7(j),
(iii) expenditures made with Net Asset Sale Proceeds permitted to be retained by
Company and its Subsidiaries for investment in long-term productive assets under
Section 2.14(a) and (iv) expenditures that are made or committed to be made
within three hundred sixty days of receipt of such proceeds from (or reimbursed
through) Net Insurance/Condemnation Proceeds.

            "CONSOLIDATED INTEREST EXPENSE" means, for any period, total
interest expense (including that portion attributable to Capital Leases in
accordance with GAAP and capitalized interest) of Company and its Subsidiaries
on a consolidated basis with respect to all outstanding Indebtedness of Company
and its Subsidiaries, including all commissions, discounts and other fees and
charges owed with respect to letters of credit and net costs under Interest Rate
Agreements, but excluding (to the extent otherwise included), however, (x) any
amounts referred to in Section 2.11(f) of this Agreement or Section 2.11 of the
Second Lien Credit Agreement payable on or before the Closing Date, (y) interest
that is capitalized in connection with construction financing and (z) all
Transaction Costs or Related Transaction Costs.

            "CONSOLIDATED NET INCOME" means, for any period, (i) the net income
(or loss) of Company and its Subsidiaries on a consolidated basis for such
period taken as a single accounting period determined in conformity with GAAP,
minus, to the extent otherwise included and without duplication, (ii) (a) the
income (or loss) of any Person (other than the Acquired Business) accrued prior
to the date it becomes a Subsidiary of Company or is merged into or consolidated
with Company or any of its Subsidiaries or that Person's assets are acquired by
Company or any of its Subsidiaries, (b) (or plus) any after-tax gains (or
losses) attributable to Asset Sales or returned surplus assets of any Pension
Plan, and (c) (to the extent not included in clauses (a) and (b) above) any net
extraordinary gains or (plus) net extraordinary losses.

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

            "CONTRIBUTING GUARANTORS" as defined in Section 7.2.

            "CONTROL AGREEMENTS" means each control agreement to be executed and
delivered by Collateral Agent, a securities intermediary or depositary bank and
Company or a Guarantor Subsidiary pursuant to the terms of the Pledge and
Security Agreement with such modifications as Collateral Agent may reasonably
approve.

            "CONVERSION/CONTINUATION DATE" means the effective date of a
continuation or conversion, as the case may be, as set forth in the applicable
Conversion/Continuation Notice.

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            "CONVERSION/CONTINUATION NOTICE" means a Conversion/Continuation
Notice substantially in the form of Exhibit A-2.

            "CORPORATE SERVICES REIMBURSEMENT AGREEMENT" means the corporate
services and expense reimbursement agreement entered into by Holdings and
Company on March 10, 2004, as such agreement may be amended, restated,
supplemented or otherwise modified from time to time to the extent permitted
thereunder and under Section 6.14.

            "CO-DOCUMENTATION AGENTS" as defined in the preamble hereto.

            "CO-SYNDICATION AGENTS" as defined in the preamble hereto.

            "COUNTERPART AGREEMENT" means a Counterpart Agreement substantially
in the form of Exhibit H delivered by a Subsidiary of Company pursuant to
Section 5.10.

            "COVANTA WARREN DEBT" as defined in the definition of Restricted
Junior Payments.

            "COVANTA WARREN ENTITIES" as defined in the definition of Affected
Entities.

            "CREDIT DATE" means the date of a Credit Extension.

            "CREDIT DOCUMENT" means any of this Agreement, the Notes, if any,
the Collateral Documents, any letter of credit applications or reimbursement
agreements or other documents or certificates requested by an Issuing Bank
executed by Company in favor of an Issuing Bank relating to Letters of Credit,
and all other certificates, instruments or agreements executed and delivered by
a Credit Party for the benefit of any Agent, any Issuing Bank or any Lender in
connection herewith.

            "CREDIT EXTENSION" means and includes the making (but not the
conversion or continuation) of a Loan, the funding of Credit Linked Deposit on
the Closing Date and the issuance, amendment, extension or renewal of a Letter
of Credit.

            "CREDIT LINKED DEPOSIT" means with respect to each Lender, the cash
deposit, if any, made by such Lender pursuant to Section 2.4(j), as the same may
be (a) reduced from time to time pursuant to Sections 2.4(f) and (h) or
2.13(b)(iii) or (b) reduced or increased from time to time pursuant to
assignments by or to such Lender pursuant to Section 10.6.

            "CREDIT LINKED DEPOSIT ACCOUNT" means one or more operating and/or
investment accounts established by Administrative Agent that shall be used for
the purposes set forth in Section 2.4.

            "CREDIT PARTY" means Company and each Guarantor and any other
Subsidiary of Company which is a party to a Credit Document.

            "CREDIT SUISSE" as defined in the preamble hereto.

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            "CURRENCY AGREEMENT" means any foreign exchange contract, currency
swap agreement, futures contract, option contract, synthetic cap or other
similar agreement or arrangement, each of which is for the purpose of hedging
the foreign currency risk associated with Company's and its Subsidiaries'
operations and not for speculative purposes.

            "DEFAULT" means a condition or event that, after notice or lapse of
time or both, would constitute an Event of Default.

            "DEFAULT EXCESS" means, with respect to any Defaulting Lender, the
excess, if any, of such Defaulting Lender's Pro Rata Share of the aggregate
outstanding principal amount of Loans of all Lenders (calculated as if all
Defaulting Lenders (other than such Defaulting Lender) had funded all of their
respective Defaulted Loans) over the aggregate outstanding principal amount of
all Loans of such Defaulting Lender.

            "DEFAULT PERIOD" means, with respect to any Defaulting Lender, the
period commencing on the date of the applicable Funding Default and ending on
the earliest of the following dates: (i) the date on which all Commitments are
cancelled or terminated and/or the Obligations are declared or become
immediately due and payable, (ii) the date on which (a) the Default Excess with
respect to such Defaulting Lender shall have been reduced to zero (whether by
the funding by such Defaulting Lender of any Defaulted Loans of such Defaulting
Lender or by the non-pro rata application of any voluntary or mandatory
prepayments of the Loans in accordance with the terms of Section 2.13 or Section
2.14 or by a combination thereof) and (b) such Defaulting Lender shall have
delivered to Company and Administrative Agent a written reaffirmation of its
intention to honor its obligations hereunder with respect to its Commitments,
and (iii) the date on which Company, Administrative Agent and Requisite Lenders
waive all Funding Defaults of such Defaulting Lender in writing.

            "DEFAULTED LOAN" as defined in Section 2.22.

            "DEFAULTING LENDER" as defined in Section 2.22.

            "DEPOSIT ACCOUNT" means a demand, time, savings, passbook or like
account with a bank, savings and loan association, credit union or like
organization, other than an account evidenced by a negotiable certificate of
deposit.

            "DETROIT LETTERS OF CREDIT" means any Funded Letter of Credit as
described on Schedule 1.1(e) in an aggregate amount no greater than the amount
set forth thereon, requested by Company to be issued hereunder and having an
expiration date no later than the date which is three years and thirty-five days
from the date of issuance.

            "DEVELOPMENT SUBSIDIARY" means, solely for the purpose of excluding
such Subsidiary from Company's obligation to comply with Section 5.10 with
respect to such Subsidiary, a Subsidiary established by Company or any of its
Subsidiaries for the sole purpose of bidding on a prospective Project; provided
that (i) any equity Investment in such Subsidiary by Company or another
Subsidiary of Company in aggregate when taken together with all other equity
Investments in Development Subsidiaries shall not exceed $1,000,000 at any one
time outstanding; (ii) such Subsidiary shall have no assets other than Cash
pursuant to clause (i) of this definition and intercompany Indebtedness
permitted hereunder and the agreements to which

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                                       13
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it is party and which are entered into in the ordinary course of business and
are necessary for it to develop or bid on prospective Projects and (iii) such
Subsidiary's sole business shall be limited to those actions necessary to
develop or bid on prospective Projects. At such time, if any, as such Subsidiary
shall incur any Indebtedness (other than intercompany Indebtedness permitted
hereunder), grant any Liens or make any Investment or Restricted Junior Payment
or carry on any activity after then that expressly permitted by sub-clause (iii)
above, such Subsidiary shall cease to become a Development Subsidiary.

            "DHC TAX SHARING AGREEMENT" means the tax sharing agreement among
Holdings, Company and CPIH dated as of March 10, 2004, as amended by Amendment
No. 1 thereto dated as of the Closing Date, as such agreement may be amended,
restated, supplemented or otherwise modified from time to time to the extent
permitted thereunder and under Section 6.14.

            "DOLLARS" and the sign "$" mean the lawful money of the United
States of America.

            "DOMESTIC SUBSIDIARY" means any Subsidiary of Company organized
under the laws of the United States of America, any State thereof or the
District of Columbia.

            "ELIGIBLE ASSIGNEE" means (i) any Lender, any Affiliate of any
Lender and any Related Fund (any two or more Related Funds being treated as a
single Eligible Assignee for all purposes hereof), and (ii) any commercial bank,
insurance company, investment or mutual fund or other entity that is an
"accredited investor" (as defined in Regulation D under the Securities Act) and
which extends credit or buys loans as one of its businesses; provided, that in
the case of any assignee of any Revolving Commitment, such Person extends credit
on a revolving basis as one of its businesses and provided, further, no
Affiliate of Company or Holdings shall be an Eligible Assignee.

            "EMPLOYEE BENEFIT PLAN" means any "employee benefit plan" as defined
in Section 3(3) of ERISA which is or was sponsored, maintained or contributed to
by, or required to be contributed by, Company, any of its Subsidiaries or any of
their respective ERISA Affiliates.

            "ENVIRONMENTAL CLAIM" means any investigation, notice of violation,
claim, action, suit, proceeding, demand, abatement order or other order or
directive, by any Governmental Authority or any other Person, arising (i)
pursuant to or in connection with any actual or alleged violation of any
Environmental Law; (ii) in connection with any Release or threatened Release of
Hazardous Material; or (iii) in connection with any actual or alleged damage,
injury, threat or harm to health, safety, natural resources or the environment.

            "ENVIRONMENTAL LAWS" means any and all current or future foreign or
domestic, federal or state (or any subdivision of either of them), statutes,
ordinances, orders, rules, regulations, judgments, Governmental Authorizations,
or any other requirements of Governmental Authorities relating to (i)
environmental matters, including those relating to any Release or threatened
Release of Hazardous Materials; (ii) the generation, use, storage,
transportation, treatment, processing, removal, remediation or disposal of
Hazardous Materials; or (iii) occupational safety and health, industrial
hygiene, land use or the protection of human,

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<PAGE>

plant or animal health or welfare, in any manner applicable to Company or any of
its Subsidiaries or any Facility.

            "ERISA" means the Employee Retirement Income Security Act of 1974,
as amended from time to time, and any successor thereto.

            "ERISA AFFILIATE" means, as applied to any Person, (i) any
corporation which is a member of a controlled group of corporations within the
meaning of Section 414(b) of the Internal Revenue Code of which that Person is a
member; (ii) any trade or business (whether or not incorporated) which is a
member of a group of trades or businesses under common control within the
meaning of Section 414(c) of the Internal Revenue Code of which that Person is a
member; and (iii) any member of an affiliated service group within the meaning
of Section 414(m) or (o) of the Internal Revenue Code of which that Person, any
corporation described in clause (i) above or any trade or business described in
clause (ii) above is a member. Any former ERISA Affiliate of Company or any of
its Subsidiaries shall continue to be considered an ERISA Affiliate of Company
or any such Subsidiary within the meaning of this definition with respect to the
period such entity was an ERISA Affiliate of Company or such Subsidiary and with
respect to liabilities arising after such period for which Company or such
Subsidiary could be liable under the Internal Revenue Code or ERISA.

            "ERISA EVENT" means (i) a "reportable event" within the meaning of
Section 4043 of ERISA and the regulations issued thereunder with respect to any
Pension Plan (excluding those for which the provision for 30-day notice to the
PBGC has been waived by regulation); (ii) the failure to meet the minimum
funding standard of Section 412 of the Internal Revenue Code with respect to any
Pension Plan (whether or not waived in accordance with Section 412(d) of the
Internal Revenue Code) or the failure to make by its due date a required
installment under Section 412(m) of the Internal Revenue Code with respect to
any Pension Plan or the failure to make any required contribution to a
Multiemployer Plan; (iii) the provision by the administrator of any Pension Plan
pursuant to Section 4041(a)(2) of ERISA of a notice of intent to terminate such
plan in a distress termination described in Section 4041(c) of ERISA; (iv) the
withdrawal by Company, any of its Subsidiaries or any of their respective ERISA
Affiliates from any Pension Plan with two or more contributing sponsors or the
termination of any such Pension Plan resulting in liability to Company, any of
its Subsidiaries or any of their respective Affiliates pursuant to Section 4063
or 4064 of ERISA; (v) the institution by the PBGC of proceedings to terminate
any Pension Plan, or the occurrence of any event or condition which might
constitute grounds under ERISA for the termination of, or the appointment of a
trustee to administer, any Pension Plan; (vi) the imposition of liability on
Company, any of its Subsidiaries or any of their respective ERISA Affiliates
pursuant to Section 4062(e) or 4069 of ERISA or by reason of the application of
Section 4212(c) of ERISA; (vii) the withdrawal of Company, any of its
Subsidiaries or any of their respective ERISA Affiliates in a complete or
partial withdrawal (within the meaning of Sections 4203 and 4205 of ERISA) from
any Multiemployer Plan if there is any potential material liability therefore,
or the receipt by Company, any of its Subsidiaries or any of their respective
ERISA Affiliates of notice from any Multiemployer Plan that it is in
reorganization or insolvency pursuant to Section 4241 or 4245 of ERISA, or that
it intends to terminate or has terminated under Section 4041A or 4042 of ERISA;
(viii) the occurrence of an act or omission which could give rise to the
imposition on Company, any of its Subsidiaries or any of their respective ERISA
Affiliates of fines, penalties, taxes or related charges under

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Chapter 43 of the Internal Revenue Code or under Section 409, Section 502(c),
(i) or (l), or Section 4071 of ERISA in respect of any Employee Benefit Plan;
(ix) the assertion of a material claim (other than routine claims for benefits)
against any Employee Benefit Plan other than a Multiemployer Plan or the assets
thereof, or against Company, any of its Subsidiaries or any of their respective
ERISA Affiliates in connection with any Employee Benefit Plan; (x) receipt from
the Internal Revenue Service of notice of the failure of any Pension Plan (or
any other Employee Benefit Plan intended to be qualified under Section 401(a) of
the Internal Revenue Code) to qualify under Section 401(a) of the Internal
Revenue Code, or the failure of any trust forming part of any Pension Plan to
qualify for exemption from taxation under Section 501(a) of the Internal Revenue
Code; or (xi) the imposition of a Lien pursuant to Section 401(a)(29) or 412(n)
of the Internal Revenue Code or pursuant to ERISA with respect to any Pension
Plan.

            "EURODOLLAR RATE LOAN" means a Loan bearing interest at a rate
determined by reference to the Adjusted Eurodollar Rate.

            "EVENT OF DEFAULT" means each of the conditions or events set forth
in Section 8.1.

            "EXCESS CASH FLOW" means, for any Fiscal Year of Company, an amount
equal to:

                  (a) Adjusted Company Operating Cash Flow for such Fiscal Year,
                  (calculated by adding Adjusted Company Operating Cash Flow for
                  four Fiscal Quarters of such Fiscal Year, as set forth in the
                  Compliance Certificate for each such Fiscal Quarter); less

                  (b) (to the extent otherwise reflected in (a) above) the sum
                  (determined without duplication) of:

                        (i) payments in respect of Company Cash Interest Expense
                        made by Company during the Fiscal Year;

                        (ii) any payment (other than voluntary prepayments and
                        prepayments made pursuant to Section 2.14(e)) of
                        principal of Company Total Debt; and

                        (iii) (A) Investments constituting intercompany loans
                        permitted under Sections 6.1(d), (e) (other than
                        subsections (i)(A), (i)(B) and (i)(D) thereof) and (t),
                        and (B) Investments incurred pursuant to Sections
                        6.7(g), (j) and (n)(ii).

            "EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended
from time to time, and any successor statute.

            "EXCLUDED ASSET SALES" means the collective reference to (i) any
sale or discount, in each case without recourse, of notes or accounts receivable
arising in the ordinary course of business, but only in connection with the
compromise or collection thereof or to resolve disputes that occur in the
ordinary course of business, (ii) any exchange of specific items of equipment

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between Company and any of its Subsidiaries or among any Subsidiaries of
Company, so long as the purpose of each such exchange is to acquire replacement
items of equipment which are the functional equivalent of the item of equipment
so exchanged, (iii) disposals of obsolete, worn out or surplus property in the
ordinary course of business, (iv) the sale, lease, license, transfer or other
disposition of equipment, materials and other tangible assets by Company or any
Subsidiary of Company to any Subsidiary of Company; provided, however, that the
aggregate fair market value of all such equipment, materials and other tangible
assets sold, leased, licensed, transferred or otherwise disposed of pursuant to
this clause (iv) does not exceed $5,000,000 in any Fiscal Year or $10,000,000 in
the aggregate since the Closing Date, (v) sales of other assets for aggregate
consideration of less than $500,000 with respect to any transaction or series of
related transactions and less than $2,000,000 in the aggregate and (vi) any
license (other than an exclusive license) of intellectual property owned by
Company or its Subsidiaries in the ordinary course of business at fair market
value, if any.

            "EXCLUDED SUBSIDIARY" means each (i) Domestic Subsidiary of Company
or of any Subsidiary of Company for which becoming a Credit Party would
constitute a violation of (a) a Contractual Obligation existing on the Closing
Date or thereafter, a bona fide Contractual Obligation (the prohibition
contained in which was not entered into in contemplation of this provision), in
favor of a Person (other than Company or any of its Subsidiaries or Affiliates)
for which the required consents have not been obtained or (b) applicable law
affecting such Subsidiary, provided, that any such Subsidiary of Company or of
another Subsidiary shall cease to be covered under this clause at such time as
such Subsidiary's becoming a Credit Party would no longer constitute a violation
of such Contractual Obligation or applicable law, whether as a result of
obtaining the required consents or otherwise and (ii) each Domestic Subsidiary
of Company identified on Schedule 1.1(b)-1. The Excluded Subsidiaries, as of the
Closing Date, by virtue of clause (i), above, are listed on Schedule 1.1(b)-2.

            "EXISTING INDEBTEDNESS" means the Indebtedness under (i) that
certain Credit Agreement dated as of March 10, 2004 among Covanta Energy
Corporation, Bank of America, N.A., as Administrative Agent, Deutsche Bank
Securities, Inc., as Documentation Agent, Bank of America, N.A. and Deutsche
Bank Securities, Inc., as Co-Lead Arrangers, (ii) that certain Credit Agreement
dated as of March 10, 2004 among Covanta Power International Holdings, Inc. and
Deutsche Bank AG, New York Branch, as Administrative Agent, (iii) that certain
Credit Agreement dated as of March 10, 2004 among Covanta Power International
Holdings, Inc. and Bank of America, N.A., as Administrative Agent, Deutsche Bank
Securities, Inc., as Documentation Agent, Bank of America, N.A. and Deutsche
Bank Securities, Inc., as Co-Lead Arrangers, (iv) that certain Credit Agreement
dated as of March 10, 2004 among Covanta Energy Corporation and Bank One, N.A.,
as Administrative Agent, (v) that certain Indenture, dated as of March 10, 2004,
among Covanta Energy Corporation and the guarantors named therein and U.S. Bank
Trust National Association as Trustee in respect of the 8.25% Senior Secured
Notes due 2011, (vi) the Indenture, dated as of March 10, 2004, between Covanta
Energy Corporation and U.S. Bank Trust National Association as Trustee in
respect of the 7.5% Subordinated Unsecured Notes due 2012 and (vii) the Amended
and Restated Credit Agreement dated as of May 1, 2003 among American Ref-Fuel
Company LLC and Citicorp North America, Inc, as Administrative Agent and (viii)
the Reimbursement Agreements relating to the ARC Equity Contribution Agreement
Letters of Credit with Hypobank.

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            "EXISTING LETTERS OF CREDIT" means those letters of credit, listed
on Schedule 1.1(c), outstanding on the Closing Date under, (i) that certain
Credit Agreement dated as of March 10, 2004 among Covanta Energy Corporation,
JPMorgan Chase Bank, N.A., as successor by merger to Bank One, N.A., as
Administrative Agent, and (ii) that certain Credit Agreement dated as of March
10, 2004 among Covanta Energy Corporation, Bank of America, N.A., as
Administrative Agent, Deutsche Bank Securities, Inc., as Documentation Agent,
Bank of America, N.A. and Deutsche Bank Securities, Inc., as Co-Lead Arrangers.

            "EXPANSION" means, with respect to any Project related to Company's
and its Subsidiaries waste disposal business in the United States of America in
existence as of the date hereof, additions or improvements to the existing
facilities of such Projects.

            "FACILITY" means any real property (including all buildings,
fixtures or other improvements located thereon) now, hereafter or heretofore
owned, leased, operated or used by Company or any of its Subsidiaries or any of
their respective predecessors or Affiliates of Company, any of its Subsidiaries,
or any such predecessors.

            "FAIR SHARE CONTRIBUTION AMOUNT" as defined in Section 7.2.

            "FAIR SHARE" as defined in Section 7.2.

            "FEDERAL FUNDS EFFECTIVE RATE" means for any day, the rate per annum
(expressed, as a decimal, rounded upwards, if necessary, to the next higher
1/100 of 1%) equal to the weighted average of the rates on overnight Federal
funds transactions with members of the Federal Reserve System arranged by
Federal funds brokers on such day, as published by the Federal Reserve Bank of
New York on the Business Day next succeeding such day; provided, (i) if such day
is not a Business Day, the Federal Funds Rate for such day shall be such rate on
such transactions on the next preceding Business Day as so published on the next
succeeding Business Day, and (ii) if no such rate is so published on such next
succeeding Business Day, the Federal Funds Rate for such day shall be the
average of the quotations received by Administrative Agent from three federal
funds broker of recognized standing selected by Administrative Agent.

            "FINANCIAL PLAN" as defined in Section 5.1(i).

            "FIRST PRIORITY" means, with respect to any Lien purported to be
created in any Collateral pursuant to any Collateral Document, that such Lien is
the only Lien to which such Collateral is subject, other than any Permitted
Lien.

            "FISCAL QUARTER" means a fiscal quarter of any Fiscal Year.

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

            "FLOOD HAZARD PROPERTY" means any Real Estate Asset subject to a
Mortgage in favor of Collateral Agent, for the benefit of the Lenders, and
located in an area designated by the Federal Emergency Management Agency as
having special flood or mud slide hazards.

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            "FOREIGN SUBSIDIARY" means any Subsidiary that is not a Domestic
Subsidiary. The Foreign Subsidiaries of Company, as of the Closing Date, are
listed on Schedule 1.1(d).

            "FUNDED LC ISSUING BANK" means initially each of JPMC and UBS and
thereafter with respect to any Funded Letter of Credit, any Lender (including
any Person who is a Lender as of the Closing Date but subsequently, after
agreeing to become a Funded LC Issuing Bank, ceases to be a Lender) which, at
the request of Company, and with the consent of Administrative Agent (not to be
unreasonably withheld), agrees in such Lender's sole discretion to become a
Funded LC Issuing Bank for the purposes of issuing such Funded Letter of Credit,
together with its permitted successors and assigns in such capacity.

            "FUNDED LC PARTICIPATION INTERESTS" means the right of any Funded
Letter of Credit Participant to receive any payments contemplated by this
Agreement in respect of such Funded Letter of Credit Participant's Pro Rata
Share of the Credit Linked Deposits in accordance with this Agreement.

            "FUNDED LETTER OF CREDIT" as defined in Section 2.4(b).

            "FUNDED LETTER OF CREDIT COMMITMENT" means the commitment of a
Lender to make or otherwise fund a Credit Linked Deposit and "FUNDED LETTER OF
CREDIT COMMITMENTS" means such commitments of all Lenders in the aggregate. The
amount of each Lender's Funded Letter of Credit Commitment, if any, is set forth
on Appendix A-3 or in the applicable Assignment Agreement, subject to any
adjustment or reduction pursuant to the terms and conditions hereof. The
aggregate amount of the Funded Letter of Credit Commitments as of the Closing
Date is $340,000,000.

            "FUNDED LETTER OF CREDIT COMMITMENT PERIOD" means the period from
the Closing Date to but excluding the Funded Letter of Credit Termination Date.

            "FUNDED LETTER OF CREDIT EXPOSURE" means with respect to any Lender,
at any time, the sum of (a) the amount of any Unpaid Drawings in respect of
which payments from such Lender's Credit Linked Deposit have been made (or were
required to be made) to a Funded LC Issuing Bank pursuant to Section 2.4(f) at
such time and (b) such Lender's Pro Rata Share of the Funded Letters of Credit
Outstanding at such time (excluding the portion thereof consisting of Unpaid
Drawings in respect of which payments from such Lender's Credit Linked Deposit
have been made (or were required to be made) to a Funded LC Issuing Bank
pursuant to Section 2.4(f)); provided that at any time when the Funded Letters
of Credit Outstanding is zero, the Funded Letter of Credit Exposure of any
Lender shall be equal to such Lender's Funded Letter of Credit Commitment.

            "FUNDED LETTER OF CREDIT FEE" as defined in Section 2.11(b)(i).

            "FUNDED LETTER OF CREDIT PARTICIPANT" means each Lender having a
Funded Letter of Credit Commitment.

            "FUNDED LETTER OF CREDIT PARTICIPATION" as defined in Section
2.4(h).

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            "FUNDED LETTER OF CREDIT TERMINATION DATE" means the earliest to
occur of (i) August 31, 2005, if the Term Loans are not made on or before that
date; (ii) the seventh anniversary of the Closing Date; (iii) the date on which
the Credit Linked Deposits have been reduced to zero pursuant to Section
2.13(b)(iii); and (iv) the date of the termination of the Funded Letter of
Credit Commitments pursuant to Section 8.1.

            "FUNDED LETTERS OF CREDIT OUTSTANDING" means at any time, the sum
of, without duplication, (a) the aggregate Stated Amount of all outstanding
Funded Letters of Credit and (b) the aggregate amount of all Unpaid Drawings in
respect of all Funded Letters of Credit.

            "FUNDING DEFAULT" as defined in Section 2.22.

            "FUNDING GUARANTORS" as defined in Section 7.2.

            "FUNDING NOTICE" means a notice substantially in the form of Exhibit
A-1.

            "GAAP" means, subject to the limitations on the application thereof
set forth in Section 1.2, United States generally accepted accounting principles
in effect as of the date of determination thereof.

            "GOVERNMENTAL ACTS" means any act or omission, whether rightful or
wrongful, of any present or future de jure or de facto government or
Governmental Authority.

            "GOVERNMENTAL AUTHORITY" means any federal, state, municipal,
national or other government, governmental department, commission, board,
bureau, court, agency or instrumentality, political subdivision or any entity or
officer thereof exercising executive, legislative, judicial, regulatory or
administrative functions of any government or any court, in each case whether
associated with a state of the United States, the United States, or a foreign
entity or government.

            "GOVERNMENTAL AUTHORIZATION" means any permit, license,
authorization, plan, directive, consent order or consent decree of or from any
Governmental Authority.

            "GRANTOR" as defined in the Pledge and Security Agreement.

            "GSCP" as defined in the preamble hereto.

            "GUARANTEED OBLIGATIONS" as defined in Section 7.1.

            "GUARANTOR" means Holdings and each Domestic Subsidiary of Company
(other than Excluded Subsidiaries).

            "GUARANTOR SUBSIDIARY" means each Guarantor other than Holdings.

            "GUARANTY" means the guaranty of each Guarantor set forth in Section
7.

            "HAZARDOUS MATERIALS" means any chemical, material or substance,
exposure to which is prohibited, limited or regulated by any Governmental
Authority or which may or could

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                                       20
<PAGE>

pose a hazard to the health and safety of the owners, occupants or any Persons
in the vicinity of any Facility or to the indoor or outdoor environment.

            "HEDGE AGREEMENT" means (i) an Interest Rate Agreement or a Currency
Agreement entered into with a Lender Counterparty in order to satisfy the
requirements of this Agreement or otherwise in the ordinary course of Company's
or any of its Subsidiaries' businesses or (ii) a forward agreement or
arrangement designed to hedge against fluctuation in electricity rates
pertaining to electricity produced by a Project, so long as the contractual
arrangements relating to such Project contemplate that Company or its
Subsidiaries shall deliver such electricity to third parties.

            "HIGHEST LAWFUL RATE" means the maximum lawful interest rate, if
any, that at any time or from time to time may be contracted for, charged, or
received under the laws applicable to any Lender which are presently in effect
or, to the extent allowed by law, under such applicable laws which may hereafter
be in effect and which allow a higher maximum nonusurious interest rate than
applicable laws now allow.

            "HISTORICAL FINANCIAL STATEMENTS" means (x) for the purposes of
Section 1.2 hereof, the audited financial statements of Holdings and Company as
at December 31, 2004, consisting of balance sheets and the related consolidated
statements of income, stockholders' equity and cash flows for such Fiscal Years
then ended, together with such changes to accounting principles and policies as
Holdings and Company may make during their 2005 Fiscal Year in connection with
the consolidating of the Acquired Business, which changes are concurred with by
their independent public accountant and (y) for all other purposes as of the
Closing Date, (i) the audited financial statements of Holdings and Company for
the immediately preceding three Fiscal Years, and the audited financial
statements of the Acquired Business for the fiscal year ending December 31, 2004
consisting of balance sheet and the related consolidated statements of income,
stockholders' equity and cash flows for such Fiscal Years, and (ii) the
unaudited financial statements of Holdings, Company and the Acquired Business as
at the most recently ended Fiscal Quarter (if any) ending after the date of the
most recent financial statements referenced in clause (i) hereof, consisting of
a balance sheet and the related consolidated statements of income, stockholders'
equity and cash flows for the three-, six-or nine-month period, as applicable,
ending on such date, and, in the case of clauses (i) and (ii), (with respect to
the financial statements of Holdings and Company) certified by the chief
financial officer or chief accounting officer of Company that they fairly
present, in all material respects, the financial condition of Holdings and
Company and the Acquired Business at the dates indicated and the results of
their operations and their cash flows for the periods ended. as indicated,
subject to changes resulting from audit and year-end adjustments.

            "HOLDINGS" as defined in the preamble hereto.

            "HOLDINGS PLEDGE AGREEMENT" means the Pledge Agreement to be
executed by Holdings in favor of the Collateral Agent on the Closing Date
substantially in the form of Exhibit I-2, as it may be amended, supplemented or
otherwise modified from time to time.

            "INCREASED-COST LENDERS" as defined in Section 2.23.

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            "INDEBTEDNESS", as applied to any Person, means, without
duplication, (i) all indebtedness for borrowed money; (ii) that portion of
obligations with respect to Capital Leases that is properly classified as a
liability on a balance sheet in conformity with GAAP; (iii) notes payable and
drafts accepted representing extensions of credit whether or not representing
obligations for borrowed money; (iv) any obligation owed for all or any part of
the deferred purchase price of property or services (excluding trade payables
incurred in the ordinary course of business, having a term of less than 12
months and payable in accordance with customary trade practices), which purchase
price is due more than six months from the date of incurrence of the obligation
in respect thereof; (v) all Indebtedness secured by any Lien on any property or
asset owned or held by that Person regardless of whether the Indebtedness
secured thereby shall have been assumed by that Person or is nonrecourse to the
credit of that Person; (vi) the face amount of any letter of credit issued for
the account of that Person or as to which that Person is otherwise liable for
reimbursement of drawings; (vii) the direct or indirect guaranty, endorsement
(otherwise than for collection or deposit in the ordinary course of business),
co-making, discounting with recourse or sale with recourse by such Person of the
obligation of another; (viii) any obligation of such Person the primary purpose
or intent of which is to provide assurance to an obligee that the obligation of
the obligor thereof will be paid or discharged, or any agreement relating
thereto will be complied with, or the holders thereof will be protected (in
whole or in part) against loss in respect thereof; (ix) any liability of such
Person for an obligation of another through any agreement (contingent or
otherwise) (a) to purchase, repurchase or otherwise acquire such obligation or
any security therefor, or to provide funds for the payment or discharge of such
obligation (whether in the form of loans, advances, stock purchases, capital
contributions or otherwise) or (b) to maintain the solvency or any balance sheet
item, level of income or financial condition of another if, in the case of any
agreement described under subclauses (a) or (b) of this clause (ix), the primary
purpose or intent thereof is as described in clause (viii) above; and (x) all
obligations of such Person in respect of any exchange traded or over the counter
derivative transaction, including, without limitation, any Interest Rate
Agreement and Currency Agreement (and Hedge Agreements that protect against
fluctuations in electricity rates), whether entered into for hedging or
speculative purposes; provided, in no event shall obligations under any Interest
Rate Agreement and any Currency Agreement be deemed "Indebtedness" for any
purpose under Section 6.8.

            "INDEMNIFIED LIABILITIES" means, collectively, any and all
liabilities, obligations, losses, damages (including natural resource damages),
penalties, claims (including Environmental Claims), reasonable out-of-pocket
costs (including the costs of any investigation, study, sampling, testing,
abatement, cleanup, removal, remediation or other response action necessary to
remove, remediate, clean up or abate any Release or threatened Release of
Hazardous Materials), and reasonable out-of-pocket expenses of any kind or
nature whatsoever (including the reasonable fees and disbursements of counsel
for Indemnitees in connection with any investigative, administrative or judicial
proceeding commenced or threatened by any Person, whether or not any such
Indemnitee shall be designated as a party or a potential party thereto, and any
fees or expenses incurred by Indemnitees in enforcing this indemnity), whether
direct, indirect or consequential and whether based on any federal, state or
foreign laws, statutes, rules or regulations (including securities and
commercial laws, statutes, rules or regulations and Environmental Laws), on
common law or equitable cause or on contract or otherwise, that may be imposed
on or incurred by any such Indemnitee, in any manner relating to or arising out
of (i) this Agreement or the other Credit Documents or the transactions
contemplated hereby or

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                                       22
<PAGE>

thereby (including the Lenders' agreement to make the Credit Extensions or the
use or intended use of the proceeds thereof, or any enforcement of any of the
Credit Documents (including any sale of, collection from, or other realization
upon any of the Collateral or the enforcement of the Guaranty)); (ii) the
statements contained in the commitment letter delivered by any Lender to
Holdings with respect to the transactions contemplated by this Agreement; or
(iii) any Environmental Claim or any Release or threatened Release of Hazardous
Materials arising from any past or present activity, operation, land ownership,
or practice of Company or any of its Subsidiaries, except to the extent, in any
such case, that any liability, obligation, loss, damage, penalty, claim, costs,
expense or disbursement results from the gross negligence, willful misconduct or
bad faith of such Indemnified Person.

            "INDEMNITEE" as defined in Section 10.3.

            "INSTALLMENT" as defined in Section 2.12.

            "INSTALLMENT DATE" as defined in Section 2.12.

            "INSURANCE DEPOSIT AMOUNT" as defined in Section 3.1(o).

            "INSURANCE PREMIUM FINANCERS" means Persons who are non-Affiliates
of Company that advance insurance premiums for Company and its Subsidiaries
pursuant to Insurance Premium Financing Arrangements.

            "INSURANCE PREMIUM FINANCING ARRANGEMENTS" means, collectively, such
agreements with Insurance Premium Financers pursuant to which such Insurance
Premium Financers advance insurance premiums for Company and its Subsidiaries.
Such Insurance Premium Financing Arrangements (i) shall provide for the benefit
of such Insurance Premium Financers a security interest in no property of
Company or any of its Subsidiaries other than gross unearned premiums for the
insurance policies and related rights, (ii) shall not purport to prohibit any
portion of the Liens created in favor of Collateral Agent (for the benefit of
Secured Parties) pursuant to the Collateral Documents, and (iii) shall not
contain any provision or contemplate any transaction prohibited by this
Agreement and shall otherwise be in form and substance reasonably satisfactory
to Administrative Agent.

            "INSURANCE REGULATORY ACCOUNT" as defined in Section 3.1(o).

            "INSURANCE SUBSIDIARIES" means Danielson Indemnity Company and its
Subsidiaries.

            "INTERCOMPANY MASTER NOTE" means a promissory note evidencing
Indebtedness of Company and each of its Subsidiaries which (a) to the extent the
Indebtedness evidenced thereby is owed to any Credit Party, is pledged pursuant
to the Collateral Documents, and (b) to the extent the Indebtedness evidenced
thereby is owed by a Subsidiary of Company, is senior Indebtedness of such
Subsidiary (except to the extent that requiring such Indebtedness to be senior
would breach a Contractual Obligation binding on such Subsidiary), except that
any such Indebtedness owed by any Credit Party to any Subsidiary which is not a
Credit Party shall be unsecured and subordinated in right of payment to the
payment in full of the Obligations pursuant to the terms of such note.

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            "INTERCREDITOR AGREEMENT" means an Intercreditor Agreement
substantially in the form of Exhibit K, as it may be amended, supplemented or
otherwise modified from time to time.

            "INTEREST PAYMENT DATE" means with respect to (i) any Base Rate
Loan, each March 31, June 30, September 30 and December 31 of each year,
commencing on the first such date to occur after the Closing Date and the final
maturity date of such Loan; and (ii) any Eurodollar Rate Loan, the last day of
each Interest Period applicable to such Loan; provided, in the case of each
Interest Period of longer than three months "Interest Payment Date" shall also
include each date that is three months, or an integral multiple thereof, after
the commencement of such Interest Period.

            "INTEREST PERIOD" means, (i) in connection with a Eurodollar Rate
Loan, an interest period of one-, two-, three- or six-months, as selected by
Company in the applicable Funding Notice or Conversion/Continuation Notice, (a)
initially, commencing on the Credit Date or Conversion/Continuation Date
thereof, as the case may be; and (b) thereafter, commencing on the day on which
the immediately preceding Interest Period expires and (ii) in connection with a
Credit Linked Deposit, each period, the first commencing on or following the
Closing Date in accordance with Section 2.4(j)(ii) and thereafter commencing on
the day on which the immediately preceding Interest Period expires and ending on
the numerically corresponding day in the calendar month that is three months
thereafter; provided that a single Interest Period shall at all times apply to
all Credit Linked Deposits; provided, in each case (1) if an Interest Period
would otherwise expire on a day that is not a Business Day, such Interest Period
shall expire on the next succeeding Business Day unless no further Business Day
occurs in such month, in which case such Interest Period shall expire on the
immediately preceding Business Day; (2) any Interest Period that begins on the
last Business Day of a calendar month (or on a day for which there is no
numerically corresponding day in the calendar month at the end of such Interest
Period) shall, subject to clauses (3) and (4) of this definition, end on the
last Business Day of a calendar month; (3) no Interest Period with respect to
any portion of Term Loan shall extend beyond the Term Loan Maturity Date, and
(4) no Interest Period with respect to any portion of the Revolving Loans shall
extend beyond the Revolving Commitment Termination Date.

            "INTEREST RATE AGREEMENT" means any interest rate swap agreement,
interest rate cap agreement, interest rate collar agreement, interest rate
hedging agreement or other similar agreement or arrangement, each of which is
for the purpose of hedging the interest rate exposure associated with Company's
and its Subsidiaries' operations and not for speculative purposes.

            "INTEREST RATE DETERMINATION DATE" means, with respect to any
Interest Period, the date that is two Business Days prior to the first day of
such Interest Period.

            "INTERNAL REVENUE CODE" means the Internal Revenue Code of 1986, as
amended to the date hereof and from time to time hereafter, and any successor
statute.

            "INVESTMENT" means (i) any direct or indirect purchase or other
acquisition by Company or any of its Subsidiaries of, or of a beneficial
interest in, any of the Securities of any other Person (other than a Guarantor
Subsidiary); (ii) any direct or indirect redemption,

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retirement, purchase or other acquisition for value, by any Subsidiary of
Company from any Person (other than Company or any Guarantor Subsidiary), of any
Capital Stock of such Person; (iii) any direct or indirect loan, advance (other
than advances to employees for moving, relocation, business, entertainment and
travel expenses, drawing accounts and similar expenditures in the ordinary
course of business) or capital contribution by Company or any of its
Subsidiaries to any other Person (other than Company or any Guarantor
Subsidiary), including all Indebtedness and accounts receivable from that other
Person but only to the extent that the same are not current assets or did not
arise from sales to that other Person in the ordinary course of business and
(iv) Commodities Agreements not constituting Hedge Agreements. The amount of any
Investment shall be the original cost of such Investment plus the cost of all
additions thereto, without any adjustments for increases or decreases in value,
or write-ups, write-downs or write-offs with respect to such Investment.

            "ISSUANCE NOTICE" means an Issuance Notice substantially in the form
of Exhibit A-3.

            "ISSUING BANK" means each of a Funded LC Issuing Bank and a
Revolving Issuing Bank.

            "JOINT LEAD ARRANGERS" as defined in the preamble hereto.

            "JOINT VENTURE" means a joint venture, partnership or other similar
arrangement, whether in partnership or other legal form.

            "JPMC" as defined in the preamble hereto.

            "LENDER" means each financial institution listed on the signature
pages hereto as a Lender, and any other Person that becomes a party hereto
pursuant to an Assignment Agreement.

            "LENDER COUNTERPARTY" means each Joint Lead Arranger, each Lender or
any Affiliate of a Lender counterparty to a Hedge Agreement (including any
Person who is a Lender (and any Affiliate thereof) as of the Closing Date but
subsequently, whether before or after entering into a Hedge Agreement, ceases to
be a Lender) including, without limitation, each such Affiliate that enters into
a joinder agreement with Collateral Agent.

            "LETTER OF CREDIT" means a Revolving Letter of Credit or a Funded
Letter of Credit.

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

            "LIMITED RECOURSE DEBT" means, with respect to any Subsidiary of
Company, Indebtedness of such Subsidiary with respect to which the recourse of
the holder or obligee of such Indebtedness is limited to (i) assets associated
with the Project (which in any event shall not include assets held by any
Guarantor Subsidiary other than a Guarantor Subsidiary, if any, whose

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sole business is the ownership and/or operation of such Project and
substantially all of whose assets are associated with such Project) in respect
of which such Indebtedness was incurred and/or (ii) such Subsidiary or the
equity interests in such Subsidiary, but in the case of clause (ii) only if such
Subsidiary's sole business is the ownership and/or operation of such Project and
substantially all of such Subsidiary's assets are associated with such Project.
For purposes of this Agreement, Indebtedness of a Subsidiary of Company shall
not fail to be Limited Recourse Debt solely by virtue of the fact that the
holders of such Limited Recourse Debt have recourse to Company or another
Subsidiary of Company pursuant to a contingent obligation supporting such
Limited Recourse Debt or a Performance Guaranty, so long as such contingent
obligation or Performance Guaranty is unsecured and permitted under Section 6.1.

            "LOAN" means a Term Loan, a Revolving Loan, and a Swing Line Loan.

            "MARGIN STOCK" as defined in Regulation U of the Board of Governors
of the Federal Reserve System as in effect from time to time.

            "MARKETABLE SECURITIES" means auction rate securities or auction
rate preferred stock having a rate reset frequency of less than ninety (90) days
and having, at the time of the acquisition thereof, a rating of at least A from
S&P or from Moody's.

            "MATERIAL ADVERSE EFFECT" means a material adverse effect on (i) the
business, operations, assets, liabilities or financial condition of Holdings and
its Subsidiaries taken as a whole; (ii) the ability of the Credit Parties as a
whole to perform their respective Obligations; (iii) the rights, remedies and
benefits available to, or conferred upon, the Secured Parties under any Credit
Document.

            "MATERIAL CONTRACT" means any contract or other arrangement to which
Company or any of its Subsidiaries is a party (other than the Credit Documents,
the Second Lien Credit Agreement and Second Lien Notes Indenture, the MSW
Indenture, the MSW Refinancing Indenture, the New MSW Indenture, the ARC
Indenture, the ARC Refinancing Indenture, the New ARC Indenture and the
principal agreements and instruments entered into in connection with any
refinancing thereof) for which breach, nonperformance, cancellation or failure
to renew could reasonably be expected to have a Material Adverse Effect.

            "MATERIAL REAL ESTATE ASSET" means any fee-owned Real Estate Asset
having a fair market value in excess of $2,000,000 as of the date of the
acquisition thereof .

            "MATERIAL SUBSIDIARY" means, with respect to any Person, any
Subsidiary of such Person now existing or hereafter acquired or formed by such
Person which, on a consolidated basis for such Subsidiary and all of its
Subsidiaries, (i) for the most recent fiscal year of such Person accounted for
more than 2% of the consolidated revenues of such Person and its Subsidiaries,
or (ii) as at the end of such fiscal year, was the owner of more than 2% of the
consolidated assets of such Person and its Subsidiaries.

            "MOODY'S" means Moody's Investor Services, Inc.

            "MORTGAGE" means a Mortgage substantially in the form of Exhibit J,
as it may be amended, supplemented or otherwise modified from time to time.

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            "MSW I" means MSW Energy Holdings LLC, a Delaware corporation, and
MSW Energy Finance Co., Inc. "MSW II" means MSW Energy Holdings II LLC, a
Delaware corporation, and MSW Energy Finance Co. II, Inc.

            "MSW I INDENTURE" means that certain Indenture in respect of the
Series A and Series B 8 1/2% Senior Secured Notes due 2010, dated as of June 25,
2003, among MSW Energy Holdings LLC, MSW Energy Finance Co., Inc., the
guarantors named therein and Wells Fargo Bank Minnesota, National Association,
as trustee, as such indenture may be further amended, restated, supplemented,
refinanced, replaced or modified from time to time in accordance with Section
6.15.

            "MSW II INDENTURE" means that certain Indenture in respect of the
Series A and Series B 7 3/8% Senior Secured Notes due 2010, dated as of November
24, 2003, among MSW Energy Holdings II LLC, MSW Energy Finance Co. II, Inc., the
guarantors named therein and Wells Fargo Bank Minnesota, National Association,
as trustee, as such indenture may be further amended, restated, supplemented,
refinanced, replaced or modified from time to time in accordance with Section
6.15.

            "MSW I NOTES" means the Series A and Series B 8 1/2% Senior Secured
Notes due 2010 of MSW I.

            "MSW II NOTES" means the Series A and Series B 7 3/8% Senior Secured
Notes due 2010 of MSW II.

            "MSW INDENTURES" means the MSW I Indenture and the MSW II Indenture.

            "MSW NOTES" means the MSW I Notes and the MSW II Notes.

            "MSW PUT-RELATED COSTS" means any principal, premium, accrued
interest, fees, costs and expenses (in each case to the date of redemption in
respect of the notes redeemed) owed by MSW I and/or MSW II to holders of the MSW
Notes in connection with any valid exercise of the mandatory redemption right
arising from the Acquisition.

            "MSW REFINANCING INDENTURE" means a trust indenture in form and
substance reasonably satisfactory to Administrative Agent pursuant to which any
MSW Refinancing Notes may be issued in accordance with the terms of this
Agreement, as such indenture may be further amended, restated, supplemented,
modified, extended, renewed or replaced from time to time in accordance with
Section 6.15 of this Agreement.

            "MSW REFINANCING NOTES" as defined in Section 6.1(n).

            "MULTIEMPLOYER PLAN" means any Employee Benefit Plan which is a
"multiemployer plan" as defined in Section 3(37) of ERISA.

            "NAIC" means The National Association of Insurance Commissioners,
and any successor thereto.

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            "NET ASSET SALE PROCEEDS" means, with respect to any Asset Sale, an
amount equal to: (i) Cash payments (including any Cash received by way of
deferred payment pursuant to, or by monetization of, a note receivable or
otherwise, but only as and when so received) received by Company or any of its
Subsidiaries from such Asset Sale, minus (ii) any bona fide direct costs
incurred in connection with such Asset Sale (or if such costs have not then been
incurred or invoiced, Company's good faith estimate thereof), including (a)
income or gains taxes payable by the seller as a result of any gain recognized
in connection with such Asset Sale, (b) payment of the outstanding principal
amount of, premium or penalty, if any, and interest on any Indebtedness (other
than the Loans and, to the extent permitted under the Intercreditor Agreement,
the Second Lien Term Loans and the Second Lien Notes) that is secured by a Lien
on the stock or assets in question and that is required to be repaid under the
terms thereof as a result of such Asset Sale, (c) other taxes actually payable
(to the extent actually subsequently so paid) upon or in connection with the
closing of such Asset Sale (including any transfer taxes or taxes on gross
receipts), (d) any taxes payable or reasonably estimated to be payable in
connection with any transactions effected (or deemed effected) to make
prepayments (e.g., taxes payable upon repatriation of funds from Subsidiaries),
(e) actual, reasonable and documented out-of-pocket fees and expenses (including
legal fees, fees to advisors and severance costs that are due (pursuant to a
Contractual Obligation, or pursuant to a written employment policy applicable to
terminated employees generally, of Company or any of its Subsidiaries in effect
prior to such Asset Sale or pursuant to applicable law) and payable to employees
of Company and its Subsidiaries that are terminated as a result thereof) paid to
Persons other than Company and its Subsidiaries and their respective Affiliates
in connection with such Asset Sale (including fees necessary to obtain any
required consents of such Persons to such Asset Sale), (f) a reasonable reserve
for any indemnification payments (fixed or contingent) attributable to seller's
indemnities and representations and warranties to purchaser in respect of such
Asset Sale undertaken by Company or any of its Subsidiaries in connection with
such Asset Sale and (g) amounts required to be paid to holders of "Allowed Class
6 Claims" (as such term is defined in the Plan of Reorganization) and other
entitled claimants with respect to the "CPIH Participation Interest" (as such
term is defined in the Plan of Reorganization) in an aggregate amount not to
exceed $4,000,000; provided, however, that Net Asset Sale Proceeds shall be
reduced in an amount equal to the amount of proceeds Subsidiaries of Company are
legally bound or required, pursuant to (i) agreements in effect on the Closing
Date, or which were entered into after the Closing Date with respect to the
financing or acquisition of a Project, and/or (ii) the ARC Indenture, ARC
Refinancing Indenture, New ARC Indenture, the MSW Indentures, MSW Refinancing
Indentures or the New MSW Indentures to use for prepayment thereunder (including
any premium, penalty and interest due in connection with such prepayment).

            "NET INSURANCE/CONDEMNATION PROCEEDS" means an amount equal to: (i)
any Cash payments or proceeds received by Company or any of its Subsidiaries (a)
under any casualty insurance policy in respect of a covered loss thereunder
(other than payments for business interruption) occurring after the Closing Date
or (b) as a result of the taking of any assets of Company or any of its
Subsidiaries by any Person pursuant to the power of eminent domain, condemnation
or otherwise, or pursuant to a sale of any such assets to a purchaser with such
power under threat of such a taking, minus (ii) (a) any actual and reasonable
costs incurred by Company or any of its Subsidiaries in connection with the
adjustment or settlement of any claims of Company or such Subsidiary in respect
thereof, and (b) any bona fide direct costs

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incurred in connection with any adjustment or settlement or any such sale as
referred to in clause (i)(b) of this definition, including income taxes payable
as a result of any gain recognized in connection therewith and any actual,
reasonable and documented out-of-pocket fees and expenses (including legal fees,
fees to advisors and severance costs that are due (pursuant to a Contractual
Obligation, or pursuant to a written employment policy applicable to terminated
employees generally, of Company or any of its Subsidiaries in effect prior to
such event or pursuant to applicable law) and payable to employees of Company
and its Subsidiaries that are terminated as a result thereof) paid to Persons
other than Company and its Subsidiaries and their respective Affiliates in
connection with such event; provided, that if any costs, fees or expenses that
may be deducted under this clause (ii) have not been incurred or invoiced at the
time of any determination of Net Insurance/Condemnation Proceeds, Company may
deduct its good faith estimate thereof to the extent actually subsequently so
paid; provided, however, that Net Insurance/Condemnation Proceeds shall be
reduced in an amount equal to the amount of proceeds Subsidiaries of Company are
legally bound or required, pursuant to (i) agreements in effect on the Closing
Date, or which were entered into after the Closing Date with respect to the
financing or acquisition of a Project, and (ii) the ARC Indenture, ARC
Refinancing Indenture, New ARC Indenture, MSW Indentures, MSW Refinancing
Indentures or New MSW Indentures to use for prepayment thereunder (including any
premium, penalty and interest due in connection with such prepayment).

            "NEW ARC INDENTURE" means a trust indenture in form and substance
reasonably satisfactory to Administrative Agent pursuant to which any New ARC
Notes may be issued in accordance with the terms of this Agreement, as such
indenture may be further amended, restated, supplemented, modified, extended,
renewed or replaced from time to time in accordance with Section 6.15 of this
Agreement.

            "NEW ARC NOTES" means the notes issued by ARC LLC in accordance with
Section 6.1(n)(iii).

            "NEW MSW I INDENTURE" means a trust indenture in form and substance
reasonably satisfactory to Administrative Agent pursuant to which any New MSW I
Notes may be issued in accordance with the terms of this Agreement, as such
indenture may be further amended, restated, supplemented, modified, extended,
renewed or replaced from time to time in accordance with Section 6.15 of this
Agreement.

            "NEW MSW I NOTES" means the notes issued by MSW I in accordance with
Section 6.1(n)(ii).

            "NEW MSW II INDENTURE" means a trust indenture in form and substance
reasonably satisfactory to Administrative Agent pursuant to which any New MSW II
Notes may be issued in accordance with the terms of this Agreement, as such
indenture may be further amended, restated, supplemented, modified, extended,
renewed or replaced from time to time in accordance with Section 6.15 of this
Agreement.

            "NEW MSW II NOTES" means the notes issued by MSW II in accordance
with Section 6.1(n)(ii).

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            "NEW MSW INDENTURES" means the New MSW I Indenture and the New MSW
II Indenture.

            "NEW MSW NOTES" means the New MSW I Notes and the New MSW II Notes.

            "NEW TERM LOANS" as defined in Section 2.4(f).

            "NON-US LENDER" means (a) each Lender (or Administrative Agent) and
each Issuing Bank that is a foreign person as defined in Treasury Regulations
section 1.1441-1(c)(2) or (b) each Lender (or Administrative Agent) and each
Issuing Bank that is a wholly-owned domestic entity that is disregarded for
United States federal tax purposes under Treasury Regulations section
301.7701-2(c)(2) as an entity separate from its owner and whose single owner is
a foreign person within the meaning of Treasury Regulations section
1.1441-1(c)(2).

            "NOTE" means a Term Loan Note, a Revolving Loan Note or a Swing Line
Note.

            "NOTICE" means a Funding Notice, an Issuance Notice, or a
Conversion/Continuation Notice.

            "OBLIGATIONS" means all obligations of every nature of each Credit
Party from time to time owed to the Agents (including former Agents), the
Lenders or any of them, the Issuing Banks and Lender Counterparties, under any
Credit Document or Hedge Agreement (including, without limitation, with respect
to a Hedge Agreement, obligations owed thereunder to any person who was a Lender
or an Affiliate of a Lender at the time such Hedge Agreement was entered into),
whether for principal, interest (including interest which, but for the filing of
a petition in bankruptcy with respect to such Credit Party, would have accrued
on any Obligation, whether or not a claim is allowed against such Credit Party
for such interest in the related bankruptcy proceeding), reimbursement of
amounts drawn under Letters of Credit, payments for early termination of Hedge
Agreements, fees, expenses, indemnification or otherwise.

            "OBLIGEE GUARANTOR" as defined in Section 7.7.

            "ORGANIZATIONAL DOCUMENTS" means (i) with respect to any
corporation, its certificate or articles of incorporation or organization, as
amended, and its by-laws, as amended, (ii) with respect to any limited
partnership, its certificate of limited partnership, as amended, and its
partnership agreement, as amended, (iii) with respect to any general
partnership, its partnership agreement, as amended, and (iv) with respect to any
limited liability company, its articles of organization, as amended, and its
operating agreement, as amended. In the event any term or condition of this
Agreement or any other Credit Document requires any Organizational Document to
be certified by a secretary of state or similar governmental official, the
reference to any such "Organizational Document" shall only be to a document of a
type customarily certified by such governmental official.

            "OTHER DOMESTIC SUBSIDIARIES" means Domestic Subsidiaries of Company
other than Subsidiaries constituting part of the Acquired Business.

            "PBGC" means the Pension Benefit Guaranty Corporation or any
successor thereto.

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<PAGE>

            "PENSION PLAN" means any Employee Benefit Plan, other than a
Multiemployer Plan, which is subject to Section 412 of the Internal Revenue Code
or Section 302 of ERISA.

            "PERFORMANCE GUARANTY" means any performance guaranty agreement
entered into by Company or any of its Subsidiaries under which Company or any
such Subsidiary (i) guarantees the performance of a Subsidiary of Company under
a principal lease, service, construction or operating agreement relating to a
Project or (ii) is otherwise obligated to provide support in connection with
Projects.

            "PERMITTED ACQUISITION" means any acquisition by Company or any of
its Subsidiaries, whether by purchase, merger or otherwise, of all or
substantially all of the assets of, all of the Capital Stock of, or a business
line or unit or a division of, any Person; provided,

                  (i) immediately prior to, and after giving effect thereto, no
      Default or Event of Default shall have occurred and be continuing or would
      result therefrom;

                  (ii) all transactions in connection therewith shall be
      consummated, in all material respects, in accordance with all applicable
      laws and in conformity with all applicable Governmental Authorizations;

                  (iii) in the case of the acquisition of Capital Stock, all of
      the Capital Stock (except for any such Securities in the nature of
      directors' qualifying shares required pursuant to applicable law) acquired
      or otherwise issued by such Person or any newly formed Subsidiary of
      Company in connection with such acquisition shall be owned 100% by Company
      or a Guarantor Subsidiary thereof (except that Capital Stock Permitted
      Acquisitions, the consideration for which constitutes less than $5,000,000
      in the aggregate from the Closing Date may be made by Subsidiaries of
      Company which are not Guarantor Subsidiaries), and, to the extent a
      Guarantor Subsidiary is then acquired, Company shall have taken, or caused
      to be taken, as of the date such Person becomes a Guarantor Subsidiary of
      Company, each of the actions set forth in Sections 5.10 and/or 5.11, as
      applicable, unless, following a request by Company, such actions are not
      required by Administrative Agent;

                  (iv) Company and its Subsidiaries shall be in compliance with
      the financial covenants set forth in Section 6.8 on a pro forma basis
      after giving effect to such acquisition as of the last day of the Fiscal
      Quarter most recently ended;

                  (v) Company shall have delivered to Administrative Agent (A)
      at least 10 Business Days prior to such proposed acquisition, a Compliance
      Certificate evidencing compliance with Section 6.8 as required under
      clause (iv) above, together with all relevant financial information with
      respect to such acquired assets, including, without limitation, the
      aggregate consideration for such acquisition and any other information
      required to demonstrate compliance with Section 6.8; and

                  (vi) any Person or assets or division as acquired in
      accordance herewith (y) shall be in same business or lines of business in
      which Company and/or its Subsidiaries are engaged as of the Closing Date
      or in which Company and/or its Subsidiaries are expressly permitted
      hereunder to engage in and (z) shall have generated

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      positive cash flow for the four quarter period most recently ended prior
      to the date of such acquisition.

            "PERMITTED LIENS" means each of the Liens permitted pursuant to
Section 6.2.

            "PERSON" means and includes natural persons, corporations, limited
partnerships, general partnerships, limited liability companies, limited
liability partnerships, joint stock companies, Joint Ventures, associations,
companies, trusts, banks, trust companies, land trusts, business trusts or other
organizations, whether or not legal entities, and Governmental Authorities.

            "PHASE I ENVIRONMENTAL ASSESSMENT" means, with respect to any
Facility, a report that (i) conforms to the ASTM Standard Practice for
Environmental Site Assessments: Phase I Environmental Site Assessment Process, E
1527-00, or, if reasonably requested by Administrative Agent, the USEPA's
standards for all appropriate inquiry, (ii) was conducted no more than six
months prior to the date such report is required to be delivered hereunder, by
one or more environmental consulting firms reasonably satisfactory to
Administrative Agent, and (iii) shall expressly specify, or shall be accompanied
by a letter stating, in form and substance reasonably satisfactory to
Administrative Agent, that the report may be relied on by Administrative Agent
and the Lenders or Administrative Agent shall have received a letter so stating
in form and substance reasonably satisfactory to Administrative Agent.

            "PLAN OF REORGANIZATION" as defined in Section 6.2(t).

            "PLAN OF REORGANIZATION ACCOUNT" as defined in Section 3.1(p).

            "PLAN OF REORGANIZATION INITIAL DEPOSIT AMOUNT" as defined in
Section 3.1(p).

            "PLEDGE AND SECURITY AGREEMENT" means the Pledge and Security
Agreement to be executed by Company and each Guarantor Subsidiary on the Closing
Date substantially in the form of Exhibit I-1, as it may be amended,
supplemented or otherwise modified from time to time.

            "PRIME RATE" means the rate of interest quoted in The Wall Street
Journal Money Rates Section as the Prime Rate (currently defined as the base
rate on corporate loans posted by at least 75% of the nation's thirty (30)
largest banks), as in effect from time to time. The Prime Rate is a reference
rate and does not necessarily represent the lowest or best rate actually charged
to any customer. Administrative Agent or any other Lender may make commercial
loans or other loans at rates of interest at, above or below the Prime Rate.

            "PRINCIPAL OFFICE" means, for each of Administrative Agent, Swing
Line Lender and the Issuing Banks, such Person's "Principal Office" as set forth
on Appendix B, or such other office or office of a third party or sub-agent, as
appropriate, as such Person may from time to time designate in writing to
Company, Administrative Agent and each Lender.

            "PROJECT" means any waste-to-energy facility, waste disposal or
collection facility and facilities related or ancillary thereto, electrical
generation plant, cogeneration plant, water treatment facility or other facility
for the generation of electricity or engaged in another

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line of business in which Company and its Subsidiaries are permitted to be
engaged hereunder for which a Subsidiary or Subsidiaries of Company was, is or
will be (as the case may be) an owner, operator, manager or builder, provided,
however, that a Project shall cease to be a Project of Company and its
Subsidiaries at such time that Company or any of its Subsidiaries ceases to have
any existing or future rights or obligations (whether direct or indirect,
contingent or matured) associated therewith.

            "PROJECTIONS" as defined in Section 4.8.

            "PRO RATA SHARE" means (i) with respect to all payments,
computations and other matters relating to the Term Loan of any Lender, the
percentage obtained by dividing (a) the Term Loan Exposure of that Lender by (b)
the aggregate Term Loan Exposure of all Lenders; (ii) with respect to all
payments, computations and other matters relating to the Revolving Commitment or
Revolving Loans of any Lender or any Revolving Letters of Credit issued or
participations purchased therein by any Lender or any participations in any
Swing Line Loans purchased by any Lender, the percentage obtained by dividing
(a) the Revolving Exposure of that Lender by (b) the aggregate Revolving
Exposure of all Lenders; and (iii) with respect to all payments, computations
and other matters relating to Funded Letters of Credit or Credit Linked Deposit
or Funded Letter of Credit Participations of any Lender, the percentage obtained
by dividing (a) the Funded Letter of Credit Exposure of that Lender by (b) the
aggregate Funded Letter of Credit Exposure of all Lenders. For all other
purposes with respect to each Lender, "Pro Rata Share" means the percentage
obtained by dividing (A) an amount equal to the sum of the Term Loan Exposure,
the Revolving Exposure and Funded Letter of Credit Exposure of that Lender, by
(B) an amount equal to the sum of the aggregate Term Loan Exposure, the
aggregate Revolving Exposure and the aggregate Funded Letter of Credit Exposure
of all Lenders.

            "PUT LOANS" as defined in the Recitals.

            "PUT-RELATED EQUITY OFFERING" means the offering of preferred stock
(such securities having no mandatory redemption, repurchase, repayment or
similar requirements prior to the date which occurs six (6) months after the
Termination Date and upon which all dividends or distributions shall be payable
in additional shares of such securities) of Holdings to all or any of its
shareholders within 120 days of the Closing Date.

            "PUT-RELATED EQUITY OFFERING AGREEMENT" means the subscription
agreement, by and among Holdings and certain of its shareholders relating to the
Put-Related Equity Offering, as it may be amended, supplemented, restated or
otherwise modified from time to time in accordance with the provisions of
Section 6.14 hereof.

            "REAL ESTATE ASSET" means, at any time of determination, any
interest (fee, leasehold or otherwise) then owned by Company or any Guarantor
Subsidiary in any real property.

            "REFINANCING" as defined in the Recitals.

            "REFUNDED SWING LINE LOANS" as defined in Section 2.3(b)(iv).

            "REGISTER" as defined in Section 2.7(b).

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            "REGULATION D" means Regulation D of the Board of Governors of the
Federal Reserve System, as in effect from time to time.

            "REIMBURSEMENT DATE" as defined in Section 2.4(e).

            "RELATED AGREEMENTS" means, collectively, (i) the Stock Purchase
Agreement; (ii) the MSW Indentures, the MSW Refinancing Indentures, the ARC
Indenture, the ARC Refinancing Indenture, the New MSW Indentures and the New ARC
Indenture; (iii) the Second Lien Credit Agreement and Second Lien Notes
Indenture and all collateral documents related thereto; (iv) the Rights Offering
Agreement; (v) the Corporate Services Reimbursement Agreement; (vi) DHC Tax
Sharing Agreement; and (vii) the Put-Related Equity Offering Agreement and the
documents evidencing the terms of the preferred stock related thereto.

            "RELATED FUND" means, with respect to any Lender that is an
investment fund, any other investment fund that invests in commercial loans and
that is managed or advised by the same investment advisor as such Lender or by
an Affiliate of such investment advisor.

            "RELATED TRANSACTION COSTS" means the fees, costs and expenses
payable by Company or its Subsidiaries in connection with the Related
Transactions within 180 days of the Closing Date.

            "RELATED TRANSACTIONS" means each of (i) the issuance of the Second
Lien Notes within 120 days of the Closing Date and the use of the proceeds
thereof to prepay the Second Lien Term Loans, (ii) the issuance of New MSW
Notes, (iii) any refinancings of the MSW Notes in connection with the valid
exercise by holders of the MSW Notes of mandatory redemption rights caused by
the Acquisition (and any refinancing of any bridge loans incurred, or
remarketing of securities undertaken, in connection therewith), (iv) issuance of
New ARC Notes and (v) the Put-Related Equity Offering.

            "RELEASE" means any release, spill, emission, leaking, pumping,
pouring, injection, escaping, deposit, disposal, discharge, dispersal, dumping,
leaching or migration of any Hazardous Material into the environment (including
the abandonment or disposal of any barrels, containers or other closed
receptacles containing any Hazardous Material), including the movement of any
Hazardous Material through the air, soil, surface water or groundwater.

            "REPLACEMENT LENDER" as defined in Section 2.23.

            "REQUISITE CLASS LENDERS" means, at any time of determination, (i)
for the Class of Lenders having Term Loan Exposure, Lenders holding more than
50% of the aggregate Term Loan Exposure of all Lenders; (ii) for the Class of
Lenders having Revolving Exposure, Lenders holding more than 50% of the
aggregate Revolving Exposure of all Lenders, and (iii) for the Class of Lenders
having Funded Letter of Credit Exposure, Lenders holding more than 50% of the
aggregate Funded Letter of Credit Exposure of all Lenders.

            "REQUISITE LENDERS" means one or more Lenders having or holding Term
Loan Exposure, Revolving Exposure and Funded Letter of Credit Exposure and
representing more than 50% of the sum of (i) the aggregate Term Loan Exposure of
all Lenders, (ii) the aggregate

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Revolving Exposure of all Lenders, and (iii) the aggregate Funded Letter of
Credit Exposure of all Lenders.

            "RESTRICTED JUNIOR PAYMENT" means (i) any dividend or other
distribution, direct or indirect, on account of any shares of any class of stock
of Company now or hereafter outstanding, except a dividend payable solely in
shares of stock to the holders of that class; (ii) any redemption, retirement,
sinking fund or similar payment, purchase or other acquisition for value, direct
or indirect, of any shares of any class of stock of Company now or hereafter
outstanding; (iii) any payment made to retire, or to obtain the surrender of,
any outstanding warrants, options or other rights to acquire shares of any class
of stock of Company now or hereafter outstanding; (iv) management or similar
fees payable to Holdings or any of its Affiliates (other than Company or
Guarantor Subsidiary); (v) any payment or prepayment of principal of, premium,
if any, or interest on, redemption, purchase, retirement, defeasance (including
in-substance or legal defeasance), sinking fund or similar payment with respect
to the MSW Notes, the MSW Refinancing Notes, the New MSW Notes, any Indebtedness
outstanding under the Second Lien Credit Agreement, Second Lien Notes Indenture,
ARC Notes, ARC Refinancing Notes and the New ARC Notes and (vi) any payment or
prepayment of principal of, premium, if any, or redemption, purchase,
retirement, defeasance, sinking fund or similar payment with respect to any
Indebtedness for borrowed money of any Covanta Warren Entity (the "COVANTA
WARREN DEBT").

            "REVOLVING COMMITMENT" means the commitment of a Lender to make or
otherwise fund any Revolving Loan and to acquire participations in Revolving
Letters of Credit and Swing Line Loans hereunder and "REVOLVING COMMITMENTS"
means such commitments of all Lenders in the aggregate. The amount of each
Lender's Revolving Commitment, if any, is set forth on Appendix A-2 or in the
applicable Assignment Agreement, subject to any adjustment or reduction pursuant
to the terms and conditions hereof. The aggregate amount of the Revolving
Commitments as of the Closing Date is $100,000,000.

            "REVOLVING COMMITMENT PERIOD" means the period from the Closing Date
to but excluding the Revolving Commitment Termination Date.

            "REVOLVING COMMITMENT TERMINATION DATE" means the earliest to occur
of (i) August 31, 2005, if the Term Loans are not made on or before that date;
(ii) the sixth anniversary of the Closing Date, (iii) the date the Revolving
Commitments are permanently reduced to zero pursuant to Section 2.13(b) or 2.14,
and (iv) the date of the termination of the Revolving Commitments pursuant to
Section 8.1.

            "REVOLVING EXPOSURE" means, with respect to any Lender as of any
date of determination, (i) prior to the termination of the Revolving
Commitments, that Lender's Revolving Commitment; and (ii) after the termination
of the Revolving Commitments, the sum of (a) the aggregate outstanding principal
amount of the Revolving Loans of that Lender, (b) in the case of any Issuing
Bank, the aggregate Revolving Letter of Credit Usage in respect of all Revolving
Letters of Credit issued by that Lender (net of any participations by Lenders in
such Revolving Letters of Credit), (c) the aggregate amount of all
participations by that Lender in any outstanding Revolving Letters of Credit or
any unreimbursed drawing under any Revolving Letter of Credit, (d) in the case
of Swing Line Lender, the aggregate outstanding principal

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amount of all Swing Line Loans (net of any participations therein by other
Lenders), and (e) the aggregate amount of all participations therein by that
Lender in any outstanding Swing Line Loans.

            "REVOLVING ISSUING BANK" means with respect to any Revolving Letter
of Credit, any Lender (including any Person who is a Lender as of the Closing
Date but subsequently, after agreeing to become a Revolving Issuing Bank, ceases
to be a Lender) which, at the request of Company, and with the consent of
Administrative Agent (not to be unreasonably withheld), agrees in such Lender's
sole discretion to become a Revolving Issuing Bank for the purposes of issuing
such Revolving Letter of Credit, together with its permitted successors and
assigns in such capacity. As of the Closing Date, JPMC shall be a Revolving
Issuing Bank.

            "REVOLVING LENDER" means a Lender having a Revolving Commitment.

            "REVOLVING LETTER OF CREDIT" means a commercial or standby letter of
credit issued or to be issued by an Issuing Bank pursuant to Section 2.4(a) of
this Agreement.

            "REVOLVING LETTER OF CREDIT PARTICIPANT" as defined in Section
2.4(g).

            "REVOLVING LETTER OF CREDIT SUBLIMIT" means the lesser of (i)
$75,000,000 and (ii) the aggregate unused amount of the Revolving Commitments
then in effect.

            "REVOLVING LETTER OF CREDIT USAGE" means, as at any date of
determination, the sum of (i) the aggregate Stated Amount of all outstanding
Revolving Letters of Credit, and (ii) the aggregate amount of all drawings under
Revolving Letters of Credit honored by an Issuing Bank and not theretofore
reimbursed by or on behalf of Company.

            "REVOLVING LOAN" means a Loan made by a Lender to Company pursuant
to Section 2.2(a) and/or 2.22.

            "REVOLVING LOAN NOTE" means a promissory note in the form of Exhibit
B-2, as it may be amended, supplemented or otherwise modified from time to time.

            "RIGHTS OFFERING" means the offering of common stock of Holdings to
its shareholders on the Closing Date.

            "RIGHTS OFFERING AGREEMENT" means the subscription agreement, dated
as of the Closing Date, by and among Holdings and certain of its shareholders
relating to the Rights Offering, as it may be amended, supplemented, restated or
otherwise modified from time to time in accordance with the provisions of
Section 6.14 hereof.

            "S&P" means Standard & Poor's Ratings Group, a division of The
McGraw Hill Corporation.

            "SECOND LIEN CREDIT AGREEMENT" means the Second Lien Credit and
Guaranty Agreement dated as of the Closing Date among Company, Holdings, GSCP as
a joint lead arranger, a joint bookrunner and co-syndication agent, Credit
Suisse, as a joint lead arranger, a joint bookrunner, co-syndication agent,
administrative agent, paying agent and collateral agent

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and the other and lenders party thereto, as it may be amended, modified,
renewed, refunded, replaced or refinanced from time to time in accordance with
Section 6.16.

            "SECOND LIEN NOTES" means the Second Lien Notes to be issued under
the Second Lien Notes Indenture as they may be amended, modified, renewed,
refunded, replaced or refinanced from time to time in accordance with Section
6.16 to the extent the proceeds of such Second Lien Notes are used solely to
promptly prepay the Second Lien Term Loans in accordance with the provisions of
the Second Lien Credit Agreement.

            "SECOND LIEN NOTES INDENTURE" means the Indenture in respect of the
Second Lien Notes, between Company and the trustee thereunder as it may be
amended, modified, renewed, refunded, replaced or refinanced from time to time
in accordance with Section 6.16.

            "SECOND LIEN TERM LOANS" means the Second Lien Term Loans in an
aggregate principal amount of $400,000,000 made on the Closing Date under the
Second Lien Credit Agreement.

            "SECURED PARTIES" has the meaning assigned to that term in the
Pledge and Security Agreement.

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

            "SERIES" as defined in Section 2.4(f).

            "SECURITIES ACT" means the Securities Act of 1933, as amended from
time to time, and any successor statute.

            "SOLVENCY CERTIFICATE" means a Solvency Certificate of the chief
financial officer of Holdings substantially in the form of Exhibit G-2.

            "SOLVENT" means, with respect to any Credit Party, that as of the
date of determination, both (i) (a) the sum of such Credit Party's, debt
(including contingent liabilities) does not exceed the present fair saleable
value of such Credit Party's and its Subsidiaries, present assets; (b) such
Credit Party's capital is not unreasonably small in relation to its business as
contemplated on the Closing Date and reflected in the Projections or with
respect to any transaction contemplated or undertaken after the Closing Date;
and (c) such Person has not incurred and does not intend to incur, or believe
that it will incur, debts beyond its ability to pay such debts as they become
due (whether at maturity or otherwise); and (ii) such Person is "solvent" within
the meaning given that term and similar terms under applicable laws relating to
fraudulent transfers and conveyances. For purposes of this definition, the
amount of any contingent liability at any time shall be computed as the amount
that, in light of all of the facts and circumstances existing at such time,
represents the amount that can reasonably be expected

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to become an actual or matured liability (irrespective of whether such
contingent liabilities meet the criteria for accrual under Statement of
Financial Accounting Standard No. 5).

            "STATED AMOUNT" of any Letter of Credit shall mean the maximum
amount from time to time available to be drawn thereunder, determined without
regard to whether any conditions to drawing could then be met.

            "STOCK PURCHASE AGREEMENT" means that certain Stock Purchase
Agreement, dated as of February 1, 2005, among the Acquired Business, the
sellers party thereto and Holdings, as it may be amended, supplemented, restated
or otherwise modified from time to time in accordance with the provisions of
Section 6.14 hereof.

            "SUBSIDIARY" means, with respect to any Person, any corporation,
partnership, limited liability company, association, joint venture or other
business entity of which more than 50% of the total voting power of shares of
stock or other ownership interests entitled (without regard to the occurrence of
any contingency) to vote in the election of the Person or Persons (whether
directors, managers, trustees or other Persons performing similar functions)
having the power to direct or cause the direction of the management and policies
thereof is at the time owned or controlled, directly or indirectly, by that
Person or one or more of the other Subsidiaries of that Person or a combination
thereof; provided, in determining the percentage of ownership interests of any
Person controlled by another Person, no ownership interest in the nature of a
"qualifying share" of the former Person shall be deemed to be outstanding; and
provided further, that in no event shall any Affected Entity constitute a
Subsidiary of Company or any of its Subsidiaries for so long as such Person
remains an Affected Entity, except that with respect to the Covanta Warren
Entities at any time after any payment is made pursuant to Section 6.5(h) such
Person shall be a Subsidiary.

            "SWING LINE LENDER" means GSCP in its capacity as Swing Line Lender
hereunder, together with its permitted successors and assigns in such capacity.

            "SWING LINE LOAN" means a Loan made by the Swing Line Lender to
Company pursuant to Section 2.3.

            "SWING LINE NOTE" means a promissory note in the form of Exhibit
B-3, as it may be amended, supplemented or otherwise modified from time to time.

            "SWING LINE SUBLIMIT" means the lesser of (i) $10,000,000, and (ii)
the aggregate unused amount of Revolving Commitments then in effect.

            "TAX" means any present or future tax, levy, impost, duty,
assessment, charge, fee, deduction or withholding of any nature and whatever
called, by whomsoever, on whomsoever and wherever imposed, levied, collected,
withheld or assessed; provided, "Tax on the overall net income" of a Person
shall be construed as a reference to a tax imposed by the jurisdiction in which
that Person is organized or in which that Person's applicable principal office
(and/or, in the case of a Lender, its lending office) is located or in which
that Person (and/or, in the case of a Lender, its lending office) is deemed to
be doing business on all or part of the net income, profits or gains (whether
worldwide, or only insofar as such income, profits or

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gains are considered to arise in or to relate to a particular jurisdiction, or
otherwise) of that Person (and/or, in the case of a Lender, its applicable
lending office).

            "TERM LOAN" means a Term Loan made by a Lender to Company on the
Closing Date pursuant to Section 2.1(a) and a New Term Loan subsequently deemed
made pursuant to Section 2.4(f).

            "TERM LOAN COMMITMENT" means the commitment of a Lender to make or
otherwise fund a Term Loan and "TERM LOAN COMMITMENTS" means such commitments of
all Lenders in the aggregate. The amount of each Lender's Term Loan Commitment,
if any, is set forth on Appendix A-1 or in the applicable Assignment Agreement,
subject to any adjustment or reduction pursuant to the terms and conditions
hereof. The aggregate amount of the Term Loan Commitments as of the Closing Date
is $275,000,000.

            "TERM LOAN EXPOSURE" means, with respect to any Lender, as of any
date of determination, the outstanding principal amount of the Term Loans of
such Lender; provided, at any time prior to the making of the Term Loans, the
Term Loan Exposure of any Lender shall be equal to such Lender's Term Loan
Commitment.

            "TERM LOAN MATURITY DATE" means the earlier of (i) the seventh
anniversary of the Closing Date, and (ii) the date that all the Term Loans shall
become due and payable in full hereunder, whether by acceleration or otherwise.

            "TERM LOAN NOTE" means a promissory note in the form of Exhibit B-1,
as it may be amended, supplemented or otherwise modified from time to time.

            "TERMINATION DATE" means the first date on which (i) each Commitment
has expired or been terminated, (ii) the principal amount of all Loans and all
other Obligations then due and payable have been paid in full, (iii) all Letters
of Credit have been cancelled or have expired or have been cash collateralized
or otherwise secured to the satisfaction of the Issuing Bank thereof and (iv)
the Funded LC Issuing Banks have repurchased all outstanding Funded LC
Participation Interests with the remaining Credit Linked Deposits and deposited
such purchase price with the Administrative Agent to be repaid to the Funded
Letter of Credit Participants according to their Pro Rata Shares of the Credit
Linked Deposits.

            "TERMINATED LENDER" as defined in Section 2.23.

            "TITLE POLICY" as defined in Section 3.1(h)(iv).

            "TOTAL CREDIT LINKED DEPOSIT" means, at any time, the sum of all
Credit Linked Deposits at such time, as the same may be reduced from time to
time pursuant to Section 2.4(f) or 2.13(b)(iii).

            "TOTAL FUNDED LETTER OF CREDIT COMMITMENT" shall mean the sum of the
Funded Letter of Credit Commitments of all the Lenders.

            "TOTAL UTILIZATION OF REVOLVING COMMITMENTS" means, as at any date
of determination, the sum of (i) the aggregate principal amount of all
outstanding Revolving Loans

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(other than Revolving Loans made for the purpose of repaying any Refunded Swing
Line Loans or reimbursing an Issuing Bank for any amount drawn under any
Revolving Letter of Credit, but not yet so applied), (ii) the aggregate
principal amount of all outstanding Swing Line Loans, and (iii) the Revolving
Letter of Credit Usage.

            "TRANSACTION COSTS" means the fees, costs and expenses payable by
Company in connection with the Transactions within 180 days of the Closing Date.

            "TRANSACTIONS" means the Acquisition, the Refinancing, the entering
into this Agreement, the Second Lien Credit Agreement and the Rights Offering.

            "TREASURY REGULATIONS" means the final and temporary (but not
proposed) income tax regulations promulgated under the Internal Revenue Code, as
such regulations may be amended from time to time (including corresponding
provisions of succeeding regulations).

            "TYPE OF LOAN" means (i) with respect to either Term Loans or
Revolving Loans, a Base Rate Loan or a Eurodollar Rate Loan, and (ii) with
respect to Swing Line Loans, a Base Rate Loan.

            "UBS" as defined in the preamble hereto.

            "UCC" means the Uniform Commercial Code (or any similar or
equivalent legislation) as in effect in any applicable jurisdiction.

            "UNADJUSTED EURODOLLAR RATE COMPONENT" means that component of the
interest costs to Company in respect of a Eurodollar Rate Loan that is based
upon the rate obtained pursuant to clause (i) of the definition of Adjusted
Eurodollar Rate.

            "UNPAID DRAWING" as defined in Section 2.4(e).

      1.2. Accounting Terms. Except as otherwise expressly provided herein, all
accounting terms not otherwise defined herein shall have the meanings assigned
to them in conformity with GAAP. Financial statements and other information
required to be delivered by Company to Lenders pursuant to Sections 5.1(b) and
5.1(c) shall be prepared in accordance with GAAP (subject, in the case of
Section 5.1(b), to final year-end adjustments and the absence of footnotes) as
in effect at the time of such preparation (and delivered together with the
reconciliation statements provided for in Section 5.1(e), if applicable).
Subject to the foregoing, calculations in connection with the definitions,
covenants and other provisions used in Section 6.8 hereof shall utilize
accounting principles and policies in conformity with those used to prepare the
Historical Financial Statements. If at any time any change in GAAP would affect
the computation of any financial ratio or requirement set forth in any Credit
Document, and Company or Administrative Agent shall so request, Administrative
Agent and Company shall negotiate in good faith to amend such ratio or
requirement to preserve the original intent thereof in light of such change in
GAAP (subject to the approval of Requisite Lenders), provided that, until so
amended, such ratio or requirement shall continue to be computed in accordance
with GAAP prior to such change therein and Company shall provide to
Administrative Agent and Lenders reconciliation statements provided for in
Section 5.1(e).

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      1.3. Interpretation, etc. Any of the terms defined herein may, unless the
context otherwise requires, be used in the singular or the plural, depending on
the reference. References herein to any Section, Appendix, Schedule or Exhibit
shall be to a Section, an Appendix, a Schedule or an Exhibit, as the case may
be, hereof unless otherwise specifically provided. The use herein of the word
"include" or "including", when following any general statement, term or matter,
shall not be construed to limit such statement, term or matter to the specific
items or matters set forth immediately following such word or to similar items
or matters, whether or not no limiting language (such as "without limitation" or
"but not limited to" or words of similar import) is used with reference thereto,
but rather shall be deemed to refer to all other items or matters that fall
within the broadest possible scope of such general statement, term or matter.
The use herein of the word "issue" or "issuance" with respect to any Letter of
Credit shall be deemed to include any amendment, extension or renewal thereof.

SECTION 2. LOANS AND LETTERS OF CREDIT

      2.1. Term Loans.

            (a) Loan Commitments. Subject to the terms and conditions hereof,
each Lender severally agrees to make, on the Closing Date, a Term Loan to
Company in an amount equal to such Lender's Term Loan Commitment.

Company may make only one borrowing under the Term Loan Commitment which shall
be on the Closing Date. Any amount borrowed under this Section 2.1(a) and
subsequently repaid or prepaid may not be reborrowed. Subject to Sections
2.13(a) and 2.14, all amounts owed hereunder with respect to the Term Loans
shall be paid in full no later than the Term Loan Maturity Date. Each Lender's
Term Loan Commitment shall terminate immediately and without further action on
the Closing Date after giving effect to the funding of such Lender's Term Loan
Commitment on such date.

            (b) Borrowing Mechanics for Term Loans.

                  (i) Company shall deliver to Administrative Agent a fully
   executed Funding Notice no later than one day prior to the Closing Date.
   Promptly upon receipt by Administrative Agent of such Certificate,
   Administrative Agent shall notify each Lender of the proposed borrowing.

                  (ii) Each Lender shall make its Term Loan available to
   Administrative Agent not later than 12:00 p.m. (New York City time) on the
   Closing Date, by wire transfer of same day funds in Dollars, at the Principal
   Office designated by Administrative Agent. Upon satisfaction or waiver of the
   conditions precedent specified herein, Administrative Agent shall make the
   proceeds of the Term Loans available to Company on the Closing Date by
   causing an amount of same day funds in Dollars equal to the proceeds of all
   such Loans received by Administrative Agent from Lenders to be credited to
   the account of Company at the Principal Office designated by Administrative
   Agent or to such other account as may be designated in writing to
   Administrative Agent by Company.

      2.2. Revolving Loans.

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            (a) Revolving Commitments. During the Revolving Commitment Period,
subject to the terms and conditions hereof, each Lender severally agrees to make
Revolving Loans to Company in an aggregate amount up to but not exceeding such
Lender's Revolving Commitment; provided, that after giving effect to the making
of any Revolving Loans in no event shall the Total Utilization of Revolving
Commitments exceed the Revolving Commitments then in effect. Amounts borrowed
pursuant to this Section 2.2(a) may be repaid and reborrowed during the
Revolving Commitment Period. Each Lender's Revolving Commitment shall expire on
the Revolving Commitment Termination Date and all Revolving Loans and all other
amounts owed hereunder with respect to the Revolving Loans and the Revolving
Commitments shall be paid in full no later than such date.

            (b) Borrowing Mechanics for Revolving Loans.

                  (i) Except pursuant to Section 2.4(d), Revolving Loans that
   are Base Rate Loans shall be made in an aggregate minimum amount of $500,000
   and integral multiples of $250,000 in excess of that amount, and Revolving
   Loans that are Eurodollar Rate Loans shall be in an aggregate minimum amount
   of $500,000 and integral multiples of $250,000 in excess of that amount.

                  (ii) Whenever Company desires that Lenders make Revolving
   Loans, Company shall deliver to Administrative Agent a fully executed and
   delivered Funding Notice no later than 10:00 a.m. (New York City time) at
   least three Business Days in advance of the proposed Credit Date in the case
   of a Eurodollar Rate Loan, and at least one Business Day in advance of the
   proposed Credit Date in the case of a Revolving Loan that is a Base Rate
   Loan. Except as otherwise provided herein, a Funding Notice for a Revolving
   Loan that is a Eurodollar Rate Loan shall be irrevocable on and after the
   related Interest Rate Determination Date, and Company shall be bound to make
   a borrowing in accordance therewith.

                  (iii) Notice of receipt of each Funding Notice in respect of
   Revolving Loans, together with the amount of each Lender's Pro Rata Share
   thereof, if any, together with the applicable interest rate, shall be
   provided by Administrative Agent to each applicable Lender by telefacsimile
   or electronic transmission means with reasonable promptness, but (provided
   Administrative Agent shall have received such notice by 10:00 a.m. (New York
   City time)) not later than 2:00 p.m. (New York City time) on the same day as
   Administrative Agent's receipt of such Notice from Company.

                  (iv) Each Lender shall make the amount of its Revolving Loan
   available to Administrative Agent not later than 12:00 p.m. (New York City
   time) on the applicable Credit Date by wire transfer of same day funds in
   Dollars, at the Principal Office designated by Administrative Agent. Except
   as provided herein, upon satisfaction or waiver of the conditions precedent
   specified herein, Administrative Agent shall make the proceeds of such
   Revolving Loans available to Company on the applicable Credit Date by causing
   an amount of same day funds in Dollars equal to the proceeds of all such
   Revolving Loans received by Administrative Agent from Lenders to be credited
   to the account of Company as may be designated in writing to Administrative
   Agent by Company.

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      2.3. Swing Line Loans.

            (a) Swing Line Loans Commitments. During the Revolving Commitment
Period, subject to the terms and conditions hereof, Swing Line Lender hereby
agrees to make Swing Line Loans to Company in the aggregate amount up to but not
exceeding the Swing Line Sublimit; provided, that after giving effect to the
making of any Swing Line Loan, in no event shall the Total Utilization of
Revolving Commitments exceed the Revolving Commitments then in effect. Amounts
borrowed pursuant to this Section 2.3 may be repaid and reborrowed during the
Revolving Commitment Period. Swing Line Lender's Revolving Commitment shall
expire on the Revolving Commitment Termination Date and all Swing Line Loans and
all other amounts owed hereunder with respect to the Swing Line Loans and the
Revolving Commitments shall be paid in full no later than such date.

            (b) Borrowing Mechanics for Swing Line Loans.

                  (i) Swing Line Loans shall be made in an aggregate minimum
   amount of $500,000 and integral multiples of $250,000 in excess of that
   amount.

                  (ii) Whenever Company desires that Swing Line Lender make a
   Swing Line Loan, Company shall deliver to Administrative Agent a Funding
   Notice no later than 12:00 p.m. (New York City time) on the proposed Credit
   Date.

                  (iii) Swing Line Lender shall make the amount of its Swing
   Line Loan available to Administrative Agent not later than 2:00 p.m.(New York
   City time) on the applicable Credit Date by wire transfer of same day funds
   in Dollars, at Administrative Agent's Principal Office. Except as provided
   herein, upon satisfaction or waiver of the conditions precedent specified
   herein, Administrative Agent shall make the proceeds of such Swing Line Loans
   available to Company on the applicable Credit Date by causing an amount of
   same day funds in Dollars equal to the proceeds of all such Swing Line Loans
   received by Administrative Agent from Swing Line Lender to be credited to the
   account of Company as may be designated in writing to Administrative Agent by
   Company.

                  (iv) With respect to any Swing Line Loans which have not been
   voluntarily prepaid by Company pursuant to Section 2.13, Swing Line Lender
   may at any time in its sole and absolute discretion, deliver to
   Administrative Agent (with a copy to Company), no later than 11:00 a.m. (New
   York City time) at least one Business Day in advance of the proposed Credit
   Date, a notice (which shall be deemed to be a Funding Notice given by
   Company) requesting that each Lender holding a Revolving Commitment make
   Revolving Loans that are Base Rate Loans to Company on such Credit Date in an
   amount equal to the amount of such Swing Line Loans (the "REFUNDED SWING LINE
   LOANS") outstanding on the date such notice is given which Swing Line Lender
   requests Lenders to prepay. Anything contained in this Agreement to the
   contrary notwithstanding, (1) the proceeds of such Revolving Loans made by
   the Lenders other than Swing Line Lender shall be immediately delivered by
   Administrative Agent to Swing Line Lender (and not to Company) and applied to
   repay a corresponding portion of the Refunded Swing Line Loans and (2) on the
   day such Revolving Loans are made, Swing Line Lender's Pro Rata Share of the
   Refunded Swing Line Loans shall be deemed to be paid with the proceeds of a
   Revolving Loan made by Swing Line

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   Lender to Company, and such portion of the Swing Line Loans deemed to be so
   paid shall no longer be outstanding as Swing Line Loans and shall no longer
   be due under the Swing Line Note of Swing Line Lender but shall instead
   constitute part of Swing Line Lender's outstanding Revolving Loans to Company
   and shall be due under the Revolving Loan Note issued by Company to Swing
   Line Lender. Company hereby authorizes Administrative Agent and Swing Line
   Lender to charge Company's accounts with Administrative Agent and Swing Line
   Lender (up to the amount available in each such account) in order to
   immediately pay Swing Line Lender the amount of the Refunded Swing Line Loans
   to the extent of the proceeds of such Revolving Loans made by Lenders,
   including the Revolving Loans deemed to be made by Swing Line Lender, are not
   sufficient to repay in full the Refunded Swing Line Loans. If any portion of
   any such amount paid (or deemed to be paid) to Swing Line Lender should be
   recovered by or on behalf of Company from Swing Line Lender in bankruptcy, by
   assignment for the benefit of creditors or otherwise, the loss of the amount
   so recovered shall be ratably shared among all Lenders in the manner
   contemplated by Section 2.17.

                  (v) If for any reason Revolving Loans are not made pursuant to
   Section 2.3(b)(iv) in an amount sufficient to repay any amounts owed to Swing
   Line Lender in respect of any outstanding Swing Line Loans on or before the
   third Business Day after demand for payment thereof by Swing Line Lender,
   each Lender holding a Revolving Commitment shall be deemed to, and hereby
   agrees to, have purchased a participation in such outstanding Swing Line
   Loans, and in an amount equal to its Pro Rata Share of the applicable unpaid
   amount together with accrued interest thereon. Upon one Business Day's notice
   from Swing Line Lender, each Lender holding a Revolving Commitment shall
   deliver to Swing Line Lender an amount equal to its respective participation
   in the applicable unpaid amount in same day funds at the Principal Office of
   Swing Line Lender. In order to evidence such participation each Lender
   holding a Revolving Commitment agrees to enter into a participation agreement
   at the request of Swing Line Lender in form and substance reasonably
   satisfactory to Swing Line Lender. In the event any Lender holding a
   Revolving Commitment fails to make available to Swing Line Lender the amount
   of such Lender's participation as provided in this paragraph, Swing Line
   Lender shall be entitled to recover such amount on demand from such Lender
   together with interest thereon for three Business Days at the rate
   customarily used by Swing Line Lender for the correction of errors among
   banks and thereafter at the Base Rate, as applicable.

                  (vi)  Notwithstanding anything contained herein to the
   contrary, (1) each Lender's obligation to make Revolving Loans for the
   purpose of repaying any Refunded Swing Line Loans pursuant to the second
   preceding paragraph and each Lender's obligation to purchase a participation
   in any unpaid Swing Line Loans pursuant to the immediately preceding
   paragraph shall be absolute and unconditional and shall not be affected by
   any circumstance, including without limitation (A) any set-off, counterclaim,
   recoupment, defense or other right which such Lender may have against Swing
   Line Lender, any Credit Party or any other Person for any reason whatsoever;
   (B) the occurrence or continuation of a Default or Event of Default; (C) any
   adverse change in the business, operations, properties, assets, condition
   (financial or otherwise) or prospects of any Credit Party; (D) any breach of
   this Agreement or any other Credit Document by any party thereto; or (E) any
   other circumstance, happening or event whatsoever, whether or not similar to
   any of the foregoing;

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      provided that such obligations of each Lender are subject to the condition
      that Swing Line Lender believed in good faith that all conditions under
      Section 3.2 to the making of the applicable Refunded Swing Line Loans or
      other unpaid Swing Line Loans, were satisfied at the time such Refunded
      Swing Line Loans or unpaid Swing Line Loans were made, or the satisfaction
      of any such condition not satisfied had been waived by the Requisite
      Lenders prior to or at the time such Refunded Swing Line Loans or other
      unpaid Swing Line Loans were made; and (2) Swing Line Lender shall not be
      obligated to make any Swing Line Loans (A) if it has elected not to do so
      after the occurrence and during the continuation of a Default or Event of
      Default or (B) at a time when a Funding Default exists unless Swing Line
      Lender has entered into arrangements satisfactory to it and Company to
      eliminate Swing Line Lender's risk with respect to the Defaulting Lender's
      participation in such Swing Line Loan, including by cash collateralizing
      such Defaulting Lender's Pro Rata Share of the outstanding Swing Line
      Loans.

            2.4. Issuance of Letters of Credit and Purchase of Participations
      Therein.

            (a) Revolving Letters of Credit. During the Revolving Commitment
Period, subject to the terms and conditions hereof, each Revolving Issuing Bank
agrees to issue Revolving Letters of Credit for the account of Company and for
the benefit of Company or any of its Subsidiaries in the aggregate amount up to
but not exceeding the Revolving Letter of Credit Sublimit; provided, (i) each
Revolving Letter of Credit shall be denominated in Dollars; (ii) the Stated
Amount of each Revolving Letter of Credit shall not be less than $5,000 or such
lesser amount as is acceptable to the applicable Revolving Issuing Bank; (iii)
after giving effect to such issuance, in no event shall the Total Utilization of
Revolving Commitments exceed the Revolving Commitments then in effect; (iv)
after giving effect to such issuance, in no event shall the Revolving Letter of
Credit Usage exceed the Revolving Letter of Credit Sublimit then in effect; (v)
in no event shall any standby Revolving Letter of Credit have an expiration date
later than the earlier of (1) the date that is five (5) Business Days prior to
the Revolving Commitment Termination Date and (2) the date which is one year
from the date of issuance of such standby Revolving Letter of Credit; (vi) in no
event shall any commercial Revolving Letter of Credit (x) have an expiration
date later than the earlier of (1) the Revolving Loan Commitment Termination
Date and (2) the date which is 180 days from the date of issuance of such
commercial Revolving Letter of Credit or (y) be issued if such commercial
Revolving Letter of Credit is otherwise unacceptable to the applicable Revolving
Issuing Bank in its reasonable discretion, and (vii) regarding Revolving Letters
of Credit issued by JPMC, the same shall be subject to the terms of letter of
credit documentation executed by Company in connection therewith (it being
agreed and understood that in the event of any conflict or inconsistency between
the provisions of such documentation and the provisions of this Agreement, the
provisions of this Agreement shall govern and control in all respects). Subject
to the foregoing, a Revolving Issuing Bank may agree that a standby Revolving
Letter of Credit will automatically be extended for one or more successive
periods each not to exceed one year each, unless such Revolving Issuing Bank
elects not to extend for any such additional period; provided, a Revolving
Issuing Bank shall not extend any such Revolving Letter of Credit if it has
received written notice from Administrative Agent not to do so and that an Event
of Default has occurred and is continuing at the time such Revolving Issuing
Bank must elect to allow such extension; provided, further, in the event a
Funding Default exists, a Revolving Issuing Bank shall not be required to issue
any Revolving Letter of Credit unless Revolving Issuing Bank has entered into
arrangements reasonably

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satisfactory to it and Company to eliminate such Revolving Issuing Bank's risk
with respect to the participation in Revolving Letters of Credit of the
Defaulting Lender, including by cash collateralizing such Defaulting Lender's
Pro Rata Share of the Revolving Letter of Credit Usage.

            (b) Funded Letters of Credit. Subject to and upon the terms and
conditions herein set forth, at any time and from time to time on and after the
Closing Date and during the Funded Letter of Credit Commitment Period, Company
may request that a Funded LC Issuing Bank issue for the account of Company a
commercial or standby letter of credit or letters of credit under the Funded
Letter of Credit Commitment (each, a "FUNDED LETTER OF CREDIT"), provided that
each Funded Letter of Credit shall be used by Company solely to support the
obligations of Company and its Subsidiaries under Projects and other Contractual
Obligations of Company and its Subsidiaries and for other general corporate uses
of Company and its Subsidiaries. Notwithstanding the foregoing, (i) each Funded
Letter of Credit shall be denominated in Dollars; (ii) the Stated Amount of each
Funded Letter of Credit shall not be less than $5,000 or such lesser amount as
is acceptable to such Funded LC Issuing Bank issuing the same; (iii) no Funded
Letter of Credit shall be issued the Stated Amount of which, (x) when added to
all other Funded Letters of Credit Outstanding at such time, would exceed the
Total Funded Letter of Credit Commitment or the Total Credit Linked Deposit then
in effect (with such Funded LC Issuing Bank being entitled to rely on a
certificate from Company as to this item) or (y) when added to all other Funded
Letters of Credit Outstanding at such time issued by such Funded LC Issuing
Bank, would exceed the amount corresponding to such Funded LC Issuing Bank that
is set forth in Schedule 1.1(c) (as each amount may be adjusted pursuant to
Section 2.4(n)) or the amount of the Credit Linked Deposits held by such Funded
LC Issuing Bank at such time; (iv) in no event shall any standby Funded Letter
of Credit have an expiration date later than the earlier of (1) the date that is
five (5) Business Days prior to the Funded Letter of Credit Termination Date and
(2) (other than in respect of Detroit Letters Of Credit, which shall initially
and upon each renewal thereof, each be available for a term of up to three years
and thirty-five days) the date which is one year from the date of issuance of
such standby Funded Letter of Credit; (v) in no event shall any commercial
Funded Letter of Credit (x) have an expiration date later than the earlier of
(1) the Funded Letter of Credit Termination Date and (2) the date which is 180
days from the date of issuance of such commercial Funded Letter of Credit or (y)
be issued if such commercial Funded Letter of Credit is otherwise unacceptable
to such Funded LC Issuing Bank in its reasonable discretion; (vi) the Letters of
Credit specified on Schedule 1.1(c)(1) shall in accordance with Section 2.4(m)
be deemed Funded Letters of Credit issued by JPMC and the Letters of Credit
specified on Schedule 1.1(c)(2) shall be deemed Funded Letters of Credit issued
by UBS, each in its capacity as a Funded LC Issuing Bank hereunder; and (vii)
regarding Funded Letters of Credit issued by JPMC, the same shall be subject to
the terms of letter of credit documentation executed by Company in connection
therewith (it being agreed and understood that in the event of any conflict or
inconsistency between the provisions of such documentation and the provisions of
this Agreement, the provisions of this Agreement shall govern and control in all
respects). Subject to the foregoing, a Funded LC Issuing Bank may (but shall not
be obligated to) agree that a standby Funded Letter of Credit will automatically
be extended for one or more successive periods not to exceed one year each
(other than in respect of Detroit Letters Of Credit), unless such Funded LC
Issuing Bank elects not to extend for any such additional period; provided, a
Funded LC Issuing Bank shall not extend any such Funded Letter of Credit if it
has received written notice that an Event of Default has occurred and is
continuing at the time such Funded LC Issuing Bank must elect to

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allow such extension. The Total Funded Letter of Credit Commitment shall
terminate on the Funded Letter of Credit Termination Date.

            (c) Notice of Issuance. Whenever Company desires the issuance of a
Letter of Credit, it shall deliver to Administrative Agent and to the relevant
Issuing Bank, an Issuance Notice no later than 12:00 p.m. (New York City time)
at least three Business Days (in the case of standby letters of credit) or five
Business Days (in the case of commercial letters of credit), or in each case
such shorter period as may be agreed to by an Issuing Bank in any particular
instance, in advance of the proposed date of issuance. Upon satisfaction or
waiver of the conditions set forth in Section 3.2, an Issuing Bank shall issue
the requested Letter of Credit only in accordance with such Issuing Bank's
standard operating procedures. Upon the issuance of any Revolving Letter of
Credit or amendment or modification to a Revolving Letter of Credit, the
applicable Issuing Bank shall promptly notify each Revolving Lender of such
issuance, which notice shall be accompanied by a copy of such Revolving Letter
of Credit or amendment or modification to a Revolving Letter of Credit and the
amount of such Revolving Lender's respective participation in such Revolving
Letter of Credit pursuant to Section 2.4(g). Upon the issuance of any Funded
Letter of Credit or amendment or modification to a Funded Letter of Credit, the
applicable Funded LC Issuing Bank shall promptly notify the Administrative Agent
of such issuance and the Administrative Agent shall notify each Funded Letter of
Credit Participant of such issuance, which notice shall be accompanied by a copy
of such Funded Letter of Credit or amendment or modification to a Funded Letter
of Credit and the amount of such Funded Letter of Credit Participant's
respective participation in such Funded Letter of Credit pursuant to Section
2.4(h).

            (d) Responsibility of Issuing Banks With Respect to Requests for
Drawings and Payments. In determining whether to honor any drawing under any
Letter of Credit by the beneficiary thereof, such Issuing Bank shall be
responsible only to examine the documents delivered under such Letter of Credit
with reasonable care so as to ascertain whether they appear on their face to be
in accordance with the terms and conditions of such Letter of Credit. As between
Company and such Issuing Bank, Company assumes all risks of the acts and
omissions of, or misuse of the Letters of Credit issued by such Issuing Bank, by
the respective beneficiaries of such Letters of Credit. In furtherance and not
in limitation of the foregoing, but subject to the first sentence of this
subsection (d), such Issuing Bank shall not be responsible for: (i) the form,
validity, sufficiency, accuracy, genuineness or legal effect of any document
submitted by any party in connection with the application for and issuance of
any such Letter of Credit, even if it should in fact prove to be in any or all
respects invalid, insufficient, inaccurate, fraudulent or forged; (ii) the
validity or sufficiency of any instrument transferring or assigning or
purporting to transfer or assign any such Letter of Credit or the rights or
benefits thereunder or proceeds thereof, in whole or in part, which may prove to
be invalid or ineffective for any reason; (iii) failure of the beneficiary of
any such Letter of Credit to comply fully with any conditions required in order
to draw upon such Letter of Credit; (iv) errors, omissions, interruptions or
delays in transmission or delivery of any messages, by mail, cable, telegraph,
telex or otherwise, whether or not they be in cipher; (v) errors in
interpretation of technical terms; (vi) any loss or delay in the transmission or
otherwise of any document required in order to make a drawing under any such
Letter of Credit or of the proceeds thereof; (vii) the misapplication by the
beneficiary of any such Letter of Credit of the proceeds of any drawing under
such Letter of Credit; or (viii) any consequences arising from causes beyond the
control of such Issuing Bank, including any Governmental Acts; none of the above
shall affect or impair, or prevent the vesting

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of, any of such Issuing Bank's rights or powers hereunder. Without limiting the
foregoing and in furtherance thereof, any action taken or omitted by such
Issuing Bank under or in connection with the Letters of Credit or any documents
and certificates delivered thereunder, if taken or omitted in good faith, shall
not give rise to any liability on the part of such Issuing Bank to Company.
Notwithstanding anything to the contrary contained in this Section 2.4(d),
Company shall retain any and all rights it may have against an Issuing Bank for
any liability arising solely out of the gross negligence or willful misconduct
of such Issuing Bank.

            (e) Reimbursement by Company of Amounts Drawn or Paid Under Letters
of Credit. (i) In the event an Issuing Bank has determined to honor a drawing
under a Letter of Credit (each such amount so paid until reimbursed, an "UNPAID
DRAWING"), it shall promptly notify Company and Administrative Agent, and
Company may reimburse such Issuing Bank on or before the Business Day
immediately following the date on which such notice of such drawing is provided
(the "REIMBURSEMENT DATE") in an amount in Dollars and in same day funds equal
to the amount of such honored drawing; provided, anything contained herein to
the contrary notwithstanding, (i) unless Company shall have notified
Administrative Agent and such Issuing Bank prior to 10:00 a.m. (New York City
time) on or before the Business Day immediately following the date such drawing
is honored that Company intends to reimburse such Issuing Bank for the amount of
such honored drawing with funds other than the proceeds of Revolving Loans with
respect to any Revolving Letter of Credit, Company shall be deemed, in the case
of any Revolving Letters of Credit, to have given a timely Funding Notice to
Administrative Agent requesting Lenders to make Revolving Loans that are Base
Rate Loans on the Reimbursement Date in an amount in Dollars equal to the amount
of such honored drawing, and (ii) provided no Event of Default under Sections
8.1(a), (f) or (g) shall have occurred and be continuing, Lenders shall, on the
Reimbursement Date, make Revolving Loans that are Base Rate Loans in the amount
of such honored drawing, the proceeds of which shall be applied directly by
Administrative Agent to reimburse such Revolving Issuing Bank for the amount of
such honored drawing; and provided further, if for any reason proceeds of
Revolving Loans are not received by such Revolving Issuing Bank on the
Reimbursement Date in an amount equal to the amount of such honored drawing,
Company shall reimburse such Revolving Issuing Bank, on demand, in an amount in
same day funds equal to the excess of the amount of such honored drawing over
the aggregate amount of such Revolving Loans, if any, which are so received.
Nothing in this Section 2.4(e) shall be deemed to relieve any Lender from its
obligation to make Revolving Loans on the terms and conditions set forth herein,
and Company shall retain any and all rights it may have against any Lender
resulting from the failure of such Lender to make such Revolving Loans under
this Section 2.4(e).

            (f) Repayment by Funded Letter of Credit Participants of Amounts
Drawn or Paid Under Funded Letters of Credit. In the event that a Funded LC
Issuing Bank makes any payment under any Funded Letter of Credit and Company
shall not have repaid such amount in full to such Funded LC Issuing Bank
pursuant to Section 2.4(e), such Funded LC Issuing Bank shall notify
Administrative Agent and Administrative Agent shall notify each Funded Letter of
Credit Participant of such failure, and such Funded LC Issuing Bank shall apply
from the Credit Linked Deposits held by such Funded LC Issuing Bank toward the
reimbursement of such payment each Funded Letter of Credit Participant's Pro
Rata Share of such unreimbursed payment from the Credit Linked Deposit Account
held by such Funded LC Issuing Bank. In the event a Funded LC Issuing Bank
applies the Credit Linked Deposits held by such Funded LC

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Issuing Bank to an unreimbursed disbursement under a Funded Letter of Credit
pursuant to the preceding sentence, Company shall have the right, one time only
following the Closing Date (provided no Default or Event of Default shall have
occurred and be continuing), within 5 Business Days of the Reimbursement Date,
to pay over to Administrative Agent in reimbursement thereof an amount equal to
the full amount of such unreimbursed disbursement, and such payment shall be
applied by Administrative Agent in accordance with clause (ii) of the
immediately following sentence. Promptly following receipt by Administrative
Agent of any payment by Company in respect of any disbursement under a Funded
Letter of Credit, Administrative Agent shall distribute such payment (i) to the
Funded LC Issuing Bank that issued such Funded Letters of Credit or (ii) subject
to the immediately preceding sentence, to the extent payments have been made
from the Credit Linked Deposits, to the Credit Linked Deposit Account with
respect to such Funded Letter of Credit to be added to the Credit Linked
Deposits held by such Funded LC Issuing Bank. Company acknowledges that each
payment made pursuant to this paragraph in respect of any unreimbursed payment
is required to be made for the benefit of the Funded LC Issuing Bank indicated
in the immediately preceding sentence. Provided no Event of Default under
Section 8.1(f) or (g) shall have occurred and be continuing, any payment made
from the Credit Linked Deposit Account (except to the extent of a one-time
repayment by Company within 5 Business Days of the Reimbursement Date as
expressly permitted above) pursuant to this paragraph to reimburse a Funded LC
Issuing Bank for any unreimbursed payment shall be deemed an extension of Term
Loans made on such date by the Funded Letter of Credit Participants ratably in
accordance with their Pro Rata Share of the Total Credit Linked Deposit, and the
amount so funded shall permanently reduce the Total Credit Linked Deposit; any
amount so funded pursuant to this paragraph shall, on and after the funding date
thereof, be deemed to be Term Loans for all purposes hereunder and have the same
terms as other Terms Loans hereunder (such deemed Term Loan, a "NEW TERM LOAN").
Any New Term Loans deemed made on the same day shall be designated a separate
series (a "SERIES") of New Term Loans for all purposes of this Agreement. In the
event that Company is required to reimburse a Funded LC Issuing Bank for any
disbursement under a Funded Letter of Credit issued by such Funded LC Issuing
Bank, for a period of 91 days following such reimbursement payment by Company,
the Funded Letter of Credit Exposures shall be deemed to include (as if such
Funded Letter of Credit were still outstanding) for purposes of determining
availability for the issuance of any new Funded Letter of Credit during such
period, the amount of such reimbursement payment until the end of such 91-day
period.

            (g) Lenders' Purchase of Participations in Revolving Letters of
Credit. Immediately upon the issuance of each Revolving Letter of Credit, each
Lender having a Revolving Commitment (each, a "REVOLVING LETTER OF CREDIT
PARTICIPANT") shall be deemed to have purchased, and hereby agrees to
irrevocably purchase, from the applicable Revolving Issuing Bank a participation
in such Revolving Letter of Credit and any drawings honored thereunder in an
amount equal to such Lender's Pro Rata Share (with respect to the Revolving
Commitments) of the maximum amount which is or at any time may become available
to be drawn thereunder. In the event that Company shall fail for any reason to
reimburse a Revolving Issuing Bank as provided in Section 2.4(e), such Revolving
Issuing Bank shall promptly notify each Revolving Letter of Credit Participant
of the unreimbursed amount of such honored drawing and of such Revolving Letter
of Credit Participant's respective participation therein based on such Revolving
Letter of Credit Participant's Pro Rata Share of the Revolving Commitments. Each
Revolving Letter of Credit Participant shall make available to such

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Revolving Issuing Bank an amount equal to its respective participation, in
Dollars and in same day funds, at the office of such Revolving Issuing Bank
specified in such notice, not later than 12:00 p.m. (New York City time) on the
first business day (under the laws of the jurisdiction in which such office of
such Revolving Issuing Bank is located) after the date notified by such
Revolving Issuing Bank. In the event that any Revolving Letter of Credit
Participant fails to make available to such Revolving Issuing Bank on such
business day the amount of such Revolving Letter of Credit Participant's
participation in such Revolving Letter of Credit as provided in this Section
2.4(g), the applicable Revolving Issuing Bank shall be entitled to recover such
amount on demand from such Lender together with interest thereon for three
Business Days at the rate customarily used by such Revolving Issuing Bank for
the correction of errors among banks and thereafter at the Base Rate. Nothing in
this Section 2.4(g) shall be deemed to prejudice the right of any Revolving
Letter of Credit Participant to recover from a Revolving Issuing Bank any
amounts made available by such Revolving Letter of Credit Participant to a
Revolving Issuing Bank pursuant to this Section in the event that it is
determined that the payment with respect to a Revolving Letter of Credit in
respect of which payment was made by such Revolving Letter of Credit Participant
constituted gross negligence or willful misconduct on the part of such Revolving
Issuing Bank. In the event a Revolving Issuing Bank shall have been reimbursed
by other Revolving Letter of Credit Participants pursuant to this Section 2.4(g)
for all or any portion of any drawing honored by such Revolving Issuing Bank
under a Revolving Letter of Credit, such Revolving Issuing Bank shall distribute
to each Revolving Letter of Credit Participant which has paid all amounts
payable by it under this Section 2.4(g) with respect to such honored drawing
such Revolving Letter of Credit Participant's Pro Rata Share of all payments
subsequently received by such Revolving Issuing Bank from Company in
reimbursement of such honored drawing when such payments are received. Any such
distribution shall be made to a Revolving Letter of Credit Participant at its
primary address set forth below its name on Appendix B or at such other address
as such Revolving Letter of Credit Participant may request.

            (h) Funded Letter of Credit Participant's Purchase of Participations
in Funded Letters of Credit. On the Closing Date, without any further action on
the part of the Funded LC Issuing Banks or the Lenders, the Funded LC Issuing
Banks hereby grant to each Funded Letter of Credit Participant, and each such
Funded Letter of Credit Participant shall be deemed irrevocably and
unconditionally to have purchased and received from each Funded LC Issuing Bank
that has issued any Funded Letter of Credit, without recourse or warranty, an
undivided interest and participation (each, a "FUNDED LETTER OF CREDIT
PARTICIPATION"), in each Funded Letter of Credit that may be issued pursuant to
Section 2.4(b) or deemed issued pursuant to Section 2.4(m) equal to such Funded
Letter of Credit Participant's Pro Rata Share of the aggregate amount available
to be drawn under each such Funded Letter of Credit and the Funded LC
Participation Interests in respect thereof together with rights to receive
payments under Section 2.4(j)(iv). The aggregate purchase price for the Funded
Letter of Credit Participations of each Funded Letter of Credit Participant
shall equal the amount of the Funded Letter of Credit Commitment of such Funded
Letter of Credit Participant paid to the Administrative Agent on the Closing
Date pursuant to the next sentence, and, unless and until the Funded Letter of
Credit Termination Date has occurred and all Funded Letters of Credit issued by
a Funded LC Issuing Bank have expired without draw, or to the extent of any
draws, have been reimbursed in full, or are cash collateralized by Company
pursuant to Section 2.4(j)(iv),each such Credit Linked Deposit held by a Funded
LC Issuing Bank shall be the property of such Funded LC Issuing

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Bank as the consideration paid by each such Funded Letter of Credit Participant
for such purchase price as it relates to any Funded Letters of Credit issued or
deemed issued by such Funded LC Issuing Bank. Each Funded Letter of Credit
Participant shall pay to Administrative Agent in full on the Closing Date an
amount equal to such Funded Letter of Credit Participant's Funded Letter of
Credit Commitment, and Administrative Agent shall immediately transfer and
allocate such Credit Linked Deposits to each Funded LC Issuing Bank in the
amounts set forth on Schedule 2.4(f). Each Funded Letter of Credit Participant
hereby absolutely and unconditionally agrees that if a Funded LC Issuing Bank
makes a disbursement in respect of any Funded Letter of Credit issued by such
Funded LC Issuing Bank which is not reimbursed by Company on the date due
pursuant to Section 2.4(e), or is required to refund any reimbursement payment
in respect of any Funded Letter of Credit issued or deemed issued by such Funded
LC Issuing Bank to Company for any reason, the amount of such disbursement shall
be satisfied, ratably as among the Funded Letter of Credit Participants in
accordance with their Pro Rata Share (with the Administrative Agent having the
responsibility to determine and keep record of the Pro Rata Shares of the Funded
Letter of Credit Participants for this purpose and all other purposes hereunder)
of the Total Credit Linked Deposit from the Credit Linked Deposit on deposit
with the Funded LC Issuing Bank. Without limiting the foregoing, each Funded
Letter of Credit Participant irrevocably authorizes the Administrative Agent and
each Funded LC Issuing Bank, as applicable, to apply amounts of the Credit
Linked Deposits as provided in this paragraph.

      (i) [Intentionally left blank].

      (j) Credit Linked Deposit Accounts.

                  (i) Subject to the terms and conditions hereof, each Funded
   Letter of Credit Participant severally agrees to make, on the Closing Date, a
   payment to Administrative Agent in an amount equal to such Funded Letter of
   Credit Participant's Funded Letter of Credit Commitment and Administrative
   Agent shall use such payments to establish a Credit Linked Deposit Account at
   each Funded LC Issuing Bank and deposit with each such Funded LC Issuing Bank
   an amount as set forth on Schedule 2.4(f). The Credit Linked Deposits paid to
   a Funded LC Issuing Bank shall be held by such Funded LC Issuing Bank in its
   Credit Linked Deposit Account, and no party other than the Funded LC Issuing
   Bank shall have a right of withdrawal from the Credit Linked Deposit Account,
   or any other right power or interest in or with respect to the Credit Linked
   Deposits, except as expressly set forth in Sections 2.4(f), (h), (j) and
   Section 2.13(b)(iii). Notwithstanding any provision in this Agreement to the
   contrary, the sole funding obligation of each Funded Letter of Credit
   Participant in respect of its Funded Letter of Credit Commitment and Funded
   Letter of Credit Participation shall be satisfied in full upon the payment of
   its purchase price on the Closing Date.

                  (ii) Each of Company, Administrative Agent, each Funded LC
   Issuing Bank and each Funded Letter of Credit Participant hereby acknowledges
   and agrees that each Funded Letter of Credit Participant is making its
   payment on the Closing Date pursuant to Section 2.4(j)(i) to be paid into the
   Credit Linked Deposit Account for application in the manner contemplated by
   Sections 2.4(f) and (h). Regarding the Credit Linked Deposits to be held by
   JPMC in its capacity as a Funded LC Issuing Bank, JPMC has agreed (except
   during

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   periods when such Credit Linked Deposits, or funds applied by or on behalf of
   JPMC against such Credit Linked Deposits, are used to cover Unpaid Drawings
   under Funded Letters of Credit) to direct the investment of the Credit Linked
   Deposits as follows: (1) Company shall advise such Funded LC Issuing Bank (in
   writing copied at the same time to the Administrative Agent) at least two
   Business Days prior to the commencement of each Interest Period of the first
   and last Business Day of such Interest Period (it being understood, without
   the requirement for any further notification, that the first Business Day of
   the first Interest Period shall be the Closing Date; (2) on the first
   Business Day of each Interest Period, JPMC in its capacity as Funded LC
   Issuing Bank shall invest the Credit Linked Deposits held by it in a JPMC
   Certificate of Deposit having a rate that is identified to the Administrative
   Agent by JPMC in its capacity as Funded LC Issuing Bank on such Business Day
   for the period commencing on the first day of such Interest Period and ending
   on the last day of such Interest Period and (3) on the last Business Day of
   such Interest Period JPMC in its capacity as a Funded LC Issuing Bank shall
   disburse to the Administrative Agent (for further distribution to the Funded
   Letter of Credit Participants in accordance with their Pro Rata Shares) the
   amount of the earnings for such Interest Period on the Credit Linked Deposits
   held by it at the rate identified pursuant to the foregoing clause (2) (the
   "JPMC RELEVANT RETURN"). Regarding the Credit Linked Deposits to be held by
   UBS in its capacity as a Funded LC Issuing Bank, UBS has agreed (except
   during periods when such Credit Linked Deposits, or funds applied by or on
   behalf of UBS against such Credit Linked Deposits, are used to cover Unpaid
   Drawings under Funded Letters of Credit) to direct the investment of the
   Credit Linked Deposits as follows: (1) Company shall advise such Funded LC
   Issuing Bank (in writing copied at the same time to the Administrative Agent)
   at least two Business Days prior to the commencement of each Interest Period
   of the first and last Business Day of such Interest Period (it being
   understood, without the requirement for any further notification, that the
   first Business Day of such Interest Period shall be the Closing Date); (2) on
   the first Business Day of each Interest Period, UBS in its capacity as Funded
   LC Issuing Bank shall invest the Credit Linked Deposits held by it in a UBS
   time deposit (or in respect of the first Interest Period from the Closing
   Date to June 27th in overnight time deposits) having a rate that is
   identified to the Administrative Agent by UBS in its capacity as Funded LC
   Issuing Bank on such Business Day for the period commencing or the first day
   of such Interest Period and ending on the last day of such Interest Period
   and (3) on the last Business Day of each Interest Period UBS in its capacity
   as a Funded LC Issuing Bank shall disburse to the Administrative Agent (for
   further distribution to the Funded Letter of Credit Participants in
   accordance with their Pro Rata Shares) the amount of the earnings for such
   Interest Period on the Credit Linked Deposits held by it (the "UBS RELEVANT
   RETURN" and together with the JPMC Relevant Return, the "RELEVANT RETURN").
   In addition to the foregoing payments by or on behalf of Administrative
   Agent, Company agrees to make payments to each Funded Letter of Credit
   Participant in accordance with its Pro Rata Share when payments of the
   Relevant Return are made as above on the last day of each Interest Period
   (and made together with such payments) in an amount equal to the amount by
   which the Relevant Return for such Interest Period is less than the amount
   which would have been earned on the total aggregate Credit Linked Deposits
   held by all Funded LC Issuing Banks for such Interest Period had such Credit
   Linked Deposits earned a return equal to the Adjusted Eurodollar Rate for
   such Interest Period (such Adjusted Eurodollar Rate shall be calculated as if
   in respect of a Eurodollar Rate Loan hereunder for such Interest Period).

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<PAGE>

                  (iii) Company shall have no right, title or interest in or to
   the Credit Linked Deposits and no obligations with respect thereto (except
   for the reimbursement obligations in respect of Funded Letters of Credit
   provided in Sections 2.4(f) and (h)), it being acknowledged and agreed by the
   parties hereto that the making of the Credit Linked Deposits by the Funded
   Letter of Credit Participants, the payments to the Funded Letter of Credit
   Participants contemplated in Section 2.4(j)(ii), the provisions of this
   Section 2.4(j)(iii) and the application of the Credit Linked Deposits in the
   manner contemplated by Sections 2.4(f) and (h) constitute agreements among
   Administrative Agent, the Funded LC Issuing Banks and the Funded Letter of
   Credit Participants with respect to payments of each Funded Letter of Credit
   Participant in respect of its Funded Letter of Credit Participation and do
   not constitute any loan or extension of credit to Company.

                  (iv) Following the occurrence of any of the events identified
   in clauses (i), (ii) or (iii) of the definition of Funded Letter of Credit
   Termination Date (but solely in the case of clause (ii), only to the extent
   at such time Company shall have paid all outstanding obligations then due and
   payable under this Agreement), and subject to Company's cash
   collateralization to the extent of a Funded LC Issuing Bank's outstanding
   Funded Letters of Credit, in an amount (but in no event greater than 105% of
   the aggregate undrawn face amount) and manner reasonably satisfactory to the
   Collateral Agent and the Funded LC Issuing Bank that issued such Funded
   Letters of Credit (which cash collateralization is hereby expressly required
   of Company on any Funded Letter of Credit Termination Date), each Funded LC
   Issuing Bank shall repurchase the Funded Letter of Credit Participation
   Interests from the Funded Letter Credit Participants with the remaining
   Credit Linked Deposits held by it at such time according to each Funded
   Letter of Credit Participant's Pro Rata Share (whereupon such remaining
   amount that has been so paid shall no longer be considered the property of
   the Funded LC Issuing Banks).

            (k) Obligations Absolute. The obligation of Company to reimburse
each Issuing Bank for drawings honored under the Letters of Credit issued by it
and to repay any Revolving Loans made by Lenders pursuant to Section 2.4(e) and
the obligations of Lenders under Sections 2.4(f) and (h) shall be unconditional
and irrevocable and shall be paid strictly in accordance with the terms hereof
under all circumstances including any of the following circumstances: (i) any
lack of validity or enforceability of any Letter of Credit; (ii) the existence
of any claim, set-off, defense or other right which Company or any Lender may
have at any time against a beneficiary or any transferee of any Letter of Credit
(or any Persons for whom any such transferee may be acting), such Issuing Bank,
Lender or any other Person or, in the case of a Lender, against Company, whether
in connection herewith, the transactions contemplated herein or any unrelated
transaction (including any underlying transaction between Company or one of its
Subsidiaries and the beneficiary for which any Letter of Credit was procured);
(iii) any draft or other document presented under any Letter of Credit proving
to be forged, fraudulent, invalid or insufficient in any respect or any
statement therein being untrue or inaccurate in any respect; (iv) payment by
such Issuing Bank under any Letter of Credit against presentation of a draft or
other document which substantially complies with the terms of such Letter of
Credit; (v) any adverse change in the business, operations, properties, assets,
condition (financial or otherwise) or prospects of Company or any of its
Subsidiaries; (v) any breach hereof or any other Credit Document by any party
thereto; (vi) any other circumstance or happening whatsoever, whether or not
similar to any of the foregoing; or (vii) the fact that an Event of Default or a
Default shall

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<PAGE>

have occurred and be continuing; provided, in each case, that payment by an
Issuing Bank under the applicable Letter of Credit shall not have constituted
gross negligence or willful misconduct of such Issuing Bank under the
circumstances in question.

            (l) Indemnification. Without duplication of any obligation of
Company under Section 10.2 or 10.3, in addition to amounts payable as provided
herein, Company hereby agrees to protect, indemnify, pay and save harmless each
Issuing Bank from and against any and all claims, demands, liabilities, damages,
losses, reasonable costs, charges and expenses (including reasonable fees,
expenses and disbursements of counsel) which such Issuing Bank may incur or be
subject to as a consequence, direct or indirect, of (i) the issuance of any
Letter of Credit by such Issuing Bank, other than as a result of (1) the gross
negligence or willful misconduct of, such Issuing Bank under the circumstances
in question or (2) the wrongful dishonor by such Issuing Bank of a proper demand
for payment made under any Letter of Credit issued by it, or (ii) the failure of
such Issuing Bank to honor a drawing under any such Letter of Credit as a result
of any Governmental Act.

            (m) Existing Letters of Credit. On the Closing Date, (i) each
Existing Letter of Credit, to the extent outstanding, shall automatically and
without further action by the parties thereto be deemed converted to Funded
Letters of Credit issued pursuant to this Section 2.4 for the account of Company
and subject to the provisions hereof, and for this purpose the fees payable with
respect to such Funded Letters of Credit issued hereunder pursuant to Section
2.11(b)(i) and 2.11(c) shall be payable (in substitution for any fees set forth
in the applicable letter of credit reimbursement agreements or applications
relating to such letters of credit, except to the extent that such fees are of
the type payable hereunder pursuant to Section 2.11(c)(iii), in which event such
fees shall be payable without duplication) as if such Funded Letters of Credit
had been issued on the Closing Date, and (ii) each of the Issuing Banks listed
on Schedule 1.1(c) with respect to its respective Existing Letter Credit shall
be deemed to be a Funded LC Issuing Bank hereunder with respect to its Funded
Letters of Credit, but UBS shall not be an Issuing Bank except as to the Detroit
Letters of Credit. UBS and Company agree for the sake of clarity that the
references to the "Credit Agreement" in the Detroit Letters of Credit are
intended to mean the Credit Agreement under which the Detroit Letters of Credit
are deemed issued (as such Credit Agreement may be amended or replaced from time
to time).

            (n) Upon the prior written consent of JPMC and at least 3 Business
Days' prior written notice to Administrative Agent and UBS, Company may request
the transfer of all or a portion of the Credit Linked Deposit held by UBS at
such time from UBS to JPMC (each such institution in its capacity as a Funded LC
Issuing Bank) on the last day of any Interest Period relating to the Credit
Linked Deposits (the date of such transfer being a "TRANSFER DATE") in an amount
not to exceed, at such time, the difference between (i) the Credit Linked
Deposits held by UBS at such time minus (ii) the Funded Letters of Credit
Outstanding at such time in respect of Funded Letters of Credit issued by UBS
(or, if greater, the amount to which such Funded Letters of Credit by their
terms permit the Stated Amount thereof to be increased to) (such difference
being the "UBS EXCESS TRANSFER AMOUNT"). No later than 12:00 noon on such
Transfer Date, UBS shall transfer to such Credit Linked Deposit Account as JPMC
may designate, an amount equal to the UBS Excess Transfer Amount in immediately
available funds. Upon such transfer (i) the Credit Linked Deposit held by JPMC,
and (without further action) the amount corresponding to JPMC on Schedule
1.1(c), shall each be increased in an amount equal to the

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<PAGE>

UBS Excess Transfer Amount and (ii) the Credit Linked Deposit held by UBS, and
(without further action) the amount corresponding to UBS on Schedule 1.1(c),
shall be reduced by an amount equal to the UBS Excess Transfer Amount.

      2.5. Pro Rata Shares; Availability of Funds.

            (a) Pro Rata Shares. All Loans and Credit Linked Deposits shall be
made, and all participations purchased, by Lenders simultaneously and
proportionately to their respective Pro Rata Shares, it being understood that no
Lender shall be responsible for any default by any other Lender in such other
Lender's obligation to make a Loan requested hereunder or purchase a
participation required hereby nor shall any Term Loan Commitment, Funded Letter
of Credit Commitment or any Revolving Commitment of any Lender be increased or
decreased as a result of a default by any other Lender in such other Lender's
obligation to make a Loan or Credit Linked Deposit requested hereunder or
purchase a participation required hereby.

            (b) Availability of Funds. Unless Administrative Agent shall have
been notified by any Lender prior to the applicable Credit Date that such Lender
does not intend to make available to Administrative Agent the amount of such
Lender's Loan requested on such Credit Date, Administrative Agent may assume
that such Lender has made such amount available to Administrative Agent on such
Credit Date and Administrative Agent may, in its sole discretion, but shall not
be obligated to, make available to Company a corresponding amount on such Credit
Date. If such corresponding amount is not in fact made available to
Administrative Agent by such Lender, Administrative Agent shall be entitled to
recover such corresponding amount on demand from such Lender together with
interest thereon, for each day from such Credit Date until the date such amount
is paid to Administrative Agent, at the customary rate set by Administrative
Agent for the correction of errors among banks for three Business Days and
thereafter at the Base Rate. If such Lender does not pay such corresponding
amount forthwith upon Administrative Agent's demand therefor, Administrative
Agent shall promptly notify Company and Company shall immediately pay such
corresponding amount to Administrative Agent together with interest thereon, for
each day from such Credit Date until the date such amount is paid to
Administrative Agent, at the rate payable hereunder for Base Rate Loans for such
Class of Loans. Nothing in this Section 2.5(b) shall be deemed to relieve any
Lender from its obligation to fulfill its Term Loan Commitments and Revolving
Commitments hereunder or to prejudice any rights that Company may have against
any Lender as a result of any default by such Lender hereunder.

      2.6. Use of Proceeds. The proceeds of the Term Loan shall be applied by
Company to fund the Acquisition, the Refinancing and to pay the related fees,
commissions, premiums and expenses. The proceeds of the Revolving Loans and
Swing Line Loans made after the Closing Date shall be applied by Company for
working capital and general corporate purposes of Company and its Subsidiaries,
including permitted Consolidated Capital Expenditures and Permitted Acquisitions
and to (in an aggregate amount not to exceed $25,000,000) pay MSW Put-Related
Costs. The proceeds of the Funded Letters of Credit and Revolving Letters of
Credit shall be used by Company to support Company's and its Subsidiaries'
obligations under the Projects and other Contractual Obligations of Company and
its Subsidiaries and other general corporate purposes, but shall in no event be
used to make or facilitate any Investment or Restricted Junior Payment not
otherwise permitted hereunder. No portion of the proceeds of any

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                                       56

<PAGE>

Credit Extension shall be used in any manner that causes or might cause such
Credit Extension or the application of such proceeds to violate Regulation U or
Regulation X of the Board of Governors of the Federal Reserve System or any
other regulation thereof or to violate the Exchange Act.

      2.7. Evidence of Debt; Register; Lenders' Books and Records; Notes.

            (a) Lenders' Evidence of Debt. Each Lender shall maintain on its
internal records an account or accounts evidencing the Obligations of Company to
such Lender, including the amounts of the Loans and the Credit Linked Deposits
made by it and each repayment and prepayment in respect thereof. Any such
recordation shall be conclusive and binding on Company, absent manifest error;
provided, that the failure to make any such recordation, or any error in such
recordation, shall not affect any Lender's Revolving Commitments or Company's
Obligations in respect of any applicable Loans or Credit Linked Deposits; and
provided further, in the event of any inconsistency between the Register and any
Lender's records, the recordations in the Register shall govern.

            (b) Register. Administrative Agent (or its agent or sub-agent
appointed by it) shall maintain at the Principal Office a register for the
recordation of the names and addresses of Lenders and the Revolving Commitments,
Loans and the Credit Linked Deposits of each Lender from time to time (the
"REGISTER"). The Register, as in effect at the close of business on the
preceding Business Day, shall be available for inspection by Company or any
Lender at any reasonable time and from time to time upon reasonable prior
notice. Administrative Agent shall record, or shall cause to be recorded, in the
Register the Revolving Commitments, the Loans and the Credit Linked Deposits in
accordance with the provisions of Section 10.6, and each repayment or prepayment
in respect of the principal amount of the Loans or the Credit Linked Deposits,
and any such recordation shall be conclusive and binding on Company and each
Lender, absent manifest error; provided, that the failure to make any such
recordation, or any error in such recordation, shall not affect any Lender's
Revolving Commitments or Company's Obligations in respect of any Loan or the
Credit Linked Deposits. The Administrative Agent shall correct any failures to
record or errors in recording in the Register reasonably promptly after
discovery of such failure or error. Company hereby designates GSCP to serve as
Company's agent solely for purposes of maintaining the Register as provided in
this Section 2.7, and Company hereby agrees that, to the extent GSCP serves in
such capacity, GSCP and its officers, directors, employees, agents, sub-agents
and affiliates shall constitute "Indemnitees." The Obligations are registered
obligations and the right, title and interest of any Lender or Issuing Bank
and/or its assignees in and to such Obligations shall be transferable only upon
notation of such transfer in the Register. This Section 2.7(b) shall be
construed so that the Obligations are at all times maintained in "registered
form" within the meaning of sections 163(f), 871(h)(2) and 881(c)(2) of the
Internal Revenue Code and any related Treasury Regulations.

            (c) Notes. If so requested by any Lender by written notice to
Company (with a copy to Administrative Agent) at least two Business Days prior
to the Closing Date, or at any time thereafter, Company shall execute and
deliver to such Lender (and/or, if applicable and if so specified in such
notice, to any Person who is an assignee of such Lender pursuant to Section
10.6) on the Closing Date (or, if such notice is delivered after the Closing
Date, promptly after

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<PAGE>

Company's receipt of such notice) a Note or Notes to evidence such Lender's Term
Loan, Revolving Loan or Swing Line Loan, as the case may be.

      2.8. Interest on Loans.

            (a) Except as otherwise set forth herein, each Class of Loan shall
bear interest on the unpaid principal amount thereof from the date made through
repayment (whether by acceleration or otherwise) thereof as follows:

                        (1) if a Base Rate Loan, at the Base Rate plus the
            Applicable Margin; or

                        (2) if a Eurodollar Rate Loan, at the Adjusted
            Eurodollar Rate plus the Applicable Margin.

            (b) The basis for determining the rate of interest with respect to
any Loan (except a Swing Line Loan which can be made and maintained as Base Rate
Loans only), and the Interest Period with respect to any Eurodollar Rate Loan,
shall be selected by Company and notified to Administrative Agent pursuant to
the applicable Funding Notice or Conversion/Continuation Notice, as the case may
be; provided, in respect of Term Loans requested on the Closing Date such Term
Loans initially shall be made as Eurodollar Rate Loans with an interest period
of three months. If on any day a Loan is outstanding with respect to which a
Funding Notice or Conversion/Continuation Notice has not been delivered to
Administrative Agent in accordance with the terms hereof specifying the
applicable basis for determining the rate of interest, then for that day such
Loan shall be a Base Rate Loan.

            (c) In connection with Eurodollar Rate Loans there shall be no more
than eight (8) Interest Periods outstanding at any time. In the event Company
fails to specify between a Base Rate Loan or a Eurodollar Rate Loan in the
applicable Funding Notice or Conversion/Continuation Notice, such Loan (if
outstanding as a Eurodollar Rate Loan) will be automatically converted into a
Base Rate Loan on the last day of the then-current Interest Period for such Loan
(or if outstanding as a Base Rate Loan will remain as, or (if not then
outstanding) will be made as, a Base Rate Loan). In the event Company fails to
specify an Interest Period for any Eurodollar Rate Loan in the applicable
Funding Notice or Conversion/Continuation Notice, Company shall be deemed to
have selected an Interest Period of one month. As soon as practicable after
10:00 a.m. (New York City time) on each Interest Rate Determination Date,
Administrative Agent shall determine (which determination shall, absent manifest
error, be final, conclusive and binding upon all parties) the interest rate that
shall apply to the Eurodollar Rate Loans for which an interest rate is then
being determined for the applicable Interest Period and shall promptly give
notice thereof (in writing or by telephone confirmed in writing) to Company and
each Lender.

            (d) Interest payable pursuant to Section 2.8(a) shall be computed
(i) in the case of Base Rate Loans on the basis of a 365-day or 366-day year, as
the case may be, and (ii) in the case of Eurodollar Rate Loans, on the basis of
a 360-day year, in each case for the actual number of days elapsed in the period
during which it accrues. In computing interest on any Loan, the date of the
making of such Loan or the first day of an Interest Period applicable to such
Loan or,

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<PAGE>

with respect to a Term Loan, the last Interest Payment Date with respect to such
Term Loan or, with respect to a Base Rate Loan being converted from a Eurodollar
Rate Loan, the date of conversion of such Eurodollar Rate Loan to such Base Rate
Loan, as the case may be, shall be included, and the date of payment of such
Loan or the expiration date of an Interest Period applicable to such Loan or,
with respect to a Base Rate Loan being converted to a Eurodollar Rate Loan, the
date of conversion of such Base Rate Loan to such Eurodollar Rate Loan, as the
case may be, shall be excluded; provided, if a Loan is repaid on the same day on
which it is made, one day's interest shall be paid on that Loan.

            (e) Except as otherwise set forth herein, interest on each Loan (i)
with respect to Revolving Loans, shall accrue on a daily basis and shall be
payable in arrears on each Interest Payment Date with respect to interest
accrued on and to each such payment date; (ii) with respect to Term Loans, shall
accrue on a daily basis and shall be payable in arrears on each Interest Payment
Date; (iii) shall accrue on a daily basis and shall be payable in arrears upon
any prepayment of that Loan, whether voluntary or mandatory, to the extent
accrued on the amount being prepaid; and (iv) shall accrue on a daily basis and
shall be payable in arrears at maturity of the Loans, including final maturity
of the Loans; provided, however, with respect to any voluntary prepayment of a
Base Rate Loan, accrued interest shall instead be payable on the applicable
Interest Payment Date.

            (f) Company agrees to pay to each Revolving Issuing Bank, with
respect to drawings honored under any Revolving Letter of Credit issued by such
Revolving Issuing Bank, interest on the amount paid by such Revolving Issuing
Bank in respect of each such honored drawing from the date such drawing is
honored to but excluding the date such amount is reimbursed by or on behalf of
Company (including any such reimbursement out of the proceeds of any Revolving
Loans), at a rate equal to (i) for the period from the date such drawing is
honored to but excluding the applicable Reimbursement Date, the rate of interest
otherwise payable hereunder with respect to Revolving Loans that are Base Rate
Loans, and (ii) thereafter, a rate which is 2% per annum in excess of the rate
of interest otherwise payable hereunder with respect to Revolving Loans that are
Base Rate Loans.

            (g) Company agrees to pay to such Funded LC Issuing Bank, with
respect to drawings honored under any Funded Letter of Credit issued by such
Funded LC Issuing Bank, interest on the amount paid by such Funded LC Issuing
Bank in respect of each such honored drawing from the date such drawing is
honored to but excluding the date such amount is reimbursed by or on behalf of
Company or from Credit Linked Deposits at a rate equal to the rate of interest
otherwise payable hereunder with respect to Term Loans that are Base Rate Loans.

            (h) Interest payable pursuant to Sections 2.8(f) or (g) shall be
computed on the basis of a 365/366-day year for the actual number of days
elapsed in the period during which it accrues, and shall be payable on demand
or, if no demand is made, on the date on which the related drawing under a
Letter of Credit is reimbursed in full. Promptly upon receipt by an Issuing Bank
of any payment of interest pursuant to Section 2.8(f) or (g), such Issuing Bank
shall distribute to each Letter of Credit Participant, out of the interest
received by such Issuing Bank in respect of the period from the date such
drawing is honored to but excluding the date on which such Issuing Bank is
reimbursed for the amount of such drawing (including any such reimbursement out
of the proceeds of any Revolving Loans), the amount that such Letter of

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<PAGE>

Credit Participant would have been entitled to receive in respect of the letter
of credit fee that would have been payable in respect of such Letter of Credit
for such period if no drawing had been honored under such Letter of Credit. In
the event an Issuing Bank shall have been reimbursed by Letter of Credit
Participants for all or any portion of such honored drawing, such Issuing Bank
shall distribute to each Letter of Credit Participant which has paid all amounts
payable by it under Section 2.4(h) with respect to such honored drawing such
Letter of Credit Participant's Pro Rata Share of any interest received by such
Issuing Bank in respect of that portion of such honored drawing so reimbursed by
Letter of Credit Participants for the period from the date on which such Issuing
Bank was so reimbursed by Letter of Credit Participants to but excluding the
date on which such portion of such honored drawing is reimbursed by Company.

      2.9. Conversion/Continuation.

            (a) Subject to Section 2.18 and (with respect to continuations of,
or conversions into, Eurodollar Rate Loans) so long as no Default or Event of
Default shall have occurred and then be continuing, Company shall have the
option:

                  (i) to convert at any time all or any part of any Term Loan or
      Revolving Loan equal to $500,000 and integral multiples of $250,000 in
      excess of that amount from one Type of Loan to another Type of Loan;
      provided, a Eurodollar Rate Loan may only be converted on the expiration
      of the Interest Period applicable to such Eurodollar Rate Loan unless
      Company shall pay all amounts due under Section 2.18 in connection with
      any such conversion; or

                  (ii) upon the expiration of any Interest Period applicable to
      any Eurodollar Rate Loan, to continue all or any portion of such Loan
      equal to $500,000 and integral multiples of $250,000 in excess of that
      amount as a Eurodollar Rate Loan.

            (b) Company shall deliver a Conversion/Continuation Notice to
Administrative Agent no later than 10:00 a.m. (New York City time) at least one
Business Day in advance of the proposed conversion date (in the case of a
conversion to a Base Rate Loan) and at least three Business Days in advance of
the proposed conversion/continuation date (in the case of a conversion to, or a
continuation of, a Eurodollar Rate Loan). Except as otherwise provided herein, a
Conversion/Continuation Notice for conversion to, or continuation of, any
Eurodollar Rate Loans (or telephonic notice in lieu thereof) shall be
irrevocable on and after the related Interest Rate Determination Date, and
Company shall be bound to effect a conversion or continuation in accordance
therewith.

      2.10. Default Interest. The principal amount of all Loans not paid when
due and, to the extent permitted by applicable law, any interest payments on the
Loans or any fees or other amounts owed hereunder but not paid when due, shall
thereafter bear interest (including post-petition interest in any proceeding
under the Bankruptcy Code or other applicable bankruptcy laws) payable on demand
at a rate that is 2% per annum in excess of the highest interest rate otherwise
payable hereunder with respect to the applicable Loans (or, in the case of any
such fees and other amounts, at a rate which is 2% per annum in excess of the
highest interest rate otherwise then payable hereunder for Base Rate Loans);
provided, in the case of

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<PAGE>

Eurodollar Rate Loans, upon the expiration of the Interest Period in effect at
the time any such increase in interest rate is effective such Eurodollar Rate
Loans shall thereupon become Base Rate Loans and shall thereafter bear interest
payable upon demand at a rate which is 2% per annum in excess of the highest
interest rate otherwise then payable hereunder for Base Rate Loans. Payment or
acceptance of the increased rates of interest provided for in this Section 2.10
is not a permitted alternative to timely payment and shall not constitute a
waiver of any Event of Default or otherwise prejudice or limit any rights or
remedies of Administrative Agent or any Lender.

      2.11. Fees.

            (a) Company agrees to pay to Administrative Agent for the ratable
benefit of each Lender having Revolving Exposure:

                  (i) commitment fees equal to (1) the average of the daily
      difference between (a) the Revolving Commitments, and (b) the Total
      Utilization of Revolving Commitments (disregarding item (ii) of the
      definition thereof), times (2) 0.50% per annum; and

                  (ii) letter of credit fees equal to (1) the Applicable Margin
      for Revolving Loans that are Eurodollar Rate Loans, times (2) the average
      aggregate daily maximum amount available to be drawn under all such
      Revolving Letters of Credit (regardless of whether any conditions for
      drawing could then be met and determined as of the close of business on
      any date of determination).

            (b) Company agrees to pay to Administrative Agent for the ratable
benefit of each Lender having Funded Letter of Credit Exposure, a fee in respect
of such Lender's Pro Rata Share of the Credit Linked Deposits (the "FUNDED
LETTER OF CREDIT FEE"), for the period from and including the Closing Date to
but excluding the date on which final payment made to such Lender pursuant to
Section 2.4(j)(iv), computed at the per annum rate for each date equal to (x)
the Applicable Margin for Credit Linked Deposits then in effect for Funded
Letters of Credit times (y) the average daily amount of such Credit Linked
Deposit.

            (c) Company agrees to pay directly to each Issuing Bank, for its own
account, the following fees:

                  (i) a fronting fee equal to 0.125%, per annum, times the
      average aggregate daily maximum amount available to be drawn under all
      Revolving Letters of Credit issued by such Issuing Bank (determined as of
      the close of business on any date of determination);

                  (ii) a fronting fee equal to 0.125%, per annum, times the
      average aggregate daily maximum amount available to be drawn under all
      Funded Letters of Credit issued by such Issuing Bank (determined as of the
      close of business on any date of determination); and

                  (iii) such documentary and processing charges for any
      issuance, amendment, transfer or payment of a Letter of Credit as are in
      accordance with such Issuing Bank's standard schedule for such charges and
      as in effect (and delivered to Company) at the time of such issuance,
      amendment, transfer or payment, as the case may be.

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<PAGE>

                  (d) All fees referred to in Sections 2.11(a) and (b) shall be
      paid to Administrative Agent at its Principal Office and upon receipt,
      Administrative Agent shall promptly distribute to each Lender its Pro Rata
      Share thereof.

                  (e) All fees referred to in Sections 2.11(a), (b), (c) shall
      be calculated on the basis of a 360-day year and the actual number of days
      elapsed and shall be payable quarterly in arrears on March 31, June 30,
      September 30 and December 31 of each year during the Revolving Commitment
      Period or the Funded Letter of Credit Commitment Period, as applicable,
      commencing on the first such date to occur after the Closing Date, and on
      the Revolving Commitment Termination Date or the Funded Letter of Credit
      Termination Date and with respect to Section 2.11(b) on the date of return
      to any Funded Letter of Credit Participant of any of such Funded Letter of
      Credit Participant's Credit Linked Deposits in respect of the amount so
      returned, as applicable.

                  (f) In addition to any of the foregoing fees, Company agrees
      to pay to Agents such other fees in the amounts and at the times
      separately agreed upon.

      2.12. Scheduled Payments. The principal amounts of the Term Loans (other
than New Term Loans, the repayment of which shall be governed by the proviso
below) shall be repaid in consecutive quarterly installments (each, an
"INSTALLMENT") in the aggregate amounts set forth below on the last day of each
Fiscal Quarter (each, an "INSTALLMENT DATE"), commencing September 30, 2005:

<TABLE>
<CAPTION>
       Dates                        Amount
------------------               ----------
<S>                              <C>
September 30, 2005               $  687,500
 December 31, 2005               $  687,500
  March 31, 2006                 $  687,500
   June 30, 2006                 $  687,500
September 30, 2006               $  687,500
 December 31, 2006               $  687,500
  March 31, 2007                 $  687,500
   June 30, 2007                 $  687,500
September 30, 2007               $  687,500
 December 31, 2007               $  687,500
  March 31, 2008                 $  687,500
   June 30, 2008                 $  687,500
September 30, 2008               $  687,500
 December 31, 2008               $  687,500
  March 31, 2009                 $  687,500
   June 30, 2009                 $  687,500
September 30, 2009               $  687,500
 December 31, 2009               $  687,500
  March 31, 2010                 $  687,500
   June 30, 2010                 $  687,500
</TABLE>

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<TABLE>
<CAPTION>
Date                             Amounts
<S>                              <C>
September 30, 2010               $   687,500
 December 31, 2010               $   687,500
  March 31, 2011                 $   687,500
   June 30, 2011                 $   687,500
September 30, 2011               $64,625,000
 December 31, 2011               $64,625,000
  March 31, 2012                 $64,625,000
   June 30, 2012                 $64,625,000
</TABLE>

;provided, that in the event any New Term Loans are deemed made, such New Term
Loans shall be repaid on each Installment Date occurring on or after the date on
which such New Term Loans are deemed made pursuant to Section 2.4(f) in an
amount equal to (i) the aggregate principal amount of such New Term Loans, times
(ii) the ratio (expressed as a percentage) of (y) the amount of all other Term
Loans being repaid on such date on which such New Term Loans are deemed made
pursuant to Section 2.4(f) and (z) the total aggregate principal amount of all
other Term Loans outstanding on such deemed date of making of such New Term
Loans.

Notwithstanding the foregoing, (x) such Installments shall be reduced in
connection with any voluntary or mandatory prepayments of the Term Loan in
accordance with Sections 2.13, 2.14 and 2.15, as applicable; and (y) and the
Term Loan, together with all other amounts owed hereunder with respect thereto,
shall, in any event, be paid in full no later than the Term Loan Maturity Date.

      2.13. Voluntary Prepayments/Commitment Reductions.

            (a) Voluntary Prepayments.

                  (i) Any time and from time to time:

                        (1) with respect to Base Rate Loans, Company may prepay
            any such Loans on any Business Day in whole or in part, in an
            aggregate minimum amount of $500,000 and integral multiples of
            $250,000 in excess of that amount;

                        (2) with respect to Eurodollar Rate Loans, Company may
            prepay any such Loans on any Business Day in whole or in part in an
            aggregate minimum amount of $500,000 and integral multiples of
            $250,000 in excess of that amount; and

                        (3) with respect to Swing Line Loans, Company may prepay
            any such Loans on any Business Day in whole or in part in an
            aggregate minimum amount of $500,000, and in integral multiples of
            $250,000 in excess of that amount.

                  (ii) All such prepayments shall be made:

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                        (1) upon not less than one Business Day's prior written
            or telephonic notice in the case of Base Rate Loans;

                        (2) upon not less than three Business Days' prior
            written or telephonic notice in the case of Eurodollar Rate Loans;
            and

                        (3) upon written or telephonic notice on the date of
            prepayment, in the case of Swing Line Loans;

in each case given to Administrative Agent or Swing Line Lender, as the case may
be, by 12:00 p.m. (New York City time) on the date required and, if given by
telephone, promptly confirmed in writing to Administrative Agent (and
Administrative Agent will promptly transmit such telephonic or original notice
for Term Loans or Revolving Loans, as the case may be, by telefacsimile or
telephone to each Lender) or Swing Line Lender, as the case may be. Upon the
giving of any such notice, the principal amount of the Loans specified in such
notice shall become due and payable on the prepayment date specified therein.
Any such voluntary prepayment shall be applied as specified in Section 2.15(a).

            (b) Voluntary Commitment Reductions.

                  (i) Company may, upon not less than one Business Day's prior
      written or telephonic notice promptly confirmed in writing to
      Administrative Agent (which original written or telephonic notice
      Administrative Agent will promptly transmit by telefacsimile or telephone
      to each applicable Lender), at any time and from time to time terminate in
      whole or permanently reduce in part, without premium or penalty, the
      Revolving Commitments in an amount up to the amount by which the Revolving
      Commitments exceed the Total Utilization of Revolving Commitments at the
      time of such proposed termination or reduction; provided, any such partial
      reduction of the Revolving Commitments shall be in an aggregate minimum
      amount of $1,000,000 and integral multiples of $1,000,000 in excess of
      that amount.

                  (ii) Company's notice to Administrative Agent shall designate
      the date (which shall be a Business Day) of such termination or reduction
      and the amount of any partial reduction, and such termination or reduction
      of the Revolving Commitments shall be effective on the date specified in
      Company's notice and shall reduce the Revolving Commitment of each Lender
      proportionately to its Pro Rata Share thereof.

                  (iii) Upon at least one Business Day's prior written notice
      (or telephonic notice promptly confirmed in writing) to Administrative
      Agent at Administrative Agent's Principal Office (which notice
      Administrative Agent shall promptly transmit to each of the Funded LC
      Issuing Banks and each of the Lenders), Company shall have the right,
      without premium or penalty, on any day, permanently to reduce the Credit
      Linked Deposits in whole or in part, provided that (i) any partial
      reduction pursuant to this Section 2.13(b)(iii) shall be in an aggregate
      minimum amount of $1,000,000 and integral multiples of $1,000,000 in
      excess of that amount, and shall be allocated among the Credit Linked
      Deposits held by the Funded LC Issuing Banks on a pro rata basis and (ii)
      after giving effect to such reduction and

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      to any cancellation or cash collateralization of Funded Letters of Credit
      made on the date thereof in accordance with this Agreement, the aggregate
      amount of the Lenders' Funded Letter of Credit Exposures (after giving
      effect to any required increase in the Stated Amount of any Funded Letters
      of Credit) shall not exceed the Total Credit Linked Deposit. In the event
      the Credit Linked Deposits shall be reduced as provided in the immediately
      preceding sentence, each Funded LC Issuing Bank shall repurchase the
      Funded LC Participation Interests in respect of such reduced Credit Linked
      Deposits held by the Funded Letter of Credit Participants with the Credit
      Linked Deposits held by such Funded LC Issuing Bank in an amount that
      corresponds to the portion of such reduction allocable to such Funded LC
      Issuing Bank (such repurchase price to be deposited by such Funded LC
      Issuing Bank with Administrative Agent) and Administrative Agent shall
      repay such amount to the Funded Letter of Credit Participants ratably in
      accordance with their Pro Rata Shares of the Total Credit Linked Deposit
      (as determined immediately prior to such reduction).

         2.14. Mandatory Prepayments/Commitment Reductions.

            (a) Asset Sales. No later than the fifth Business Day following the
date of receipt by Company or any of its Subsidiaries of any Net Asset Sale
Proceeds (or, in the event such Net Asset Sale Proceeds are subject to
distribution limitations contained in the ARC Indenture, any ARC Refinancing
Indenture, any New ARC Indenture, either MSW Indenture, any MSW Refinancing
Indenture, any New MSW Indenture or any Project document or any instrument or
agreement governing the terms of any permitted refinancing thereof, no later
than the fifth Business Day after the last of such distribution limitations (as
the same relates to such Net Asset Sale Proceeds) expires), Company shall prepay
the Loans and/or the Revolving Commitments shall be permanently reduced as set
forth in Section 2.15(b) in an aggregate amount equal to 100% of such Net Asset
Sale Proceeds; provided, (i) so long as no Default or Event of Default shall
have occurred and be continuing on the date of the related Asset Sale, and (ii)
to the extent that aggregate of such Net Asset Sale Proceeds from the Closing
Date through the applicable date of determination do not exceed $5,000,000 in
any Fiscal Year or $10,000,000 in the aggregate since the Closing Date
(excluding, but only for the purposes of calculating such cap and not the
reinvestment provision itself, Net Asset Sale Proceeds from the sale or other
disposition of those assets identified on Schedule 6.9-A), Company shall have
the option, directly or through one or more of its Subsidiaries, to invest such
Net Asset Sale Proceeds within three hundred sixty days of receipt thereof in
long-term productive assets of the general type used in the business of Company
and its Subsidiaries; provided further, pending any such investment all such Net
Asset Sale Proceeds shall be applied to prepay Revolving Loans to the extent
outstanding (without a reduction in Revolving Commitments).

            (b) Insurance/Condemnation Proceeds. No later than the fifth
Business Day following the date of receipt by Company or any of its
Subsidiaries, or Collateral Agent or Administrative Agent as loss payee, of any
Net Insurance/Condemnation Proceeds (or, in the event such Net
Insurance/Condemnation Proceeds are subject to distribution limitations
contained in the ARC Indenture, any ARC Refinancing Indenture, New ARC
Indenture, either MSW Indenture, any MSW Refinancing Indenture and New MSW
Indenture or any Project document or any instrument or agreement governing the
terms of any permitted refinancing thereof, no later than the fifth Business Day
after the last of such distribution limitations (as the same relates to such Net
Insurance/Condemnation Proceeds) expires), Company shall prepay the

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Loans and/or the Revolving Commitments shall be permanently reduced as set forth
in Section 2.15(b) in an aggregate amount equal to such Net
Insurance/Condemnation Proceeds; provided, so long as no Default or Event of
Default shall have occurred and be continuing on the date of such receipt,
Company shall have the option, directly or through one or more of its
Subsidiaries to invest or commit to reinvest such Net Insurance/Condemnation
Proceeds within three hundred sixty days of receipt thereof in long term
productive assets of the general type used in the business of Company and its
Subsidiaries, which investment may include the repair, restoration or
replacement of the applicable assets thereof (or to reimburse Company and its
Subsidiaries for costs incurred in respect of such loss); provided further,
pending any such investment all such Net Insurance/Condemnation Proceeds, as the
case may be, shall be applied to prepay Revolving Loans to the extent
outstanding (without a reduction in Revolving Commitments).

            (c) Issuance of Equity Securities. On the fifth Business Day
following date of receipt by Company of any Cash proceeds from a capital
contribution to, or the issuance of any Capital Stock of, Company or any of its
Subsidiaries (other than (i) the Rights Offering and any equity contribution or
investment made by Holdings in Company with the proceeds thereof, (ii) the
Put-Related Equity Offering and any equity contribution or investment made by
Holdings in Company with the proceeds thereof, (iii) an equity contribution from
Holdings to Company to occur within 120 days of the Closing Date in an aggregate
amount not to exceed $25,000,000, the proceeds of which are on-lent pursuant to
Section 6.1(e) or invested pursuant Section 6.7(n)(iii) to pay MSW Put-Related
Costs, (iv) proceeds received by a Subsidiary of Company from Company or another
Subsidiary of Company and (v) pursuant to any employee and/or director stock or
stock option compensation plan), Company shall prepay the Loans and/or the
Revolving Commitments shall be permanently reduced as set forth in Section
2.15(b) in an aggregate amount equal to 50% of such proceeds, net of
underwriting discounts and commissions and other reasonable costs and expenses
associated therewith, including reasonable legal fees and expenses provided,
that if any such commissions, costs or expenses have not been incurred or
invoiced at such time, Company may deduct its good faith estimate thereof to
extent subsequently paid; provided, further, that the amount of such proceeds
required to be prepaid shall be reduced in an amount equal to the amount of
proceeds Subsidiaries of Company are legally bound, or required, pursuant to the
ARC Indenture, the ARC Refinancing Indenture, any New ARC Indenture, the MSW
Indentures, MSW Refinancing Indenture, MSW Refinancing Notes, any New MSW
Indenture or any refinancings thereof to use for prepayments thereunder.

            (d) Issuance of Debt. No later than the fifth Business Day following
the date of receipt by Company or any of its Subsidiaries of any Cash proceeds
from the incurrence of any Indebtedness for borrowed money of Company or any of
its Subsidiaries (other than with respect to any Indebtedness permitted to be
incurred pursuant to Section 6.1), Company shall prepay the Loans and/or the
Revolving Commitments shall be permanently reduced as set forth in Section
2.15(b) in an aggregate amount equal to 100% of such proceeds, net of
underwriting discounts and commissions and other reasonable costs and expenses
associated therewith, including reasonable legal fees and expenses; provided,
that if any such commissions, costs or expenses have not been incurred or
invoiced at such time, Company may deduct its good faith estimate thereof to the
extent subsequently paid.

            (e) Excess Cash Flow. In the event that there shall be Excess Cash
Flow for any Fiscal Year (commencing with Fiscal Year 2005, but for Fiscal Year
2005 calculated solely for

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<PAGE>

the period from July 1, 2005 to the end of such Fiscal Year), Company shall, no
later than ninety days after the end of such Fiscal Year, prepay the Loans
and/or the Revolving Commitments shall be permanently reduced as set forth in
Section 2.15(b) in an aggregate amount equal to 50% of such Excess Cash Flow;
provided, during any period in which the Company Leverage Ratio (determined for
any such period by reference to the most recent Compliance Certificate delivered
pursuant to Section 5.1(d) calculating the Company Leverage Ratio) shall be
4.00:1.00 or less, Company shall only be required to make the prepayments and/or
reductions otherwise required hereby in an amount equal to 25% of such Excess
Cash Flow. In calculating amounts owing under this clause (e), credit shall be
given for any voluntary prepayments of the Loans (excluding repayments of
Revolving Loans or Swing Line Loans except to the extent the Revolving
Commitments are permanently reduced in connection with such repayments) and, to
the extent expressly permitted by the Intercreditor Agreement, the Second Lien
Term Loans made during the applicable Fiscal Year.

            (f) Revolving Loans and Swing Loans. Company shall from time to time
prepay first, the Swing Line Loans, and second, the Revolving Loans to the
extent necessary so that the Total Utilization of Revolving Commitments shall
not at any time exceed the Revolving Commitments then in effect.

            (g) Prepayment Certificate. Concurrently with any prepayment of the
Loans and/or reduction of the Revolving Commitments pursuant to Sections 2.14(a)
through 2.14(e), Company shall deliver to Administrative Agent a certificate of
an Authorized Officer demonstrating the calculation of the amount of the
applicable net proceeds or Excess Cash Flow, as the case may be. In the event
that Company shall subsequently determine that the actual amount received
exceeded the amount set forth in such certificate, Company shall promptly make
an additional prepayment of the Loans and/or the Revolving Commitments shall be
permanently reduced in an amount equal to such excess, and Company shall
concurrently therewith deliver to Administrative Agent a certificate of an
Authorized Officer demonstrating the derivation of such excess.

            (h) Second Lien Debt Override. Notwithstanding anything to the
contrary contained in this Section 2.14, Company shall not be required to repay
any of the Loans with proceeds, from any source, that are required to be applied
to a reduction of the loans under the Second Lien Credit Agreement and/or the
Second Lien Notes both under the terms thereof and the Intercreditor Agreement.

      2.15. Application of Prepayments.

            (a) Application of Voluntary Prepayments by Type of Loans. Subject
to Section 4.1 of the Intercreditor Agreement, any prepayment of any Loan
pursuant to Section 2.13(a) shall be applied as specified by Company in the
applicable notice of prepayment; provided, in the event Company fails to specify
the Loans to which any such prepayment shall be applied, such prepayment shall
be applied as follows:

                  first, to repay outstanding Swing Line Loans to the full
extent thereof;

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                  second, to repay outstanding Revolving Loans to the full
extent thereof; and

                  third, to reduce on a pro rata basis the next four scheduled
Installments of principal on the Term Loans and thereafter on a pro rata basis
to the remaining scheduled Installments of principal on the Term Loans.

            (b) Application of Mandatory Prepayments by Type of Loans. Subject
to Section 4.1(a) of the Intercreditor Agreement and Section 2.14(h) hereof, any
amount required to be paid pursuant to Sections 2.14(a) through 2.14(e) shall be
applied as follows:

                  first, to prepay Term Loans on a pro rata basis to the
      remaining scheduled Installments of principal of Term Loans;

                  second, to prepay the Swing Line Loans to the full extent
      thereof and to permanently reduce the Revolving Commitments by the amount
      of such prepayment;

                  third, to prepay the Revolving Loans to the full extent
      thereof and to further permanently reduce the Revolving Commitments by the
      amount of such prepayment;

                  fourth, to prepay outstanding reimbursement obligations with
      respect to Revolving Letters of Credit and to further permanently reduce
      the Revolving Commitments by the amount of such prepayment;

                  fifth, to cash collateralize Revolving Letters of Credit and
      to further permanently reduce the Revolving Commitments by the amount of
      such cash collateralization; and

                  sixth, to further permanently reduce the Revolving Commitments
      to the full extent thereof.

            (c) Application of Prepayments of Loans to Base Rate Loans and
Eurodollar Rate Loans. Considering each Class of Loans being prepaid separately,
any prepayment thereof shall be applied first to Base Rate Loans to the full
extent thereof before application to Eurodollar Rate Loans, in each case in a
manner which minimizes the amount of any payments required to be made by Company
pursuant to Section 2.18(c).

      2.16. General Provisions Regarding Payments.

            (a) All payments by Company of principal, interest, fees and other
Obligations shall be made in Dollars in same day funds, without defense, setoff
or counterclaim, free of any restriction or condition, and delivered to
Administrative Agent not later than 12:00 p.m. (New York City time) on the date
due at the Principal Office designated by Administrative Agent for the account
of Lenders; for purposes of computing interest and fees, funds received by
Administrative Agent after that time on such due date shall be deemed to have
been paid by Company on the next succeeding Business Day.

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            (b) All payments in respect of the principal amount of any Loan
(other than voluntary prepayments of Revolving Loans) shall be accompanied by
payment of accrued interest on the principal amount being repaid or prepaid.

            (c) Administrative Agent (or its agent or sub-agent appointed by it)
shall promptly distribute to each Lender at such address as such Lender shall
indicate in writing, such Lender's applicable Pro Rata Share of all payments and
prepayments of principal and interest due hereunder, together with all other
amounts due thereto, including, without limitation, all fees payable with
respect thereto, to the extent received by Administrative Agent.

            (d) Notwithstanding the foregoing provisions hereof, if any
Conversion/Continuation Notice is withdrawn as to any Affected Lender or if any
Affected Lender makes Base Rate Loans in lieu of its Pro Rata Share of any
Eurodollar Rate Loans, Administrative Agent shall give effect thereto in
apportioning payments received thereafter.

            (e) Subject to the provisos set forth in the definition of "Interest
Period" as they may apply to Revolving Loans, whenever any payment to be made
hereunder with respect to any Loan shall be stated to be due on a day that is
not a Business Day, such payment shall be made on the next succeeding Business
Day and, with respect to Revolving Loans only, such extension of time shall be
included in the computation of the payment of interest hereunder or of the
Revolving Commitment fees hereunder.

            (f) Company hereby authorizes Administrative Agent to charge
Company's accounts with Administrative Agent in order to cause timely payment to
be made to Administrative Agent of all principal, interest, fees and expenses
due hereunder (subject to sufficient funds being available in its accounts for
that purpose).

            (g) Administrative Agent shall deem any payment by or on behalf of
Company hereunder that is not made in same day funds prior to 12:00 p.m. (New
York City time) to be a non-conforming payment. Any such payment shall not be
deemed to have been received by Administrative Agent until the later of (i) the
time such funds become available funds, and (ii) the applicable next Business
Day. Administrative Agent shall give prompt telephonic notice to Company and
each applicable Lender (confirmed in writing) if any payment is non-conforming.
Any non-conforming payment may constitute or become a Default or Event of
Default in accordance with the terms of Section 8.1(a). Interest shall continue
to accrue on any principal as to which a non-conforming payment is made until
such funds become available funds (but in no event less than the period from the
date of such payment to the next succeeding applicable Business Day) at the rate
determined pursuant to Section 2.10 from the date such amount was due and
payable until the date such amount is paid in full.

            (h) If an Event of Default shall have occurred and not otherwise
been cured or waived, and the maturity of the Obligations shall have been
accelerated pursuant to Section 8.1, all payments or proceeds received by Agents
hereunder in respect of any of the Obligations, shall be applied in accordance
with the application arrangements described in Section 7.2 of the Pledge and
Security Agreement.

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      2.17. Ratable Sharing. Lenders hereby agree among themselves that, except
as otherwise provided in the Collateral Documents with respect to amounts
realized from the exercise of rights with respect to Liens on the Collateral, if
any of them shall, whether by voluntary payment (other than a voluntary
prepayment of Loans made and applied in accordance with the terms hereof),
through the exercise of any right of set-off or banker's lien, by counterclaim
or cross action or by the enforcement of any right under the Credit Documents or
otherwise, or as adequate protection of a deposit treated as cash collateral
under the Bankruptcy Code, receive payment or reduction of a proportion of the
aggregate amount of principal, interest, amounts payable in respect of Letters
of Credit, fees and other amounts then due and owing to such Lender hereunder or
under the other Credit Documents (collectively, the "AGGREGATE AMOUNTS DUE" to
such Lender) which is greater than the proportion received by any other Lender
in respect of the Aggregate Amounts Due to such other Lender, then the Lender
receiving such proportionately greater payment shall (a) notify Administrative
Agent and each other Lender of the receipt of such payment and (b) apply a
portion of such payment to purchase participations (which it shall be deemed to
have purchased from each seller of a participation simultaneously upon the
receipt by such seller of its portion of such payment) in the Aggregate Amounts
Due to the other Lenders so that all such recoveries of Aggregate Amounts Due
shall be shared by all Lenders in proportion to the Aggregate Amounts Due to
them; provided, if all or part of such proportionately greater payment received
by such purchasing Lender is thereafter recovered from such Lender upon the
bankruptcy or reorganization of Company or otherwise, those purchases shall be
rescinded and the purchase prices paid for such participations shall be returned
to such purchasing Lender ratably to the extent of such recovery, but without
interest. Company expressly consents to the foregoing arrangement and agrees
that any holder of a participation so purchased may exercise any and all rights
of banker's lien, set-off or counterclaim with respect to any and all monies
owing by Company to that holder with respect thereto as fully as if that holder
were owed the amount of the participation held by that holder.

      2.18. Making or Maintaining Eurodollar Rate Loans.

            (a) Inability to Determine Applicable Interest Rate. In the event
that Administrative Agent shall have determined in good faith (which
determination shall be final and conclusive and binding upon all parties
hereto), on any Interest Rate Determination Date with respect to any Eurodollar
Rate Loans, that by reason of circumstances affecting the London interbank
market adequate and fair means do not exist for ascertaining the interest rate
applicable to such Loans on the basis provided for in the definition of Adjusted
Eurodollar Rate, Administrative Agent shall on such date give notice (by
telefacsimile or by telephone confirmed in writing) to Company and each Lender
of such determination, whereupon (i) no Loans may be made as, or converted to,
Eurodollar Rate Loans until such time as Administrative Agent notifies Company
and Lenders that the circumstances giving rise to such notice no longer exist,
and (ii) any Funding Notice or Conversion/Continuation Notice given by Company
with respect to the Loans in respect of which such determination was made shall
be deemed to be rescinded by Company.

            (b) Illegality or Impracticability of Eurodollar Rate Loans. In the
event that on any date any Lender shall have determined in good faith (which
determination shall be final and conclusive and binding upon all parties hereto
but shall be made only after consultation with

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<PAGE>

Company and Administrative Agent) that the making, maintaining or continuation
of its Eurodollar Rate Loans (i) has become unlawful as a result of compliance
by such Lender in good faith with any law, treaty, governmental rule,
regulation, guideline or order (or would conflict with any such treaty,
governmental rule, regulation, guideline or order not having the force of law
even though the failure to comply therewith would not be unlawful), or (ii) has
become impracticable, as a result of contingencies occurring after the date
hereof which materially and adversely affect the London interbank market or the
position of such Lender in that market, then, and in any such event, such Lender
shall be an "AFFECTED LENDER" and it shall on that day give notice (by
telefacsimile or by telephone confirmed in writing) to Company and
Administrative Agent of such determination (which notice Administrative Agent
shall promptly transmit to each other Lender). Thereafter (1) the obligation of
the Affected Lender to make Loans as, or to convert Loans to, Eurodollar Rate
Loans shall be suspended until such notice shall be withdrawn by the Affected
Lender, (2) to the extent such determination by the Affected Lender relates to a
Eurodollar Rate Loan then being requested by Company pursuant to a Funding
Notice or a Conversion/Continuation Notice, the Affected Lender shall make such
Loan as (or continue such Loan as or convert such Loan to, as the case may be) a
Base Rate Loan, (3) the Affected Lender's obligation to maintain its outstanding
Eurodollar Rate Loans (the "AFFECTED LOANS") shall be terminated at the earlier
to occur of the expiration of the relevant Interest Periods, then in effect with
respect to the Affected Loans or when required by law, and (4) the Affected
Loans shall automatically convert into Base Rate Loans on the date of such
termination. Notwithstanding the foregoing, to the extent a determination by an
Affected Lender as described above relates to a Eurodollar Rate Loan then being
requested by Company pursuant to a Funding Notice or a Conversion/Continuation
Notice, Company shall have the option, subject to the provisions of Section
2.18(c), to rescind such Funding Notice or Conversion/Continuation Notice as to
all Lenders by giving notice (by telefacsimile or by telephone confirmed in
writing) to Administrative Agent of such rescission on the date on which the
Affected Lender gives notice of its determination as described above (which
notice of rescission Administrative Agent shall promptly transmit to each other
Lender). If Company does not rescind such Funding Notice or
Conversion/Continuation Notice, the Affected Lender's Pro-Rata Share of such
Loan shall constitute a Base Rate Loan. Except as provided in the immediately
preceding sentence, nothing in this Section 2.18(b) shall affect the obligation
of any Lender other than an Affected Lender to make or maintain Loans as, or to
convert Loans to, Eurodollar Rate Loans in accordance with the terms hereof.

            (c) Compensation for Breakage or Non-Commencement of Interest
Periods. Company shall compensate each Lender and each Funded LC Issuing Bank,
upon written request by such Lender or such Funded LC Issuing Bank, as the case
may be (which request shall set forth the basis for requesting such amounts),
for all reasonable losses, expenses and liabilities (including (x) the
difference between any interest paid by such Lender to lenders of funds borrowed
by it to make or carry its Eurodollar Rate Loans or make its Credit Linked
Deposits and the Adjusted Eurodollar Rate such Lender would receive in
connection with the liquidation or re-employment of such funds and (y) any
expense or liability sustained by such Lender in connection with the liquidation
or re-employment of such funds) which such Lender or such Funded LC Issuing Bank
may sustain: (i) if for any reason (other than a default by any such Lender or
Funded LC Issuing Bank) a borrowing of any Eurodollar Rate Loan does not occur
on a date specified therefor in a Funding Notice or a telephonic request for
borrowing, or a conversion to or continuation of any Eurodollar Rate Loan does
not occur on a date specified

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therefor in a Conversion/Continuation Notice or a telephonic request for
conversion or continuation; (ii) if any prepayment or other principal payment
of, or any conversion of, any of its Eurodollar Rate Loans occurs on a date
prior to the last day of an Interest Period applicable to that Loan; (iii) if
any prepayment of any of its Eurodollar Rate Loans is not made on any date
specified in a notice of prepayment given by Company; (iv) if any Credit Linked
Deposit is reduced prior to the last day of the Interest Period applicable
thereto (including as a result of an Event of Default) or any Credit Linked
Deposit is not reduced on the date specified in any notice delivered pursuant
hereto or (v) if any Credit Linked Deposit held by such Funded LC Issuing Bank
is reduced in order to reimburse such Funded LC Issuing Bank pursuant to
Sections 2.4(f) or 2.4(h); provided, Company shall not be obligated to
compensate any Lender or Funded LC Issuing Bank for any such losses, expenses or
liabilities attributable to any such circumstance occurring prior to the date
that is 90 days prior to the date on which such Lender or Funded LC Issuing Bank
requested such compensation from Company.

            (d) Booking of Eurodollar Rate Loans. Any Lender may make, carry or
transfer Eurodollar Rate Loans at, to, or for the account of any of its branch
offices or the office of an Affiliate of such Lender.

            (e) Assumptions Concerning Funding of Eurodollar Rate Loans.
Calculation of all amounts payable to a Lender under Section 2.18(c) shall be
made as though such Lender had actually funded each of its relevant Eurodollar
Rate Loans through the purchase of a Eurodollar deposit bearing interest at the
rate obtained pursuant to clause (i) of the definition of Adjusted Eurodollar
Rate in an amount equal to the amount of such Eurodollar Rate Loan and having a
maturity comparable to the relevant Interest Period and through the transfer of
such Eurodollar deposit from an offshore office of such Lender to a domestic
office of such Lender in the United States of America; provided, however, each
Lender may fund each of its Eurodollar Rate Loans in any manner it sees fit and
the foregoing assumptions shall be utilized only for the purposes of calculating
amounts payable under Section 2.18(c).

      2.19. Increased Costs; Capital Adequacy.

            (a) Compensation For Increased Costs and Taxes. Subject to the
provisions of Section 2.20 (which shall be controlling with respect to the
matters covered thereby), in the event that any Lender (which term shall include
each Issuing Bank for purposes of this Section 2.19(a)) shall determine (which
determination shall, absent manifest error, be final and conclusive and binding
upon all parties hereto) that any law, treaty or governmental rule, regulation
or order, or any change therein or in the interpretation, administration or
application thereof (including the introduction of any new law, treaty or
governmental rule, regulation or order), or any determination of a court or
governmental authority, in each case that becomes effective after the date
hereof, or compliance by such Lender with any guideline, request or directive
issued or made after the date hereof by any central bank or other governmental
or quasi-governmental authority (whether or not having the force of law): (i)
subjects such Lender (or its applicable lending office) to any additional Tax
(other than any Tax on the overall net income of such Lender) with respect to
this Agreement or any of the other Credit Documents or any of its obligations
hereunder or thereunder or any payments to such Lender (or its applicable
lending office) of principal, interest, fees or any other amount payable
hereunder; (ii) imposes, modifies or holds applicable any reserve (including any
marginal, emergency, supplemental, special or

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other reserve), special deposit, compulsory loan, FDIC insurance or similar
requirement against assets held by, or deposits or other liabilities in or for
the account of, or advances or loans by, or other credit extended by, or any
other acquisition of funds by, any office of such Lender (other than any such
reserve or other requirements with respect to Eurodollar Rate Loans or Credit
Linked Deposits that are reflected in the definition of Adjusted Eurodollar
Rate, or (iii) imposes any other condition (other than with respect to a Tax
matter) on or affecting such Lender (or its applicable lending office) or its
obligations hereunder or the London interbank market; and the result of any of
the foregoing is to increase the cost to such Lender of agreeing to make, making
or maintaining Loans or Credit Linked Deposits hereunder or to reduce any amount
received or receivable by such Lender (or its applicable lending office) with
respect thereto; then (A) as necessary, the Credit Linked Deposits shall be
invested so as to earn a return equal to the greater of the Federal Funds
Effective Rate and a rate determined by Administrative Agent in accordance with
banking industry rules in interbank compensation and (B) in any such case,
Company shall promptly pay to such Lender, upon receipt of the statement
referred to in the next sentence, such additional amount or amounts (in the form
of an increased rate of, or a different method of calculating, interest or
otherwise as such Lender in its sole discretion shall determine) as may be
necessary to compensate such Lender for any such increased cost or reduction in
amounts received or receivable hereunder; provided, Company shall not be
obligated to pay such Lender any compensation attributable to any period prior
to the date that is 180 days prior to the date on which such Lender gave notice
to Company of the circumstances entitling such Lender to compensation. Such
Lender shall deliver to Company (with a copy to Administrative Agent) a written
statement, setting forth in reasonable detail the basis for calculating the
additional amounts owed to such Lender under this Section 2.19(a) and in the
calculation thereof, which statement shall be conclusive and binding upon all
parties hereto absent manifest error.

            (b) Capital Adequacy Adjustment. In the event that any Lender (which
term shall include each Issuing Bank for purposes of this Section 2.19(b)) shall
have determined that the adoption, effectiveness, phase-in or change in
applicability after the Closing Date of any law, rule or regulation (or any
provision thereof) regarding capital adequacy, or any change therein or in the
interpretation or administration thereof by any Governmental Authority, central
bank or comparable agency charged with the interpretation or administration
thereof, or compliance by any Lender (or its applicable lending office) with any
guideline, request or directive regarding capital adequacy (whether or not
having the force of law) of any such Governmental Authority, central bank or
comparable agency, has or would have the effect of reducing the rate of return
on the capital of such Lender or any corporation controlling such Lender as a
consequence of, or with reference to, such Lender's Loans, Revolving
Commitments, Letters of Credit or Credit Linked Deposits, or participations
therein or other obligations hereunder with respect to the Loans or the Letters
of Credit to a level below that which such Lender or such controlling
corporation could have achieved but for such adoption, effectiveness, phase-in,
change in applicability, change or compliance (taking into consideration the
policies of such Lender or such controlling corporation with regard to capital
adequacy), then from time to time, within five Business Days after receipt by
Company from such Lender of the statement referred to in the next sentence,
Company shall pay to such Lender such additional amount or amounts as will
compensate such Lender or such controlling corporation on an after-tax basis for
such reduction; provided, Company shall not be obligated to pay such Lender any
compensation attributable to any period prior to the date that is 180 days prior
to the date on which such Lender gave notice to Company of the circumstances
entitling such Lender to compensation. Such Lender shall deliver

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to Company (with a copy to Administrative Agent) a written statement, setting
forth in reasonable detail the basis for calculating the additional amounts owed
to Lender under this Section 2.19(b) and in the calculation thereof, which
statement shall be conclusive and binding upon all parties hereto absent
manifest error.

      2.20. Taxes; Withholding, etc.

            (a) Payments to Be Free and Clear. All sums payable by any Credit
Party hereunder and under the other Credit Documents shall (except to the extent
required by law) be paid free and clear of, and without any deduction or
withholding on account of, any Tax (other than a Tax on the overall net income
of any Lender (which term shall include each Issuing Bank for purposes of this
Section 2.20(a)) imposed, levied, collected, withheld or assessed by or within
the United States of America or any political subdivision in or of the United
States of America or any other jurisdiction from or to which a payment is made
by or on behalf of any Credit Party.

            (b) Withholding of Taxes. If any Credit Party or any other Person is
required by law to make any deduction or withholding on account of any such Tax
from any sum paid or payable by any Credit Party to Administrative Agent or any
Lender (which term shall include each Issuing Bank for purposes of this Section
2.20(b)) under any of the Credit Documents: (i) Company shall notify
Administrative Agent of any such requirement or any change in any such
requirement reasonably promptly after Company becomes aware of it; (ii) Company
shall pay or cause to be paid any such Tax before the date on which penalties
attach thereto; (iii) the sum payable by such Credit Party in respect of which
the relevant deduction, withholding or payment is required shall be increased to
the extent necessary to ensure that, after the making of that deduction,
withholding or payment, Administrative Agent or such Lender, as the case may be,
receives on the due date a net sum equal to what it would have received had no
such deduction, withholding or payment been required or made; and (iv) within
thirty days after paying any sum from which it is required by law to make any
deduction or withholding, and within thirty days after the due date of payment
of any Tax which it is required by clause (ii) above to pay, Company shall
deliver to Administrative Agent evidence reasonably satisfactory to the other
affected parties of such deduction, withholding or payment and of the remittance
thereof to the relevant taxing or other authority; provided, no such additional
amount shall be required to be paid to Administrative Agent or any Lender under
clause (iii) above except to the extent that any change in any applicable law,
treaty or governmental rule, regulation, or order or, or any change in the
interpretation, administration or application thereof, after the date hereof (in
the case of each Lender listed on the signature pages hereof on the Closing
Date) or after the effective date of the Assignment Agreement pursuant to which
such Lender became a Lender (in the case of each other Lender) in any such
requirement for a deduction, withholding or payment as is mentioned therein
shall result in an increase in the rate of such deduction, withholding or
payment from that in effect at the date hereof or at the date of such Assignment
Agreement, as the case may be, in respect of payments to Administrative Agent or
such Lender.

            (c) Evidence of Exemption From U.S. Withholding Tax. Each Non-US
Lender shall deliver to Administrative Agent and Company, on or prior to the
Closing Date (in the case of each Lender (which term shall include each Issuing
Bank for purposes of this Section 2.20(c)) listed on the signature pages hereof
on the Closing Date) or on or prior to the date of the Assignment Agreement
pursuant to which it becomes a Lender (in the case of each other

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Lender), and at such other times as may be necessary in the determination of
Company or Administrative Agent (each in the reasonable exercise of its
discretion), (i) two original copies of Internal Revenue Service Form W-8BEN,
W-8ECI or W-8IMY (including therewith any withholding certificates and
withholding statements required under applicable Treasury Regulations) (or any
successor forms), properly completed and duly executed by such Lender, and such
other documentation required under the Internal Revenue Code and the applicable
Treasury Regulations and reasonably requested by Company to establish that such
Lender is not subject to deduction or withholding of United States federal
income tax with respect to any payments to such Lender of principal, interest,
fees or other amounts payable under any of the Credit Documents, or (ii) if such
Lender is not a "bank" or other Person described in Section 881(c)(3) of the
Internal Revenue Code and cannot deliver Internal Revenue Service Form W-8ECI
pursuant to clause (i) above, a Certificate re Non-Bank Status together with two
original copies of Internal Revenue Service Form W-8BEN (or any successor form),
properly completed and duly executed by such Lender, and such other
documentation required under the Internal Revenue Code and the applicable
Treasury Regulations and reasonably requested by Company to establish that such
Lender is not subject to deduction or withholding of United States federal
income tax with respect to any payments to such Lender of interest payable under
any of the Credit Documents. Each Lender required to deliver any forms,
certificates or other evidence with respect to United States federal income tax
withholding matters pursuant to this Section 2.20(c) hereby agrees, from time to
time after the initial delivery by such Lender of such forms, certificates or
other evidence, whenever a lapse in time or change in circumstances renders such
forms, certificates or other evidence obsolete or inaccurate in any material
respect, that such Lender shall promptly deliver to Administrative Agent and
Company two new original copies of Internal Revenue Service Form W-8BEN, W-8ECI
or W-8IMY (including therewith any withholding certificates and withholding
statements required under applicable Treasury Regulations), or a Certificate re
Non-Bank Status and two original copies of Internal Revenue Service Form W-8BEN
(or any successor form), as the case may be, properly completed and duly
executed by such Lender, and such other documentation required under the
Internal Revenue Code and the applicable Treasury Regulations and reasonably
requested by Company to confirm or establish that such Lender is not subject to
deduction or withholding of United States federal income tax with respect to
payments to such Lender under the Credit Documents, or notify Administrative
Agent and Company of its inability to deliver any such forms, certificates or
other evidence. Each Lender that is organized under the laws of the United
States or any State or political subdivision thereof and that is not an "exempt
recipient" (as defined in Treasury Regulations section 1.6049-4(c)) with respect
to which no backup withholding is required shall, on or prior to the Closing
Date (in the case of each Lender listed on the signature pages hereof on the
Closing Date), or on or prior to the date of the Assignment Agreement pursuant
to which it becomes a Lender (in the case of each other Lender) provide
Administrative Agent and Company with two original copies of Internal Revenue
Service Form W-9 (certifying that such Person is entitled to an exemption from
United States backup withholding tax) or any successor form, and each such
Lender shall thereafter provide Administrative Agent and Company with such
supplements and amendments thereto and such additional forms, certificates,
statements or documents as may from time to time be required by applicable law.
Company shall not be required to pay any additional amount to any Lender under
Section 2.20(b)(iii) if such Lender shall have failed (1) to deliver the forms,
certificates or other evidence referred to in this Section 2.20(c), or (2) to
notify Administrative Agent and Company of its inability to deliver any such

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forms, certificates or other evidence, as the case may be; provided, if such
Lender shall have satisfied the requirements of the first sentence or third
sentence, as applicable, of this Section 2.20(c) on the Closing Date or on the
date of the Assignment Agreement pursuant to which it became a Lender, as
applicable, nothing in this last sentence of this Section 2.20(c) shall relieve
Company of its obligation to pay any additional amounts pursuant to Section
2.20(b)(iii) in the event that, as a result of any change in any applicable law,
treaty or governmental rule, regulation or order, or any change in the
interpretation, administration or application thereof, such Lender is no longer
legally entitled to deliver forms, certificates or other evidence at a
subsequent date establishing the fact that such Lender is not subject to
withholding as described herein.

            (d) If any Lender (which term shall include each Issuing Bank for
purposes of this Section 2.20(d)) or Administrative Agent shall become aware
that it is entitled to receive a refund in respect of Taxes paid by Company or
as to which it has received additional amounts under Section 2.20(b)(iii), it
shall promptly notify Company of the availability of such refund and shall,
within ninety days after receipt of a request by Company, apply for such refund
at Company's expense. If any Lender or Administrative Agent actually receives a
refund in respect of any Taxes paid by Company or as to which it has received
additional amounts under Section 2.20(b)(iii), it shall promptly notify Company
of such refund and shall, within ninety days after receipt of a request by
Company (or promptly upon receipt, if Company has requested application for such
refund pursuant hereto), repay such refund to Company (to the extent of amounts
that have been paid by Company under Section 2.20(b)(iii) with respect to such
refund plus interest that is received by such Lender or Administrative Agent as
part of the refund), net of all reasonable out-of-pocket expenses of such Lender
or Administrative Agent and without additional interest thereon; provided, that
Company, upon the request of such Lender or Administrative Agent, agrees to
return such refund to such Lender or Administrative Agent in the event such
Lender or Administrative Agent is required to repay such refund. Nothing
contained in this Section 2.20(d) shall require any Lender or Administrative
Agent to make available any of its tax returns (or any other information
relating to its taxes that it deems to be confidential).

      2.21. Obligation to Mitigate. Each Lender (which term shall include each
Issuing Bank for purposes of this Section 2.21) agrees that, as promptly as
practicable after the officer of such Lender responsible for administering its
Loans or Letters of Credit, as the case may be, becomes aware of the occurrence
of an event or the existence of a condition that would cause such Lender to
become an Affected Lender or that would entitle such Lender to receive payments
under Section 2.18, 2.19 or 2.20, it will, to the extent not inconsistent with
the internal policies of such Lender and any applicable legal or regulatory
restrictions, use reasonable efforts to (a) make, issue, fund or maintain its
Credit Extensions, including any Affected Loans, through another office of such
Lender, or (b) take such other measures as such Lender may in good faith deem
reasonable, if as a result thereof the circumstances which would cause such
Lender to be an Affected Lender would cease to exist or the additional amounts
which would otherwise be required to be paid to such Lender pursuant to Section
2.18, 2.19 or 2.20 would be materially reduced and if, as determined by such
Lender in its sole discretion, the making, issuing, funding or maintaining of
such Revolving Commitments, Loans or Letters of Credit through such other office
or in accordance with such other measures, as the case may be, would not
otherwise adversely affect such Revolving Commitments, Loans or Letters of
Credit or the interests of such

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Lender; provided, such Lender will not be obligated to utilize such other office
pursuant to this Section 2.21 unless Company agrees to pay all incremental
expenses incurred by such Lender as a result of utilizing such other office as
described in clause (i) above. A certificate as to the amount of any such
expenses payable by Company pursuant to this Section 2.21 (setting forth in
reasonable detail the basis for requesting such amount) submitted by such Lender
to Company (with a copy to Administrative Agent) shall be conclusive absent
manifest error.

      2.22. Defaulting Lenders. Anything contained herein to the contrary
notwithstanding, in the event that any Lender, other than at the direction or
request of any regulatory agency or authority, defaults (a "DEFAULTING LENDER")
in its obligation to fund (a "FUNDING DEFAULT") any Revolving Loan or its
portion of any unreimbursed payment under Section 2.3(b)(iv) or 2.4(e) or to
fund its Credit Linked Deposit (in each case, a "DEFAULTED LOAN"), then (a)
during any Default Period with respect to such Defaulting Lender, such
Defaulting Lender shall be deemed not to be a "Lender" for purposes of voting on
any matters (including the granting of any consents or waivers) with respect to
any of the Credit Documents; (b) to the extent permitted by applicable law,
until such time as the Default Excess with respect to such Defaulting Lender
shall have been reduced to zero, (i) any voluntary prepayment of the Revolving
Loans shall, if Company so directs at the time of making such voluntary
prepayment, be applied to the Revolving Loans of other Lenders as if such
Defaulting Lender had no Revolving Loans outstanding and the Revolving Exposure
of such Defaulting Lender were zero, and (ii) any mandatory prepayment of the
Revolving Loans shall, if Company so directs at the time of making such
mandatory prepayment, be applied to the Revolving Loans of other Lenders (but
not to the Revolving Loans of such Defaulting Lender) as if such Defaulting
Lender had funded all Defaulted Loans of such Defaulting Lender, it being
understood and agreed that Company shall be entitled to retain any portion of
any mandatory prepayment of the Revolving Loans that is not paid to such
Defaulting Lender solely as a result of the operation of the provisions of this
clause (b); (c)(i) such Defaulting Lender's Revolving Commitment and outstanding
Revolving Loans and such Defaulting Lender's Pro Rata Share of the Revolving
Letter of Credit Usage shall be excluded for purposes of calculating the
Revolving Commitment fee payable to Lenders in respect of any day during any
Default Period with respect to such Defaulting Lender, and such Defaulting
Lender shall not be entitled to receive any Revolving Commitment fee pursuant to
Section 2.11 with respect to such Defaulting Lender's Revolving Commitment in
respect of any Default Period with respect to such Defaulting Lender and (ii)
such Defaulting Lender shall not be entitled to receive any Funded Letter of
Credit Fees pursuant to Section 2.11 with respect to such Lenders' Credit Linked
Deposit in respect of any Default Period with respect to such Default under; and
(d) the Total Utilization of Revolving Commitments as at any date of
determination shall be calculated as if such Defaulting Lender had funded all
Defaulted Loans of such Defaulting Lender. No Revolving Commitment or Credit
Linked Deposit of any Lender shall be increased or otherwise affected, and,
except as otherwise expressly provided in this Section 2.22, performance by
Company of its obligations hereunder and the other Credit Documents shall not be
excused or otherwise modified as a result of any Funding Default or the
operation of this Section 2.22. The rights and remedies against a Defaulting
Lender under this Section 2.22 are in addition to other rights and remedies
which Company may have against such Defaulting Lender with respect to any
Funding Default and which Administrative Agent or any Lender may have against
such Defaulting Lender with respect to any Funding Default.

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      2.23. Removal or Replacement of a Lender. Anything contained herein to the
contrary notwithstanding, in the event that: (a) (i) any Lender (an
"INCREASED-COST LENDER") shall give notice to Company that such Lender is an
Affected Lender or that such Lender is entitled to receive payments under
Section 2.18, 2.19 or 2.20, (ii) the circumstances which have caused such Lender
to be an Affected Lender or which entitle such Lender to receive such payments
shall remain in effect, and (iii) such Lender shall fail to withdraw such notice
within five Business Days after Company's request for such withdrawal; or (b)
(i) any Lender shall become a Defaulting Lender (or any Lender at the direction
or request or any regulatory agency or authority shall default in its obligation
to fund, for the purposes of this Section 2.23 only, such Lender also a
"Defaulting Lender"), (ii) the Default Period for such Defaulting Lender shall
remain in effect, and (iii) such Defaulting Lender shall fail to cure the
default as a result of which it has become a Defaulting Lender within five
Business Days after Company's request that it cure such default; or (c) in
connection with any proposed amendment, modification, termination, waiver or
consent with respect to any of the provisions hereof as contemplated by Section
10.5(b), the consent of Requisite Lenders shall have been obtained, but the
consent of one or more of such other Lenders (each a "NON-CONSENTING LENDER")
whose consent is required shall not have been obtained; then, with respect to
each such Increased-Cost Lender, Defaulting Lender or Non-Consenting Lender (the
"TERMINATED LENDER"), Company may, by giving written notice to Administrative
Agent and any Terminated Lender of its election to do so, elect to cause such
Terminated Lender (and such Terminated Lender hereby irrevocably agrees) to
assign all or any part of its outstanding Loans, its Revolving Commitments and
Credit Linked Deposits, if any, in full to one or more Eligible Assignees (each
a "REPLACEMENT LENDER") in accordance with the provisions of Section 10.6 and
Terminated Lender shall pay any fees payable thereunder in connection with such
assignment; provided, (1) on the date of such assignment, the Replacement Lender
shall pay to Terminated Lender an amount equal to the sum of (A) an amount equal
to the principal of, and all accrued interest on, all outstanding Loans and
Credit Linked Deposits of the Terminated Lender, (B) an amount equal to all
unreimbursed drawings that have been funded by such Terminated Lender, together
with all then unpaid interest with respect thereto at such time and (C) an
amount equal to all accrued, but theretofore unpaid fees owing to such
Terminated Lender pursuant to Section 2.11; (2) on the date of such assignment,
Company shall pay any amounts payable to such Terminated Lender pursuant to
Section 2.18(c), 2.19 or 2.20; and (3) in the event such Terminated Lender is a
Non-Consenting Lender, each Replacement Lender shall consent, at the time of
such assignment, to each matter in respect of which such Terminated Lender was a
Non-Consenting Lender; provided, Company may not make such election with respect
to any Terminated Lender that is also an Issuing Bank unless, prior to the
effectiveness of such election, Company shall have caused each outstanding
Letter of Credit issued thereby to be cancelled, fully cash collateralized or
supported by a "back-to-back" Letter of Credit reasonably satisfactory to such
Terminated Lender. In connection with any such replacement, if the replaced
Lender does not execute and deliver to the Administrative Agent a duly completed
Assignment and Acceptance reflecting such replacement within a period of time
deemed reasonable by the Administrative Agent, then such replaced Lender shall
be deemed to have executed and delivered such Assignment and Acceptance. Upon
the prepayment of all amounts owing to any Terminated Lender and the termination
of such Terminated Lender's Revolving Commitments and Credit Linked Deposits, if
any, such Terminated Lender shall no longer constitute a "Lender" for purposes
hereof; provided, any rights of such Terminated Lender to indemnification
hereunder shall survive as to such Terminated Lender.

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SECTION 3. CONDITIONS PRECEDENT

      3.1. Closing Date. The obligation of any Lender to make a Credit Extension
on the Closing Date is subject to the satisfaction, or waiver in accordance with
Section 10.5, of the following conditions on or before the Closing Date:

            (a) Credit Documents. Administrative Agent shall have received
sufficient copies of each Credit Document originally executed and delivered by
Holdings, Company and each of its Subsidiaries, as applicable, for each Lender.

            (b) Organizational Documents; Incumbency. Administrative Agent shall
have received (i) sufficient copies of each Organizational Document of Holdings,
Company and each Guarantor Subsidiary, as applicable, and, to the extent
applicable, certified as of a recent date by the appropriate governmental
official, for each Lender, each dated the Closing Date or a recent date prior
thereto; (ii) signature and incumbency certificates of the officers of such
Person executing the Credit Documents to which it is a party; (iii) resolutions
of the board of directors or similar governing body of Holdings, Company and
each Guarantor Subsidiary approving and authorizing the execution, delivery and
performance of this Agreement and the other Credit Documents and the Related
Agreements to which it is a party or by which it or its assets may be bound as
of the Closing Date, certified as of the Closing Date by its secretary or an
assistant secretary as being in full force and effect without modification or
amendment; (iv) a good standing certificate from the applicable Governmental
Authority (A) of the jurisdiction of incorporation, organization or formation of
Holdings, Company and each Guarantor Subsidiary, (B), with respect to Company,
of each jurisdiction in which it is qualified as a foreign corporation or other
entity to do business and (C), with respect to Holdings and each Guarantor
Subsidiary, of each jurisdiction in which each such entity has its principal
assets, each dated a recent date prior to the Closing Date; and (v) such other
documents as Administrative Agent may reasonably request.

            (c) Organizational and Capital Structure. The organizational
structure and capital structure of Holdings, Company and its Subsidiaries, both
before and after giving effect to the Transactions, shall be as set forth on
Schedule 4.1.

            (d) Consummation of Transactions.

                  (i) Company shall have received the gross proceeds from the
      borrowings of the Second Lien Term Loans in an aggregate amount in cash of
      not less than $400,000,000;

                  (ii) Company shall have delivered to Administrative Agent
      complete, correct and conformed copies of the Second Lien Credit
      Agreement.

                  (iii) Administrative Agent shall have received a fully
      executed or conformed copy of each Related Agreement (except the Second
      Lien Notes Indenture, the MSW Refinancing Indentures, the New MSW
      Indentures, the ARC Refinancing Indenture, the New ARC Indenture and the
      Put-Related Equity Offering Agreement and all collateral documents related
      to each) executed on or prior to the Closing Date and each such Related
      Agreement shall be in full force and effect.

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                  (iv) Since the date of execution thereof, there shall have
      been no amendment, restatement, or other modification or waiver of the
      terms and conditions of the Stock Purchase Agreement which, in the
      reasonable opinion of Administrative Agent, is in any manner materially
      adverse to the Lenders without the prior written consent of Administrative
      Agent (which consent shall not be unreasonably withheld).

                  (v) Holdings shall have completed the Rights Offering and
      Company shall have received at least $399,000,000 from (i) the cash
      contribution to Company by Holdings of the proceeds of the Rights
      Offering, (ii) the cash contribution to Company by Holdings of
      unrestricted cash on hand at Holdings and/or (iii) no more than
      $25,000,000 in cash from pro forma consolidated cash on hand at Company.

                  (vi) There shall not exist, after giving effect to the
      Transactions, any default or potential event of default under the Second
      Lien Credit Agreement, or any Credit Document or (except to the extent
      expressly described as Schedule 3.1(d)) any material Indebtedness of
      Holdings and its Subsidiaries including, without limitation, the MSW
      Indentures and the ARC Indenture.

            (e) Existing Indebtedness. On the Closing Date, Company and its
Subsidiaries shall have (i) repaid in full all Existing Indebtedness, (ii)
terminated any commitments to lend or make other extensions of credit under
Existing Indebtedness, (iii) delivered to Administrative Agent all documents or
instruments necessary to release all Liens securing Existing Indebtedness or
other obligations of Company and its Subsidiaries thereunder being repaid on the
Closing Date or otherwise made arrangements reasonably satisfactory to
Administrative Agent with respect thereto, and (iv) made arrangements reasonably
satisfactory to Administrative Agent with respect to the cancellation of any
letters of credit outstanding thereunder or the deemed issuance of such letters
of credit as Funded Letters of Credit under Section 2.4(m) or the issuance of
Letters of Credit to support the obligations of Company and its Subsidiaries
with respect thereto.

            (f) Transaction Costs. On or prior to the Closing Date, Company
shall have delivered to Administrative Agent Company's estimate of the
Transactions Costs.

            (g) Governmental Authorizations and Consents. Each Credit Party
shall have obtained all Governmental Authorizations and all consents of other
Persons, in each case that are necessary in connection with the transactions
contemplated by the Credit Documents and the Related Agreements to be entered
into on or prior to the Closing Date and each of the foregoing shall be in full
force and effect and in form and substance reasonably satisfactory to
Administrative Agent. All applicable waiting periods shall have expired without
any action being taken or threatened by any competent authority which would
restrain, prevent or otherwise impose adverse conditions on the Transactions or
the financing thereof and no action, request for stay, petition for review or
rehearing, reconsideration, or appeal with respect to any of the foregoing shall
be pending, and the time for any applicable agency to take action to set aside
its consent on its own motion shall have expired.

            (h) Real Estate Assets. In order to create in favor of Collateral
Agent, for the benefit of Secured Parties, a valid and, subject to any filing
and/or recording referred to herein,

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perfected First Priority security interest in certain Real Estate Assets,
Collateral Agent shall have received from Company and each applicable Guarantor
Subsidiary:

                  (i) fully executed and notarized Mortgages, in proper form for
      recording in all appropriate places in all applicable jurisdictions,
      encumbering each Real Estate Asset listed in Schedule 3.1(h) (each, a
      "CLOSING DATE MORTGAGED PROPERTY");

                  (ii) an opinion of counsel (which counsel shall be reasonably
      satisfactory to Collateral Agent) in each state in which a Closing Date
      Mortgaged Property is located with respect to the enforceability of the
      Mortgages to be recorded in such state and such other matters as
      Collateral Agent may reasonably request, in each case in form and
      substance reasonably satisfactory to Collateral Agent;

                  (iii) (a) ALTA mortgagee title insurance policies or
      unconditional commitments therefor issued by one or more title companies
      reasonably satisfactory to Collateral Agent with respect to each Closing
      Date Mortgaged Property (each, a "TITLE POLICY"), in amounts not less than
      the fair market value of each Closing Date Mortgaged Property or such
      other amount reasonably required by Collateral Agent, together with a
      title report issued by a title company with respect thereto, dated not
      more than thirty days prior to the Closing Date and copies of all recorded
      documents listed as exceptions to title or otherwise referred to therein,
      each in form and substance reasonably satisfactory to Collateral Agent and
      (B) evidence satisfactory to Collateral Agent that Company or such
      Guarantor Subsidiary has paid to the title company or to the appropriate
      governmental authorities all expenses and premiums of the title company
      and all other sums required in connection with the issuance of each Title
      Policy and all recording and stamp taxes (including mortgage recording and
      intangible taxes) payable in connection with recording the Mortgages for
      each Closing Date Mortgaged Property in the appropriate real estate
      records;

                  (iv) evidence of flood insurance with respect to each Flood
      Hazard Property that is located in a community that participates in the
      National Flood Insurance Program, in each case in compliance with any
      applicable regulations of the Board of Governors of the Federal Reserve
      System, in form and substance reasonably satisfactory to Collateral Agent;
      and

                  (v) ALTA surveys of all Closing Date Mortgaged Properties,
      certified to Collateral Agent with a form of certification reasonably
      satisfactory to Collateral Agent and dated not more than thirty days prior
      to the Closing Date (each a "SURVEY").

               (i) Personal Property Collateral. In order to create in favor of
   Collateral Agent, for the benefit of Secured Parties, a valid, perfected
   First Priority security interest in the personal property Collateral,
   Collateral Agent shall have received:

                  (i) evidence satisfactory to Collateral Agent of the
      compliance by Holdings with the Holdings Pledge Agreement and by Company
      or each Guarantor Subsidiary of their obligations under the Pledge and
      Security Agreement and the other Collateral Documents (including, without
      limitation, their obligations to execute and/or deliver UCC financing

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      statements, originals of securities, instruments and chattel paper and any
      agreements governing deposit and/or securities accounts as provided
      therein);

                  (ii) (A) the results of a recent search, by a Person
      reasonably satisfactory to Collateral Agent, of the UCC filing offices in
      the jurisdictions specified by Company, together with copies of all such
      filings disclosed by such search, and (B) UCC termination statements (or
      similar documents) duly authorized by all applicable Persons for filing in
      all applicable jurisdictions as may be necessary to terminate any
      effective UCC financing statements (or equivalent filings) disclosed in
      such search (other than any such financing statements in respect of
      Permitted Liens);

                  (iii) opinions of counsel (which counsel shall be reasonably
      satisfactory to Collateral Agent) with respect to the creation and
      perfection of the security interests in favor of Collateral Agent in such
      Collateral and such other matters governed by the laws of each
      jurisdiction in which Company or any Guarantor Subsidiary is located as
      Collateral Agent may reasonably request, in each case in form and
      substance reasonably satisfactory to Collateral Agent; and

                  (iv) evidence that Company or each Guarantor Subsidiary shall
      have taken or caused to be taken any other action, executed and delivered
      or caused to be executed and delivered any other agreement, document and
      instrument (including without limitation, any intercompany notes
      evidencing Indebtedness permitted to be incurred pursuant to Section
      6.1(b) including, without limitation, the Intercompany Master Note) and
      made or caused to be made any other filing and recording (other than as
      set forth herein) reasonably required by Collateral Agent to create or
      perfect a First Priority Lien on the personal property Collateral, in each
      case except for matters contemplated in Section 5.18.

            (j) Environmental Reports. Administrative Agent shall have received
reports and other information, in form and substance satisfactory to
Administrative Agent, regarding environmental matters relating to the
Facilities.

            (k) Financial Statements; Projections. Administrative Agent shall
have received from Holdings, Company and Acquired Business (i) the Historical
Financial Statements, (ii) pro forma consolidated balance sheets of Holdings,
Company and Acquired Business as at December 31, 2004, and reflecting the
consummation of the Transactions, the related financings, which pro forma
financial statements shall be in form and substance reasonably satisfactory to
Administrative Agent, and (iii) the Projections.

            (l) Evidence of Insurance. Collateral Agent shall have received a
certificate from Company's insurance broker or other evidence reasonably
satisfactory to it that all insurance required to be maintained pursuant to
Section 5.5 is in full force and effect, together with endorsements naming the
Collateral Agent, for the benefit of Lenders, as additional insured and loss
payee thereunder to the extent required under Section 5.5.

            (m) Opinions of Counsel to Credit Parties. Lenders and their
respective counsel shall have received originally executed copies of the
favorable written opinions of (i) Skadden, Arps, Slate, Meagher & Flom LLP,
counsel for Credit Parties, (ii) LeBoeuf, Lamb, Greene &

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MacRae LLP, and (iii) and Timothy Simpson as general counsel to Company, in the
form of Exhibit D1, Exhibit D-2 and Exhibit D-3, respectively, dated as of the
Closing Date and otherwise in form and substance reasonably satisfactory to
Administrative Agent (and each Credit Party hereby instructs such counsel to
deliver such opinions to Agents and Lenders).

            (n) Chief Financial Officer Certificate. Company shall have
delivered to Administrative Agent and Lenders an originally executed chief
financial officer certificate certifying that the pro forma Consolidated
Adjusted EBITDA of Company and its Subsidiaries for the twelve-month period
ended December 31, 2004 and for the latest twelve-month period for which
financial statements are available (which pro forma ratio shall be calculated
reflecting the Transactions on a pro forma basis and reflecting the methodology
set forth in Exhibit 1 to the commitment letter delivered by GSCP and Credit
Suisse to Holdings with respect to the transactions contemplated by this
Agreement) is not less than $485,000,000.

            (o) Holdings Restricted Account. Administrative Agent shall be
satisfied that Holdings has funded a segregated account in an amount not less
than $6,471,000 (the "INSURANCE DEPOSIT AMOUNT") for the sole purpose of funding
any regulatory capital or other requirements relating to the Insurance
Subsidiaries of Holdings (the "INSURANCE REGULATORY ACCOUNT").

            (p) Plan of Reorganization Restricted Account. Administrative Agent
shall be satisfied that Company has established and funded a segregated account
in an amount not less than $4,000,000 (the "PLAN OF REORGANIZATION INITIAL
DEPOSIT AMOUNT") for the sole purpose of satisfying the "Class 4 Claims" (as
such term is defined in the Plan of Reorganization) (the "PLAN OF REORGANIZATION
ACCOUNT"), and shall have paid to U.S. Bank Trust National Association as
Trustee under the Indenture dated as of March 10, 2004, between Company and U.S.
Bank Trust National Association in respect of the 7.5% Subordinated Unsecured
Notes due 2012 an amount sufficient to discharge all obligations under all notes
issued under such indenture.

            (q) Fees. Company shall have paid to Co-Syndication Agents, Joint
Lead Arrangers, Administrative Agent and Co-Documentation Agents, the fees
payable on the Closing Date referred to in Section 2.11(f).

            (r) Solvency Certificate. On the Closing Date, Administrative Agent
shall have received a Solvency Certificate from Holdings dated the Closing Date
and addressed to Administrative Agent and Lenders, and in the form of Exhibit
G-2 hereto demonstrating that after giving effect to the consummation of the
Acquisition, the Refinancing, the Rights Offering and the borrowings under this
Agreement and the Second Lien Credit Agreement, Holdings and its Subsidiaries on
a consolidated basis are Solvent.

            (s) Closing Date Certificate. Holdings and Company shall have
delivered to Administrative Agent an originally executed Closing Date
Certificate, together with all attachments thereto.

            (t) Credit Rating. The credit facilities provided for under this
Agreement shall have been assigned a credit rating by each of S&P and Moody's.

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            (u) Closing Date. Lenders shall have made the Term Loans to Company.

            (v) No Litigation. There shall not exist any action, suit,
investigation, litigation or proceeding or other legal or regulatory
developments, pending or threatened in any court or before any arbitrator or
Governmental Authority, singly or in the aggregate, that seeks to prohibit the
Transactions, the financing thereof or any of the other transactions
contemplated by the Credit Documents or that has had or could reasonably be
expected to have a Material Adverse Effect.

            (w) Completion of Proceedings. All partnership, corporate and other
similar proceedings taken or to be taken in connection with the transactions
contemplated hereby and all documents incidental thereto shall be reasonably
satisfactory in form and substance to Administrative Agent, and Administrative
Agent shall have received all such counterpart originals or certified copies of
such documents as Administrative Agent may reasonably request.

Each Lender, by delivering its signature page to this Agreement and funding a
Loan or funding a Credit Linked Deposit on the Closing Date, shall be deemed to
have acknowledged receipt of, and consented to and approved, each Credit
Document and each other document required to be approved by any Agent, Requisite
Lenders or Lenders, as applicable on the Closing Date.

      3.2. Conditions to Each Credit Extension.

            (a) Conditions Precedent. The obligation of each Lender to make any
Loan on any Credit Date or fund its Credit Linked Deposit on the Closing Date,
or any Issuing Bank to issue any Letter of Credit, on any Credit Date, including
the Closing Date, are subject to the satisfaction, or waiver in accordance with
Section 10.5, of the following conditions precedent:

                  (i) Administrative Agent shall have received a fully executed
      and delivered Funding Notice or Issuance Notice, as the case may be;

                  (ii) after making the Credit Extensions requested on such
      Credit Date, the Total Utilization of Revolving Commitments shall not
      exceed the Revolving Commitments then in effect;

                  (iii) as of such Credit Date, the representations and
      warranties contained herein and in the other Credit Documents shall be
      true and correct in all material respects on and as of that Credit Date to
      the same extent as though made on and as of that date, except to the
      extent such representations and warranties specifically relate to an
      earlier date, in which case such representations and warranties shall have
      been true and correct in all material respects on and as of such earlier
      date;

                  (iv) as of such Credit Date, no event shall have occurred and
      be continuing or would result from the consummation of the applicable
      Credit Extension that would constitute an Event of Default or a Default;
      and

                  (v) on or before the date of issuance of any Letter of Credit,
      Administrative Agent shall have received all other information required by
      the applicable Issuance Notice,

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      and such other documents or information as the Issuing Bank may reasonably
      require in connection with the issuance of such Letter of Credit.

            (b) Notices. Any Notice shall be executed by an Authorized Officer
in a writing delivered to Administrative Agent. In lieu of delivering a Notice,
Company may give Administrative Agent telephonic notice by the required time of
any proposed borrowing, conversion/continuation or issuance of a Letter of
Credit, as the case may be; provided each such notice shall be promptly
confirmed in writing by delivery of the applicable Notice to Administrative
Agent on or before the applicable date of borrowing, continuation/conversion or
issuance. Neither Administrative Agent nor any Lender shall incur any liability
to Company in acting upon any telephonic notice referred to above that
Administrative Agent believes in good faith to have been given by a duly
authorized officer or other person authorized on behalf of Company or for
otherwise acting in good faith.

SECTION 4. REPRESENTATIONS AND WARRANTIES

      In order to induce Lenders and Issuing Banks to enter into this Agreement
and to make each Credit Extension to be made thereby, Company represents and
warrants to each Lender and each Issuing Bank, on the Closing Date and on each
Credit Date, that the following statements are true and correct (it being
understood and agreed that the representations and warranties made on the
Closing Date are deemed to be made concurrently with the consummation of the
Transactions contemplated hereby):

      4.1. Organization; Requisite Power and Authority; Qualification. Each of
Holdings, Company and its Subsidiaries (a) is duly organized, validly existing
and in good standing under the laws of its jurisdiction of organization as
identified in Schedule 4.1, (b) has all requisite power and authority to own and
operate its properties, to carry on its business as now conducted and as
proposed to be conducted, to enter into the Credit Documents, if any, to which
it is a party and to carry out the transactions contemplated thereby, and (c) is
qualified to do business and in good standing in every jurisdiction where its
assets are located and wherever necessary to carry out its business and
operations, except in jurisdictions where the failure to be so qualified or in
good standing has not had, and could not be reasonably expected to have, a
Material Adverse Effect.

      4.2. Capital Stock and Ownership. The Capital Stock of each of Company and
its Subsidiaries the shares of which are pledged under the Pledge and Security
Agreement has been duly authorized and validly issued and is fully paid and
non-assessable. Except as set forth on Schedule 4.2, as of the date hereof,
there is no existing option, warrant, call, right, commitment or other agreement
to which, Company or any of its Subsidiaries is a party requiring, and there is
no membership interest or other Capital Stock of Company or any of its
Subsidiaries outstanding which upon conversion or exchange would require, the
issuance by Company or any of its Subsidiaries of any additional membership
interests or other Capital Stock of Company or any of its Subsidiaries or other
Securities convertible into, exchangeable for or evidencing the right to
subscribe for or purchase, a membership interest or other Capital Stock of
Company or any of its Subsidiaries. Schedule 4.2 correctly sets forth the
ownership interest of Holdings, Company and each of its Subsidiaries in their
respective Subsidiaries as of the Closing Date both before and

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after giving effect to the Transactions. Each Domestic Subsidiary of Company
which is not identified on Schedule 1.1(b)-1 or Schedule 1.1(b)-2 is a Guarantor
as of the Closing Date.

      4.3. Due Authorization. The execution, delivery and performance of the
Credit Documents have been duly authorized by all necessary action on the part
of each Credit Party that is a party thereto.

      4.4. No Conflict. The execution, delivery and performance by Credit
Parties of the Credit Documents to which they are parties and the consummation
of the transactions contemplated by the Credit Documents do not and will not (a)
violate any provision of any law or any governmental rule or regulation
applicable to Holdings, Company or any of its Subsidiaries, any of the
Organizational Documents of Holdings, Company or any of its Subsidiaries, or any
order, judgment (other than de minimis judgments) or decree of any court or
other agency of government binding on Holdings, Company or any of its
Subsidiaries; (b) 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
Holdings, Company or any of its Subsidiaries; (c) result in or require the
creation or imposition of any Lien upon any of the properties or assets of
Holdings, Company or any of its Subsidiaries (other than any Liens created under
any of the Credit Documents in favor of Collateral Agent, on behalf of Secured
Parties, and Liens securing the obligations under the Second Lien Credit
Agreement and the Second Lien Notes Indenture pursuant to Section 6.2(o)); or
(d) require any material approval of stockholders, members or partners or any
approval or material consent of any Person under any material Contractual
Obligation of Holdings, Company or any of its Subsidiaries, except for such
approvals or consents which will be obtained on or before the Closing Date and
disclosed to Administrative Agent.

      4.5. Governmental Consents. The execution, delivery and performance by
Credit Parties of the Credit Documents to which they are parties and the
consummation of the transactions contemplated by the Credit Documents do not and
will not require any registration with, consent or approval of, or notice to, or
other action to, with or by, any Governmental Authority except as contemplated
in Section 3.1 or as otherwise set forth in the Related Agreements, and except
for filings and recordings with respect to the Collateral to be made, or
otherwise delivered to Collateral Agent and to the agent under the Second Lien
Credit Agreement and Second Lien Notes Indenture for filing and/or recordation,
as of the Closing Date.

      4.6. Binding Obligation. Each Credit Document has been duly executed and
delivered by each Credit Party that is a party thereto and is the legally valid
and binding obligation of such Credit Party, enforceable against such Credit
Party in accordance with its respective terms, except as may be limited by
bankruptcy, insolvency, reorganization, moratorium or similar laws relating to
or limiting creditors' rights generally or by equitable principles (whether
enforcement is sought in equity or at law).

      4.7. HISTORICAL FINANCIAL STATEMENTS. The Historical Financial Statements
were prepared in conformity with GAAP and fairly present, in all material
respects, the financial position, on a consolidated basis, of the Persons
described in such financial statements as at the respective dates thereof and
the results of operations and cash flows, on a consolidated basis, of

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the entities described therein for each of the periods then ended, subject, in
the case of any such unaudited financial statements, to changes resulting from
audit and normal year-end adjustments and the absence of foot notes. As of the
Closing Date, none of Holdings, Company or any of Company's Subsidiaries has any
contingent liability or liability for taxes, long-term lease or unusual forward
or long-term commitment that is not reflected in the Historical Financial
Statements or the notes thereto and which in any such case is material in
relation to the business, operations, assets, liabilities or financial condition
of Holdings, Company and its Subsidiaries taken as a whole.

      4.8. Projections. On and as of the Closing Date, the Projections of
Company and its Subsidiaries for the period Fiscal Year 2005 through and
including Fiscal Year 2012 (the "PROJECTIONS") are based on good faith estimates
and assumptions made by the management of Company believed by management to have
been reasonable at the time made; provided, the Projections are not to be viewed
as facts and that actual results during the period or periods covered by the
Projections may differ from such Projections and that the differences may be
material.

      4.9. No Material Adverse Change. Since December 31, 2004, no event,
circumstance or change has occurred that has caused a Material Adverse Effect.

      4.10. NO RESTRICTED JUNIOR PAYMENTS. Since December 31, 2004, and prior to
the Closing Date neither Company nor any of its Subsidiaries has directly or
indirectly declared, ordered, paid or made, or set apart any sum or property
for, any Restricted Junior Payment of the type identified in clauses (i) through
(iv) of the definition thereof in excess of $10,000,000 or agreed to do so.

      4.11. Adverse Proceedings, etc. There are no Adverse Proceedings,
individually or in the aggregate, that could reasonably be expected to have a
Material Adverse Effect. Neither Company nor any of its Subsidiaries (a) is in
violation of any applicable laws (including Environmental Laws) that,
individually or in the aggregate, could reasonably be expected to have a
Material Adverse Effect, or (b) is subject to or in default with respect to any
final judgments, writs, injunctions, decrees, rules or regulations of any court
or any federal, state, municipal or other governmental department, commission,
board, bureau, agency or instrumentality, domestic or foreign, that,
individually or in the aggregate, could reasonably be expected to have a
Material Adverse Effect.

      4.12. Payment of Taxes. Except as otherwise permitted under Section 5.3,
all income and other material tax returns and reports of Holdings and its
Subsidiaries required to be filed by any of them have been timely filed, and all
taxes shown on such tax returns to be due and payable and all material
assessments, fees and other governmental charges upon Holdings and its
Subsidiaries and upon their respective properties, assets, income, businesses
and franchises which are due and payable have been paid when due and payable.
Holdings knows of no material tax assessment that has been proposed in writing
against Holdings or any of its Subsidiaries as of the Closing Date which is not
being actively contested by Holdings or such Subsidiary in good faith and by
appropriate proceedings; provided, such reserves or other appropriate
provisions, if any, as shall be required in conformity with GAAP shall have been
made or provided therefor.

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      4.13. Properties.

            (a) Title. Each of Company and its Subsidiaries has (i) good,
sufficient and legal title to (in the case of fee interests in real property),
(ii) valid leasehold interests in (in the case of leased personal property), and
(iii) good title to or rights in (in the case of all other personal property),
all of their respective properties and assets reflected in their respective
Historical Financial Statements referred to in Section 4.7 and in the most
recent financial statements delivered pursuant to Section 5.1, in each case
except for assets disposed of since the date of such financial statements in the
ordinary course of business or as otherwise permitted under Section 6.9. Except
as permitted by this Agreement, all such properties and assets are free and
clear of Liens.

            (b) Real Estate. As of the Closing Date, Schedule 4.13 contains a
true, accurate and complete list of (i) all Real Estate Assets, and (ii) all
leases, subleases or assignments of leases (together with all amendments,
modifications, supplements, renewals or extensions of any thereof) affecting
each Real Estate Asset of Company or any of its Guarantor Subsidiaries,
regardless of whether Company or such Guarantor Subsidiary is the landlord or
tenant (whether directly or as an assignee or successor in interest) under such
lease, sublease or assignment.

      4.14. Environmental Matters. Neither Company nor any of its Subsidiaries
nor any of their respective Facilities or operations are subject to any
outstanding written order, consent decree or settlement agreement with any
Person relating to any Environmental Law, any Environmental Claim, or any
Release or threatened Release of Hazardous Materials that, individually or in
the aggregate, could reasonably be expected to have a Material Adverse Effect.
Neither Company nor any of its Subsidiaries has received any letter or request
for information under Section 104 of the Comprehensive Environmental Response,
Compensation, and Liability Act (42 U.S.C. Section 9604) or any comparable state
law, except, with respect to matters that either have been fully resolved or
matters that individually or in the aggregate could not reasonably be expected
to have a Material Adverse Effect. To Company's and its Subsidiaries' knowledge,
there are and have been, no conditions or occurrences, including any Release,
threatened Release, use, generation, storage, treatment, transportation,
processing, disposal, removal or remediation of Hazardous Materials, which could
reasonably be expected to form the basis of an Environmental Claim against
Company or any of its Subsidiaries that, individually or in the aggregate, could
reasonably be expected to have a Material Adverse Effect. Neither Holdings nor
any Subsidiary has been issued or required to obtain a permit for the treatment,
storage or disposal of hazardous waste for any of its currently owned or
operated Facilities, pursuant to the federal Resource Conservation and Recovery
Act, 42 U.S.C. Section 6901, et. seq. and its implementing regulations ("RCRA"),
or any equivalent State law, nor are any such Facilities regulated as "interim
status" facilities required to undergo corrective action pursuant to RCRA,
except in either case to the extent that such Facilities' obligations pursuant
to RCRA, individually or in the aggregate, could not reasonably be expected to
have a Material Adverse Effect. Compliance with all current requirements of
Environmental Law or, to Company's and its Subsidiaries' knowledge reasonably
likely future requirements arising from (i) existing environmental regulations
or (ii) environmental regulations that have been formally proposed but have not
been finalized could not reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect.

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      4.15. No Defaults. Neither Company nor any of its Subsidiaries is in
default in the performance, observance or fulfillment of any of the obligations,
covenants or conditions contained in any of its Contractual Obligations, and no
condition exists which, with the giving of notice or the lapse of time or both,
could constitute such a default, except where the consequences, direct or
indirect, of such default or defaults, if any, could not reasonably be expected
to have a Material Adverse Effect.

      4.16. Material Contracts. Schedule 4.16 contains a true, correct and
complete list of all the Material Contracts in effect on the Closing Date, and
except as described thereon, and to the knowledge of Company as of the Closing
Date all such Material Contracts are in full force and effect and no defaults
currently exist thereunder by Company and/or its Subsidiaries party thereto.

      4.17. Governmental Regulation. Neither Company nor any of its Subsidiaries
is subject to regulation under the Public Utility Holding Company Act of 1935,
the Federal Power Act or the Investment Company Act of 1940 or under any other
federal or state statute or regulation which may limit its ability to incur
Indebtedness or which may otherwise render all or any portion of the Obligations
unenforceable. Neither Company nor any of its Subsidiaries is a "registered
investment company" or a company "controlled" by a "registered investment
company" as such terms are defined in the Investment Company Act of 1940.

      4.18. Margin Stock. Neither Company nor any of its Subsidiaries is engaged
principally, or as one of its important activities, in the business of extending
credit for the purpose of purchasing or carrying any Margin Stock. No part of
the proceeds of the Loans or the Credit Linked Deposits made to such Credit
Party will be used to purchase or carry any such Margin Stock or to extend
credit to others for the purpose of purchasing or carrying any such Margin Stock
or for any purpose that violates, or is inconsistent with, the provisions of
Regulation U or X of said Board of Governors.

      4.19. Employee Matters. Neither Company nor any of its Subsidiaries is
engaged in any unfair labor practice that could reasonably be expected to have a
Material Adverse Effect. There is (a) no unfair labor practice complaint pending
against Company or any of its Subsidiaries, or to the best knowledge of Company,
threatened against any of them before the National Labor Relations Board and no
grievance or arbitration proceeding arising out of or under any collective
bargaining agreement that is so pending against Company or any of its
Subsidiaries or to the best knowledge of Company, threatened against any of
them, (b) no strike or work stoppage in existence or threatened involving
Company or any of its Subsidiaries that could reasonably be expected to have a
Material Adverse Effect, and (c) to the best knowledge of Company, no union
representation question existing with respect to the employees of Company or any
of its Subsidiaries and, to the best knowledge of Company, no union organization
activity that is taking place, except (with respect to any matter specified in
clause (a), (b) or (c) above, either individually or in the aggregate) such as
is not reasonably likely to have a Material Adverse Effect.

      4.20. Employee Benefit Plans. Company, each of its Subsidiaries and each
of their respective ERISA Affiliates are in material compliance with all
applicable provisions and requirements of ERISA and the Internal Revenue Code
and the regulations and published

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interpretations thereunder with respect to each Employee Benefit Plan, and have
performed all their obligations under each Employee Benefit Plan which the
failure to perform would result in a Material Adverse Effect. Each Employee
Benefit Plan which is intended to qualify under Section 401(a) of the Internal
Revenue Code has received a favorable determination letter from the Internal
Revenue Service indicating that such Employee Benefit Plan is so qualified and,
to the knowledge of Company, nothing has occurred subsequent to the issuance of
such determination letter which would cause such Employee Benefit Plan to lose
its qualified status. No liability to the PBGC (other than required premium
payments), the Internal Revenue Service, any Employee Benefit Plan or any trust
established under Title IV of ERISA has been or is expected to be incurred by
Company, any of its Subsidiaries or any of their ERISA Affiliates. No ERISA
Event has occurred or is reasonably expected to occur. The present value of the
aggregate benefit liabilities under each Pension Plan sponsored, maintained or
contributed to by Holdings, any of its Subsidiaries or any of their ERISA
Affiliates, (determined as of the end of the most recent plan year on the basis
of the actuarial assumptions specified for funding purposes in the most recent
actuarial valuation for such Pension Plan), did not exceed the aggregate current
value of the assets of such Pension Plan by more than $2,000,000. As of the most
recent valuation date for each Multiemployer Plan for which the actuarial report
is available, the potential liability of Holdings, its Subsidiaries and their
respective ERISA Affiliates for a complete withdrawal from such Multiemployer
Plan (within the meaning of Section 4203 of ERISA), when aggregated with such
potential liability for a complete withdrawal from all Multiemployer Plans,
based on information available pursuant to Section 4221(e) of ERISA is not
greater than $5,000,000. Company, each of its Subsidiaries and each of their
ERISA Affiliates have complied with the requirements of Section 515 of ERISA
with respect to each Multiemployer Plan and are not in material "default" (as
defined in Section 4219(c)(5) of ERISA) with respect to payments to a
Multiemployer Plan.

      4.21. Certain Fees. Except as disclosed to Administrative Agent, no
broker's or finder's fee or commission will be payable with respect hereto or
any of the transactions contemplated hereby.

      4.22. Solvency. Each Credit Party and its Subsidiaries on a consolidated
basis, are Solvent on the Closing Date, and Company and its Subsidiaries on a
consolidated basis will, upon the date of each Credit Extension, be Solvent.

      4.23. Related Agreements.

            (a) Delivery. Company has delivered to Administrative Agent complete
and correct copies of each Related Agreement and of all exhibits and schedules
thereto as of the date hereof as in effect on the date hereof.

            (b) Representations and Warranties. Except to the extent otherwise
expressly set forth herein or in the schedules hereto, and subject to the
qualifications set forth therein, each of the representations and warranties
given by any Credit Party in the Stock Purchase Agreement and in any other
Related Agreement entered into on the Closing Date is true and correct in all
material respects as of the Closing Date (or as of any earlier date to which
such representation and warranty specifically relates).

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            (c) Governmental Approvals. As of the Closing Date, Governmental
Authorizations and all other authorizations, approvals and consents of any other
Person required by the Related Agreements in effect on such date or to
consummate the Transactions have been obtained and are in full force and effect.

            (d) Conditions Precedent. On the Closing Date, (i) all of the
conditions to effecting or consummating the Transactions set forth in the
Related Agreements in effect on such date have been duly satisfied or, with the
consent of Administrative Agent, waived, and (ii) the Transactions being
consummated on or prior to the Closing Date have been consummated in accordance
with the Related Agreements in effect on such date and all applicable laws.

      4.24. Disclosure. No representation or warranty of any Credit Party
contained in any Credit Document or in any other documents, certificates or
written statements furnished to Lenders by or on behalf of any Credit Party for
use in connection with the transactions contemplated hereby contains, when taken
as a whole with other representations, warranties, documents, certificates and
statements, any untrue statement of a material fact or omits to state a material
fact (known to the Credit Parties, in the case of any document not furnished by
either of them) necessary in order to make the statements contained herein or
therein not misleading in light of the circumstances in which the same were
made. Any projections and pro forma financial information contained in such
materials are based upon good faith estimates and assumptions believed by the
Credit Parties to be reasonable at the time made, it being recognized by Lenders
that such projections as to future events are not to be viewed as facts and that
actual results during the period or periods covered by any such projections may
differ from the projected results and that such differences may be material.
There are no facts known to the Credit Parties (other than matters of a general
economic nature) as of the Closing Date that, individually or in the aggregate,
could reasonably be expected to result in a Material Adverse Effect and that
have not been disclosed herein or in such other documents, certificates and
statements furnished to Lenders for use in connection with the transactions
contemplated hereby.

      4.25. Patriot Act. To the extent applicable, each Credit Party is in
compliance, in all material respects, with the (i) Trading with the Enemy Act,
as amended, and each of the foreign assets control regulations of the Untied
States Treasury Department (31 CFR, Subtitle B, Chapter V, as amended) and any
other enabling legislation or executive order relating thereto, and (ii) Uniting
and Strengthening America by Providing Appropriate Tools Required to Intercept
and Obstruct Terrorism (USA Patriot Act of 2001) (the "ACT"). No part of the
proceeds of the Loans or Credit Linked Deposits will be used, directly or
indirectly, for any payments to any governmental official or employee, political
party, official of a political party, candidate for political office, or anyone
else acting in an official capacity, in order to obtain, retain or direct
business or obtain any improper advantage, in violation of the United States
Foreign Corrupt Practices Act of 1977, as amended.

      4.26. Financing Statements. Other than the financing statements filed in
favor of the Collateral Agent, no effective UCC financing statement, fixture
filing or other instrument similar in effect under any applicable law which is
effective to perfect a security interest under the UCC as in effect on the
Closing Date in all or any part of the Collateral is on file in any filing or
recording office on the Closing Date or has been authorized by such Grantor at
any time thereafter except for (x) financing statements or other instruments
similar in effect for which

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proper termination statements or releases have been delivered to the Collateral
Agent for filing and (y) financing statements or other instruments similar in
effect filed in connection with Permitted Liens.

SECTION 5. AFFIRMATIVE COVENANTS

      Each of Company and each Guarantor Subsidiary covenants and agrees that
until the Termination Date each of Company and each Guarantor Subsidiary shall
perform, and shall cause each of its Subsidiaries to perform, all covenants in
this Section.

      5.1. Financial Statements and Other Reports. Company will deliver to
Administrative Agent and Lenders (which delivery to Lenders may be satisfied by
the posting of relevant documents to Intralinks or other similar service
reasonably satisfactory to Administrative Agent):

            (a) Monthly Reports. As soon as available, and in any event within
30 days after the end of each month ending after the Closing Date (commencing in
respect of August 2005) (or, for any month which is the end of a Fiscal Quarter
or a Fiscal Year, no later than the date on which the financial statements for
any such Fiscal Quarter or Fiscal Year are due pursuant to Section 5.1(b) or
(c), as applicable), the unaudited consolidated balance sheet of Company and its
Subsidiaries as at the end of such month and the related unaudited consolidated
statements of income and cash flows of Company and its Subsidiaries for such
month and for the period from the beginning of the then current Fiscal Year to
the end of such month (in each case, without footnotes), setting forth in each
case in comparative form the corresponding figures from the Financial Plan for
the current Fiscal Year (commencing in respect of January 2006); provided that
any cash flow reports delivered pursuant to this Section 5.1(a) shall be in a
form consistent with the form presented to the Lenders prior to the Closing Date
with such non-material changes thereto as Company shall adopt in connection with
its internal board and management reporting and such other changes as to which
the Administrative Agent may consent;

            (b) Quarterly Financial Statements. As soon as available, and in any
event within forty-five (45) days after the end of each of the first three
Fiscal Quarters of each Fiscal Year, the unaudited consolidated balance sheets
of Company and its Subsidiaries as at the end of such Fiscal Quarter and the
related unaudited consolidated statements of income and cash flows of Company
and its Subsidiaries for such Fiscal Quarter and for the period from the
beginning of the then current Fiscal Year to the end of such Fiscal Quarter, (in
each case, without footnotes) setting forth in each case, commencing with the
2006 Fiscal Year, in comparative form the corresponding figures for the
corresponding periods of the previous Fiscal Year all in reasonable detail,
together with a copy of Holdings' Form 10-Q for such period;

            (c) Annual Financial Statements. As soon as available, and in any
event within ninety (90) days after the end of each Fiscal Year, (i) the
consolidated balance sheets of Company and its Subsidiaries as at the end of
such Fiscal Year and the related consolidated statements of income and cash
flows of Company and its Subsidiaries for such Fiscal Year, setting forth in
each case, commencing with the 2006 Fiscal Year, in comparative form the
corresponding figures for the previous Fiscal Year in reasonable detail,
together with a copy of Holdings' Form 10-K for such period; and (ii) with
respect to such consolidated financial

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statements a report thereon of Ernst & Young LLP or other independent certified
public accountants of recognized national standing selected by Company, and
reasonably satisfactory to Administrative Agent (which report shall be
unqualified as to going concern and scope of audit) a written statement by the
independent certified public accountants stating that in connection with their
audit, nothing came to their attention that caused them to believe that Company
failed to comply with the terms and provisions of Section 6.8, insofar as they
relate to accounting matters, or, if such a failure to comply has come to their
attention, specifying the nature and, if readily discernable from the
information gathered during the audit, period of existence thereof (it being
understood that their audit is not directed primarily toward obtaining knowledge
of non-compliance and that such accountants shall not be liable by reason of any
failure to obtain knowledge of any such non-compliance that would not be
disclosed in the course of their audit);

            (d) Compliance Certificate. Together with each delivery of financial
statements of Company and its Subsidiaries pursuant to Sections 5.1(b) and
5.1(c), a duly executed and completed Compliance Certificate;

            (e) Statements of Reconciliation after Change in Accounting
Principles. If, as a result of any change in accounting principles and policies
from those used in the preparation of the Historical Financial Statements, the
consolidated financial statements of Company and its Subsidiaries delivered
pursuant to Section 5.1(b) or 5.1(c) will differ in any material respect from
the consolidated financial statements that would have been delivered pursuant to
such subdivisions had no such change in accounting principles and policies been
made, then, together with the first delivery of such financial statement after
such change, one or more statements of reconciliation for all such prior
financial statements in form and substance satisfactory to Administrative Agent;

            (f) Notice of Default. Promptly upon any Authorized Officer of
Company obtaining knowledge (i) of any condition or event that constitutes a
Default or an Event of Default or that notice has been given to Company with
respect thereto; (ii) that any Person has given any notice to Company or any of
its Subsidiaries or taken any other action with respect to any event or
condition set forth in Section 8.1(b); or (iii) of the occurrence of any event
or change that has caused or evidences, either in any case or in the aggregate,
a Material Adverse Effect, a certificate of its Authorized Officers specifying
the nature and period of existence of such condition, event or change, or
specifying the notice given and action taken by any such Person and the nature
of such claimed Event of Default, Default, default, event or condition, and what
action Company has taken, is taking and proposes to take with respect thereto;

            (g) Notice of Litigation. Promptly upon any Authorized Officer of
Company obtaining knowledge of (i) the institution of, or non-frivolous threat
of, any Adverse Proceeding not previously disclosed in writing by Company to
Lenders, or (ii) any material development in any Adverse Proceeding that, in the
case of either (i) or (ii) could be reasonably expected to have a Material
Adverse Effect, or seeks to enjoin or otherwise prevent the consummation of, or
to recover any damages or obtain relief as a result of, the transactions
contemplated hereby, written notice thereof together with such other
non-privileged information as may be reasonably available to Company to enable
Lenders and their counsel to evaluate such matters;

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            (h) ERISA. (i) Promptly upon becoming aware of the occurrence of or
forthcoming occurrence of any ERISA Event, a written notice specifying the
nature thereof, what action Company, any of its Subsidiaries or any of their
respective ERISA Affiliates has taken, is taking or proposes to take with
respect thereto and, when known, any action taken or threatened by the Internal
Revenue Service, the Department of Labor or the PBGC with respect thereto; and
(ii) with reasonable promptness, copies of (1) each Schedule B (Actuarial
Information) to the annual report (Form 5500 Series) filed by Company, any of
its Subsidiaries or any of their respective ERISA Affiliates with the Internal
Revenue Service with respect to each Pension Plan; (2) all notices received by
Company, any of its Subsidiaries or any of their respective ERISA Affiliates
from a Multiemployer Plan sponsor concerning an ERISA Event; and (3) copies of
such other documents or governmental reports or filings relating to any Employee
Benefit Plan as Administrative Agent shall reasonably request;

            (i) Financial Plan. As soon as practicable and in any event no later
than 30 days after the beginning of each Fiscal Year, the following projections
(the "FINANCIAL PLAN") a consolidated plan and financial forecast consisting of
(i) a forecasted consolidated balance sheet and forecasted consolidated
statements of income and cash flows of Company and its Subsidiaries for the then
current Fiscal Year, together with an explanation of the assumptions on which
such forecasts are based, (ii) a forecasted consolidated statement of income and
(in a form consistent with the form presented to the Lenders prior to the
Closing Date with such non-material changes thereto as Company shall adopt in
connection with its internal board and management reporting and such other
changes as to which the Administrative Agent may consent) cash flows of Company
and its Subsidiaries for each month of such Fiscal Year, and (iii) forecasted
consolidated annual statements of income and cash flows of Company and its
Subsidiaries for each Fiscal Year (or portion thereof) after the current Fiscal
Year through the final maturity date of the Loans, which information shall be
accompanied by a certificate from the chief financial officer of Company
certifying that the projections contained therein are based upon good faith
estimates and assumptions believed by Company to be reasonable at the time made;

            (j) Insurance Report. As soon as practicable and in any event by the
thirtieth day of each Fiscal Year, a report in form and substance reasonably
satisfactory to Administrative Agent outlining all material insurance coverage
maintained for such Fiscal Year by Company and its Subsidiaries; and

            (k) MSW Put-Related Costs Certificate. As soon as practicable and in
no event later than two (2) Business Days prior to payment in full of the MSW
Put-Related Costs, a certificate in form and substance reasonably satisfactory
to Administrative Agent certifying as to the total amount of the principal,
interest and premiums comprised in the MSW Put-Related Costs and a good faith
estimate of the reasonable costs and expenses directly incurred in connection
therewith.

            (l) Other Information. (A) Promptly upon their becoming available,
copies of (i) all financial statements, reports, notices and proxy statements
sent or made available generally by Holdings to its security holders acting in
such capacity or by any Subsidiary of Holdings to its security holders other
than Holdings or another Subsidiary of Holdings (other than Project specific
information delivered to holders of Limited Recourse Debt or other Project
participants),

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(ii) all regular and periodic reports and all registration statements (other
than on Form S-8 or similar forms) and prospectuses, if any, filed by Holdings
or any of its Subsidiaries (other than Project specific information) with any
securities exchange or with the Securities and Exchange Commission or any
governmental or private regulatory authority, (iii) all press releases and other
statements made available generally by Holdings or any of its Subsidiaries to
the public concerning material developments in the business of Holdings or any
of its Subsidiaries, and (B) such other information and data promptly upon
request with respect to Holdings or any of its Subsidiaries (including, without
limitation, with respect to compliance with Sections 5.15 and 6.1) as from time
to time may be reasonably requested by Administrative Agent or any Lender.

      5.2. Existence. Except as otherwise permitted under Section 6.9, each of
Holdings, Company and its Subsidiaries will at all times preserve and keep in
full force and effect its existence and all rights and franchises, licenses and
permits material to its business; provided, neither Company nor any Subsidiary
of Company shall be required to preserve (a) any such existence of any
Subsidiary of Company if such Persons board of directors (or similar governing
body) shall determine that the preservation thereof is no longer desirable in
the conduct of the business of such Person, and that the loss thereof is not
disadvantageous in any material respect to such Person or to Lenders or (b) any
such rights franchises, licenses or permits except to the extent that failure to
do so could reasonably be expected to have a Material Adverse Effect,
individually or in the aggregate.

      5.3. Payment of Taxes and Claims. Each Credit Party will, and will cause
each of its Subsidiaries to pay all income and other material Taxes imposed upon
it or any of its properties or assets or in respect of any of its income,
businesses or franchises before any penalty or fine accrues thereon, and all
claims (including claims for labor, services, materials and supplies) for
material sums that have become due and payable and that by law have or may
become a Lien (other than a Permitted Lien) upon any of its properties or
assets, prior to the time when any penalty or fine shall be incurred with
respect thereto; provided, no such Tax or claim need be paid if it is being
contested in good faith by appropriate proceedings promptly instituted and
diligently conducted, so long as (a) adequate reserve or other appropriate
provision, as shall be required in conformity with GAAP, shall have been made
therefor, and (b) in the case of a Tax or claim which has or may become a Lien
against any of the Collateral, such contest proceedings conclusively operate to
stay the sale of any portion of the Collateral (other than a de minimis portion
of the Collateral) to satisfy such Tax or claim. No Credit Party will, nor will
it permit any of its Subsidiaries to, file or consent to the filing of any
consolidated income tax return with any Person (other than Holdings or any of
its Subsidiaries).

      5.4. Maintenance of Properties. Each of Company and its Subsidiaries will,
and will cause each of their Subsidiaries to maintain or cause to be maintained
in good repair, working order and condition, ordinary wear and tear excepted,
all material properties used or useful in the business of Company and its
Subsidiaries and from time to time will make or cause to be made all appropriate
repairs, renewals and replacements thereof except that Company and its
Subsidiaries shall not be required to perform the foregoing obligations (i) with
respect to Subsidiaries or assets to which Persons other than Company and its
Subsidiaries have recourse under Limited Recourse Debt owed to such Persons
where the amount of such Limited Recourse Debt exceeds the fair market value of
such property (ii) to the extent that failure to perform such

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obligations, individually or in the aggregate, could not reasonably be expected
to have a Material Adverse Effect.

      5.5. Insurance. Company will maintain or cause to be maintained, with
financially sound and reputable insurers, such public liability insurance, third
party property damage insurance, business interruption insurance and casualty
insurance with respect to liabilities, losses or damage in respect of the
assets, properties and businesses of Company and its Subsidiaries as may
customarily be carried or maintained under similar circumstances by Persons of
established reputation engaged in similar businesses, in each case in such
amounts (giving effect to self-insurance), with such deductibles, covering such
risks and otherwise on such terms and conditions as shall be customary for such
Persons except, in the case of Projects owned by Foreign Subsidiaries, to the
extent not commercially available at a reasonable cost. Without limiting the
generality of the foregoing, Company will maintain or cause to be maintained (a)
flood insurance with respect to each Flood Hazard Property that is located in a
community that participates in the National Flood Insurance Program, in each
case in compliance with any applicable regulations of the Board of Governors of
the Federal Reserve System, and (b) replacement value casualty insurance on the
Collateral under such policies of insurance, with such insurance companies, in
such amounts, with such deductibles, and covering such risks as are at all times
carried or maintained under similar circumstances by Persons of established
reputation engaged in similar businesses. Each such policy of insurance (other
than business interruption insurance) shall with respect to Company and each
Guarantor Subsidiary (i) in the case of liability insurance name Collateral
Agent, on behalf of Lenders as an additional insured thereunder as its interests
may appear, (ii) in the case of each casualty insurance policy, contain a loss
payable clause or endorsement, reasonably satisfactory in form and substance to
Collateral Agent, that names Collateral Agent, on behalf of Lenders as the loss
payee thereunder, and (iii) provides for at least thirty days' prior written
notice to Collateral Agent of any cancellation or non-renewal of such policy
except as the result of non-payment of premiums, in which case ten days' prior
written notice will be provided.

      5.6. Inspections. Each of Company and its Subsidiaries will, and will
cause each of their Subsidiaries to permit any authorized representatives
designated by (i) Administrative Agent (prior to an Event of Default at
Administrative Agent's expense to the extent Administrative Agent visits more
than once per year) or (ii) any Lender (at such Lender's expense) to visit and
inspect any of the properties of any of Company and its Subsidiaries and any of
its respective Subsidiaries, to inspect, copy and take extracts from its and
their financial and accounting records, and to discuss its and their affairs,
finances and accounts with its and their officers and independent public
accountants (provided, that Company may, if it so chooses, be present and
participate in any such discussion), in each case all upon reasonable notice and
at such reasonable times during normal business hours and as often as may
reasonably be requested.

      5.7. Lenders Meetings. Company will, upon the request of Administrative
Agent or Requisite Lenders, participate in a meeting of Administrative Agent and
Lenders once during each Fiscal Year to be held at Company's corporate offices
(or at such other location as may be agreed to by Company and Administrative
Agent) at such time as may be agreed to by Company and Administrative Agent.

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      5.8. Compliance with Laws. Each Credit Party will comply, and shall use
all reasonable efforts to cause each of its Subsidiaries and all other Persons,
if any, on or occupying any Facilities to comply, with the requirements of all
applicable laws, rules, regulations and orders of any Governmental Authority
(including all Environmental Laws), noncompliance with which could reasonably be
expected to have, individually or in the aggregate, a Material Adverse Effect.

      5.9. ENVIRONMENTAL.

            (a) Environmental Disclosure. Company will deliver to Administrative
Agent and Lenders:

               (i) as soon as practicable following receipt thereof, copies of
   all environmental audits, investigations, analyses and reports of any kind or
   character, whether prepared by personnel of Company or any of its
   Subsidiaries or by independent consultants, governmental authorities or any
   other Persons, with respect to environmental matters at any Facility or to
   any Environmental Claims that could be reasonably expected to give rise to
   liability or expenses of Company or any of its Subsidiaries in excess of
   $2,000,000;

               (ii) promptly upon the occurrence thereof, written notice
   describing in reasonable detail (1) any Release required to be reported to
   any federal, state or local governmental or regulatory agency under
   applicable Environmental Laws that could reasonably be expected to result in
   Environmental Claims or other liability or expenses of Company or any of its
   Subsidiaries in excess of $2,000,000, (2) any remedial action taken by
   Company or any other Person in response to (A) any Release or threatened
   Release of Hazardous Materials, which has a reasonable possibility of
   resulting in one or more Environmental Claims that could reasonably be
   expected to have, individually or in the aggregate, a Material Adverse
   Effect, or (B) any Environmental Claims that could reasonably be expected to
   have, individually or in the aggregate, a Material Adverse Effect, and (3)
   Company's discovery of any occurrence or condition on any real property
   adjoining or in the vicinity of any Facility that could cause such Facility
   or any part thereof to be subject to any material legal restrictions on the
   ownership, occupancy, transferability or use thereof under any Environmental
   Laws;

               (iii)as soon as practicable following the sending or receipt
   thereof by Holdings or any of its Subsidiaries, a copy of any and all written
   communications with respect to either (1) any Environmental Claims that could
   reasonably be expected to have, individually or in the aggregate, a Material
   Adverse Effect, or (2) any Release required to be reported to any federal,
   state or local governmental or regulatory agency that could reasonably be
   expected to have, individually or in the aggregate, a Material Adverse
   Effect;

               (iv) prompt written notice describing in reasonable detail (1)
   any proposed acquisition of stock, assets, or property by Company or any of
   its Subsidiaries that could reasonably be expected to (A) expose Company or
   any of its Subsidiaries to, or result in, Environmental Claims that could
   reasonably be expected to have, individually or in the aggregate, a Material
   Adverse Effect or (B) affect the ability of Company or any of its
   Subsidiaries to maintain in full force and effect all material Governmental
   Authorizations

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   required under any Environmental Laws for their respective operations and (2)
   any proposed action to be taken by Company or any of its Subsidiaries to
   modify current operations in a manner that could reasonably be expected to
   subject Company or any of its Subsidiaries to any additional material
   obligations or requirements under any Environmental Laws; and

               (v) with reasonable promptness, such other material and relevant
   documents and information as from time to time may be reasonably requested by
   Administrative Agent in relation to any matters disclosed pursuant to this
   Section 5.9(a).

            (b) Hazardous Materials Activities, Etc. Each of Company and its
Subsidiaries shall promptly take, and shall cause each of its Subsidiaries
promptly to take, any and all actions necessary to (i) cure any violation of
applicable Environmental Laws by such Company or its Subsidiaries that could
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect, and (ii) make an appropriate response to any Environmental Claim
against such Company or any of its Subsidiaries and discharge any obligations it
may have to any Person thereunder where failure to do so could reasonably be
expected to have, individually or in the aggregate, a Material Adverse Effect.

            (c) Right of Access and Inspection. With respect to any event
described in Section 5.9(a), or if an Event of Default has occurred and is
continuing, or if Administrative Agent reasonably believes that Company or any
Subsidiary has breached any representation, warranty or covenant related to
environmental matters (including those contained in Sections 4.11, 4.14, 5.8 or
5.9):

               (i) Administrative Agent and its representatives shall have the
   right, but not the obligation or duty, to enter the Facilities at reasonable
   times for the purposes of observing the Facilities. Such access shall
   include, at the reasonable request of Administrative Agent, access to
   relevant documents and employees of Company and its Subsidiaries and to their
   outside representatives, to the extent necessary to obtain necessary
   information related to the event at issue. If an Event of Default has
   occurred and is continuing, the Credit Parties shall conduct such tests and
   investigations on the Facilities or relevant portion thereof, as reasonably
   requested by Administrative Agent, including the preparation of a Phase I
   Environmental Assessment or such other sampling or analysis as determined to
   be necessary under the circumstances by a qualified environmental engineer or
   consultant. If an Event of Default has occurred and is continuing, and if a
   Credit Party does not undertake such tests and investigations in a reasonably
   timely manner following the request of Administrative Agent, Administrative
   Agent may hire an independent engineer, at the Credit Parties' expense, to
   conduct such tests and investigations. Administrative Agent will make all
   reasonable efforts to conduct any such tests and investigations so as to
   avoid interfering with the operation of the Facility

               (ii) Any observations, tests or investigations of the Facilities
   by or on behalf of Administrative Agent shall be solely for the purpose of
   protecting the Lenders' security interests and rights under the Credit
   Documents. The exercise of Administrative Agent's rights under this
   Subsection (c) shall not constitute a waiver of any default of any Credit
   Party or impose any liability on Administrative Agent or any of the Lenders.
   In no event will any observation, test or investigation by or on behalf of
   Administrative Agent be a

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   representation that Hazardous Materials are or are not present in, on or
   under any of the Facilities, or that there has been or will be compliance
   with any Environmental Law and Administrative Agent shall not be deemed to
   have made any representation or warranty to any party regarding the truth,
   accuracy or completeness of any report or findings with regard thereto.
   Neither any Credit Party nor any other party is entitled to rely on any
   observation, test or investigation by or on behalf of Administrative Agent.
   Administrative Agent and the Lenders owe no duty of care to protect any
   Credit Party or any other party against, or to inform any Credit Party or any
   other party of, any Hazardous Materials or any other adverse condition
   affecting any of the Facilities. Administrative Agent may, in its sole
   discretion, disclose to the applicable Credit Party, or to any other party if
   so required by law, any report or findings made as a result of, or in
   connection with, its observations, tests or investigations. If a request is
   made of Administrative Agent to disclose any such report or finding to any
   third party, then Administrative Agent shall endeavor to give the applicable
   Credit Party prior notice of such disclosure and afford such Credit Party the
   opportunity to object or defend against such disclosure at its own and sole
   cost; provided, that the failure of Administrative Agent to give any such
   notice or afford such Credit Party the opportunity to object or defend
   against such disclosure shall not result in any liability to Administrative
   Agent. Each Credit Party acknowledges that it may be obligated to notify
   relevant Governmental Authorities regarding the results of any observation,
   test or investigation disclosed to such Credit Party, and that such reporting
   requirements are site and fact-specific and are to be evaluated by such
   Credit Party without advice or assistance from Administrative Agent.

            (d) If counsel to Company or any of its Subsidiaries reasonably
determines (1) that provision to Administrative Agent of a document otherwise
required to be provided pursuant to this Section 5.9 (or any other provision of
this Agreement or any other Credit Document relating to environmental matters)
would jeopardize an applicable attorney-client or work product privilege
pertaining to such document, then Company or its Subsidiary shall not be
obligated to deliver such document to Administrative Agent but shall provide
Administrative Agent with a notice identifying the author and recipient of such
document and generally describing the contents of the document. Upon request of
Administrative Agent, Company and its Subsidiaries shall take all reasonable
steps necessary to provide Administrative Agent with the factual information
contained in any such privileged document.

      5.10. Subsidiaries. In the event that any Person becomes a Domestic
Subsidiary of Company (other than an Excluded Subsidiary or a Development
Subsidiary) or any Domestic Subsidiary of Company ceases to be an Excluded
Subsidiary or a Development Subsidiary, then in each case, Company shall, within
twenty days of such event (a) cause such Domestic Subsidiary to become a
Guarantor hereunder and a Grantor under the Pledge and Security Agreement by
executing and delivering to Administrative Agent and Collateral Agent a
Counterpart Agreement, and (b) take all such actions and execute and deliver, or
cause to be executed and delivered, all such documents, instruments, agreements,
and certificates as are similar to those described in Sections 3.1(b), 3.1(h)
(to the extent applicable), 3.1(i), and 3.1(m). In the event that any Person
becomes a Foreign Subsidiary of Company, and the ownership interests of such
Foreign Subsidiary are directly owned by Company or by any Domestic Subsidiary
thereof (other than an Excluded Subsidiary), Company shall or shall cause such
Domestic Subsidiary to, deliver all such documents, instruments, agreements, and
certificates as

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<PAGE>
\
are similar to those described in Sections 3.1(b), and Company shall take, or
shall cause such Domestic Subsidiary to take, all of the actions referred to in
Section 3.1(i)(i) necessary to grant and to perfect a First Priority Lien in
favor of Collateral Agent, for the benefit of Secured Parties, under the Pledge
and Security Agreement in 65% of such ownership interests. With respect to each
such Subsidiary, Company shall promptly send to Administrative Agent written
notice setting forth with respect to such Person (i) the date on which such
Person became a Subsidiary of Company, and (ii) all of the data required to be
set forth in Schedules 4.1 and 4.2 with respect to all Subsidiaries of Company;
provided, such written notice shall be deemed to supplement Schedule 4.1 and 4.2
for all purposes hereof.

      5.11. Additional Material Real Estate Assets. In the event that Company or
any Guarantor Subsidiary acquires a Material Real Estate Asset and such interest
has not otherwise been made subject to the Lien of the Collateral Documents in
favor of Collateral Agent, for the benefit of Secured Parties, then Company or
such Guarantor Subsidiary, as soon as practicable after acquiring such Material
Real Estate Asset, shall take all such actions and execute and deliver, or cause
to be executed and delivered, all such mortgages, documents, instruments,
agreements, opinions and certificates similar to those described in Sections
3.1(h), 3.1(i) and 3.1(j) and a Phase I Environmental Assessment with respect to
each such Material Real Estate Asset that Collateral Agent shall reasonably
request to create in favor of Collateral Agent, for the benefit of Secured
Parties, a valid and, subject to any filing and/or recording referred to herein,
First Priority Lien in such Material Real Estate Assets. In addition to the
foregoing, Company shall, at the request of Requisite Lenders, deliver, from
time to time, to Administrative Agent such appraisals as are required by law or
regulation of Real Estate Assets with respect to which Collateral Agent has been
granted a lien

      5.12. Interest Rate Protection. No later than the earlier of (i) 90 days
following the date of the issuance of the Second Lien Notes and (ii) 270 days
following the Closing Date and at all times thereafter, Company shall maintain,
or caused to be maintained, in effect one or more Interest Rate Agreements for a
term of not less than three (3) years and otherwise in form and substance
reasonably satisfactory to Administrative Agent, which Interest Rate Agreements
shall effectively limit the Unadjusted Eurodollar Rate Component of the interest
costs to Company with respect to an aggregate notional principal amount of not
less than an amount equal to (a) $337,500,000 less (b) the aggregate principal
amount of the Second Lien Notes, to a rate reasonably acceptable to
Administrative Agent.

      5.13. Further Assurances. At any time or from time to time at the request
of Administrative Agent, each Credit Party will, at its expense, promptly
execute, acknowledge and deliver such further documents and do such other acts
and things, as Administrative Agent or Collateral Agent may reasonably request
in order to effect fully the purposes of the Credit Documents that do not
involve material expansion of any Credit Party's obligations or duties under the
Credit Documents from those originally mutually intended or contemplated. In
furtherance and not in limitation of the foregoing, each Credit Party shall take
such actions as Administrative Agent or Collateral Agent may reasonably request
from time to time to ensure that the Obligations are guarantied by the
Guarantors and are secured by the Collateral (subject to limitations contained
in the Credit Documents).

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      5.14. Miscellaneous Business Covenants. Unless otherwise consented to by
Agents or Requisite Lenders:

            (a) Non-Consolidation. Company will and will cause each of its
Subsidiaries to: (i) maintain entity records and books of account separate from
those of any other entity which is an Affiliate of such entity; (ii) not
commingle its funds (other than consistent with Company's cash management
requirements as permitted hereunder) or assets with those of any other entity
which is an Affiliate of such entity; and (iii) provide that its board of
directors or other analogous governing body will hold all appropriate meetings
to authorize and approve such entity's actions, which meetings will be separate
from those of other entities.

            (b) Filing of Agreement. No later than the earlier of the next
filing of a quarterly report on Form 10Q or annual report on Form 10K, provided
that Holdings or any of its Subsidiaries is otherwise required to file periodic
reports with the Securities and Exchange Commission, Holdings or such
Subsidiaries shall file a copy of this Agreement and the schedules hereto as a
material contract with the Securities and Exchange Commission.

      5.15. CASH MANAGEMENT SYSTEMS. Company and its Subsidiaries' cash
management systems on the Closing Date are outlined on Schedule 5.15. Company
and its Subsidiaries may make such modifications to its cash management system
as it may deem appropriate (subject to the requirements of this Section 5.15)
provided that to the extent any such modification would (i) affect attributes of
the cash management system described in paragraphs 5, 6, 7, 8, 11, 12, 13, 14,
15 and 19 of Part A of Schedule 5.15 and paragraphs 3, 4 and 5 of Part B of
Schedule 5.15 or (ii) otherwise be material and adverse to the Secured Parties,
such modifications shall have been approved by Administrative Agent. Company and
each of its Guarantor Subsidiaries shall at all times after the Closing Date
ensure that all Cash and Cash Equivalents held by it are subject to a valid and
perfected First Priority security interest in favor of the Collateral Agent for
the benefit of the Secured Parties; provided that (i) Cash and Cash Equivalents
maintained in the deposit accounts and investment accounts identified on
Schedule 2.2 of the Pledge and Security Agreement in respect of "Class 4 Claims"
(as such term is defined in the Plan of Reorganization) and or in payroll,
trusts and similar accounts (ii) other Cash and Cash Equivalents of up to
$2,000,000 in the aggregate at any one time for Company and all Guarantor
Subsidiaries shall not in either case be required to be maintained in deposit
accounts or investments accounts subject to Control Agreements; provided further
that Company and each of its Guarantor Subsidiaries shall at all times
thereafter ensure that no funds accumulate at any Excluded Subsidiary, except
(a) in the case of any Excluded Subsidiary owning an interest in a Project,
funds required to be accumulated pursuant to restrictions in effect on the date
hereof or in respect of Indebtedness permitted under Section 6.1(l), imposed
under the documentation for the financing or operation of such Project and
required for such financing or operation, (b) as required by any applicable
requirement of law, (c) as required by Contractual Obligations in effect as of
the date hereof or entered into after the date hereof in accordance with the
provisions of this Agreement, (d) until the date that is six months after the
Closing Date and in an amount (net of amounts held against uncleared drafts or
wire payments) not to exceed $35,000,000, funds on deposit on the Closing Date
in accounts in the name of Subsidiaries of Company constituting part of the
Acquired Business, or (e) in an amount (net of amounts held against uncleared
drafts or wire payments and in addition to amounts referred to in clause (d)
above) not

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to exceed $5,000,000, funds in accounts in the name of Subsidiaries of Company
constituting part of the Acquired Business.

      5.16. INSURANCE REGULATORY ACCOUNT. Until the later of the fourth
anniversary of the Closing Date and such time as the net operating loss of
Holdings and its Subsidiaries is less than $50,000,000, Holdings shall maintain
Cash and Cash Equivalents of not less than the Insurance Deposit Amount (less
amounts applied from such account to the capitalization of the Insurance
Subsidiaries) in the Insurance Regulatory Account.

      5.17. PLAN OF REORGANIZATION ACCOUNT. Until all "Class 4 Claims" (as such
term is defined in the Plan of Reorganization) have been satisfied and
discharged as evidenced by a certificate delivered to Administrative Agent by
Company, Company shall maintain in the Plan of Reorganization Account Cash of
not less than the Plan of Reorganization Initial Deposit Amount minus the amount
of any "Class 4 Claims" (as such term is defined in the Plan of Reorganization)
which have been satisfied and discharged. Company shall maintain such account
and shall not make distributions from such account other than to make payments
of amounts due with regard to Class 4 Claims in accordance with the Plan of
Reorganization until all Class 4 Claims have been satisfied and discharged.

      5.18. POST CLOSING MATTERS. Holdings and Company shall, and shall cause
each of its Subsidiaries to, satisfy the requirements set forth on Schedule 5.18
on or before the date specified for such requirement or such later date to be
determined by Administrative Agent.

SECTION 6. NEGATIVE COVENANTS

      Each of Company and Guarantor Subsidiaries covenants and agrees that,
until the Termination Date, Company and its Guarantor Subsidiaries shall
perform, and shall cause each of its Subsidiaries to perform, all covenants in
this Section 6.

      6.1. Indebtedness. Neither Company nor any Guarantor Subsidiary shall, nor
shall it permit any of its Subsidiaries to, directly or indirectly, create,
incur, assume or guaranty, or otherwise become or remain directly or indirectly
liable with respect to any Indebtedness, except:

            (a) the Obligations;

            (b) Indebtedness of any Guarantor Subsidiary to Company or to any
other Guarantor Subsidiary, or of Company to any Guarantor Subsidiary; provided,
(x) all such Indebtedness shall be evidenced by the Intercompany Master Note and
(y) any payment by any such Guarantor Subsidiary under any guaranty of the
Obligations shall result in a pro tanto reduction of the amount of any
Indebtedness owed by such Guarantor Subsidiary to Company or to any of its
Guarantor Subsidiaries for whose benefit such payment is made;

            (c) Subject to continued compliance with Sections 5.15 and 5.1(k)(B)
Indebtedness of any Subsidiary of Company other than the Guarantor Subsidiaries
to Company or any Guarantor Subsidiary so long as the proceeds of such
Indebtedness are applied to current requirements in respect of working capital,
maintenance capital expenditures, operation or payroll in the ordinary course of
business of such Subsidiary incurring such Indebtedness or to

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make payments of debt service in connection with the Alexandria, Virginia and
Fairfax, Virginia facilities to the extent that such obligor with respect to
such debt service does not otherwise have funds available to make such payments
and lease payments in connection with the Delaware County, Pennsylvania
facility, in each case to the extent that the obligor with respect to such debt
service or lease payments is required to make such payments and payment of such
debt service or lease payments would not be prohibited under Section 6.5;
provided, that following the occurrence of and continuance of an Event of
Default (without prejudicing or impairing any of the Secured Parties' rights,
privileges, powers and remedies with respect thereto, which rights, privileges,
powers and remedies are reserved in full) no such Indebtedness may be incurred
to make maintenance capital expenditures other than those that, if not made,
would materially compromise the ability of a Subsidiary to operate and maintain
one or more of the Projects in compliance with law, all such intercompany
Indebtedness shall be evidenced by the Intercompany Master Note;

            (d) Indebtedness of Foreign Subsidiaries of Company to Company or
any Guarantor Subsidiary in an amount not to exceed (i) $3,000,000 incurred in
any Fiscal Year (with any unused amounts accumulating on a cumulative basis to
each subsequent Fiscal Year) or (ii) $15,000,000 in the aggregate at any one
time outstanding which is incurred after the Closing Date (plus the principal
amount of any Indebtedness repaid by a Foreign Subsidiary to Company or any
Guarantor Subsidiary after the Closing Date), provided, that (A) the proceeds of
such Indebtedness are used to finance the development, construction or capital
improvements to renewable energy or waste-to-energy Projects, (B) no more than
$2,000,000 of such Indebtedness incurred in any Fiscal Year may be incurred with
respect to Projects located in jurisdictions outside of the United Kingdom or
Europe, (C) no such Indebtedness may be incurred at any time that Company and
its Subsidiaries are not in compliance with Section 6.8, (D) no such
Indebtedness may be incurred to make capital expenditures if after giving effect
to such expenditures Company and its Subsidiaries would not be in pro forma
compliance with Section 6.8(d) and (E) all such intercompany Indebtedness shall
be evidenced by the Intercompany Master Note;

            (e) (i) Indebtedness of MSW I and/or MSW II to Company with respect
to the on-lending of (A) Put Loans in an aggregate principal amount not to
exceed $25,000,000, (B) the proceeds of the Put-Related Equity Offering (less
the amount of any Investment made pursuant to Section 6.7(n)(i)), (C) Cash and
Cash Equivalents from Company's operations, provided that after giving effect to
the incurrence of such Indebtedness and any Investment made pursuant to Section
6.7(n)(ii), unrestricted Cash and Cash Equivalents of Company and the Acquired
Business shall not be less than $50,000,000 (provided that for the purposes of
calculating such amount, no more than $5,000,000 of Marketable Securities shall
be included in such calculation) and/or (D) an equity contribution from Holdings
to Company to occur within 120 days of the Closing Date in an aggregate amount
not to exceed $25,000,000 (less the amount of any equity Investment made
pursuant to Section 6.7(n)(iii)), provided that the amounts on-lent to MSW I
and/or MSW II pursuant to clauses (A) through (D) immediately above shall be
used to pay MSW Put-Related Costs and when added to the equity Investments made
pursuant to Section 6.7(n) shall not exceed in the aggregate the amount set
forth on the certificate delivered pursuant to Section 5.1(k), (ii) Indebtedness
of MSW I and/or MSW II to ARC LLC with respect to the on-lending of the proceeds
of the New ARC Notes by ARC LLC to fund MSW Put-Related Costs, (iii)
Indebtedness of MSW I and/or MSW II to ARC LLC with respect to the on-lending

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of the proceeds of the ARC Refinancing Notes by ARC LLC to redeem, refinance,
replace, renew or extend the MSW Notes in accordance with clause (n)(i) below,
(iv) Indebtedness of ARC LLC to MSW I and/or MSW II with respect to the
on-lending of the proceeds of the MSW Refinancing Notes by MSW I and/or MSW II
to redeem, refinance, replace, renew or extend the ARC Notes in accordance with
clause (n)(i) below, and (v) additional Indebtedness of Excluded Subsidiaries to
Company or any Guarantor Subsidiary in an amount not to exceed (A) $10,000,000
incurred in any Fiscal Year (with any unused amounts accumulating on a
cumulative basis to each subsequent Fiscal Year) or (B) $30,000,000 in the
aggregate at any one time outstanding which is incurred after the Closing Date,
provided, that in each case (1) no such Indebtedness may be incurred at any time
such that Company and its Subsidiaries would not be in compliance with Section
6.8, (2) no such Indebtedness may be incurred to make capital expenditures if
after giving effect to such expenditures Company and its Subsidiaries would not
be in pro forma compliance with Section 6.8(d), and (3) all such intercompany
Indebtedness shall be evidenced by the Intercompany Master Note, and provided
further that notwithstanding anything to contrary in this Agreement, no Credit
Party shall cancel any Indebtedness owed to it by any Subsidiary of Company
(other than among Credit Parties) except (a) in connection with the Foreign
Subsidiary restructuring disclosed on Schedule 6.9-B, (b) to the extent such
cancellation directly results in material savings (taking into consideration any
tax savings) to Company and its Subsidiaries on a group-wide basis and is not
done in contemplation of any event which would give rise to an Event of Default
under Sections 8.1(f) or 8.1(g), or (c) for adequate consideration and in the
ordinary course of business;

            (f) Indebtedness of any Excluded Subsidiary to another Excluded
Subsidiary which is its direct or indirect parent or Subsidiary and Indebtedness
for any Foreign Subsidiary to another Foreign Subsidiary;

            (g) Indebtedness incurred by Company or any of its Subsidiaries
arising from agreements providing for indemnification, adjustment of purchase
price or similar obligations incurred in connection with Permitted Acquisitions;

            (h) Indebtedness which may be deemed to exist pursuant to any
guaranties, performance, surety, statutory, appeal, bid, payment (other than
payment of Indebtedness) or similar obligations (including any bonds or Letters
of Credit issued with respect thereto and all reimbursement and indemnity
agreements entered into in connection therewith) incurred in the ordinary course
of business;

            (i) Indebtedness in respect of netting services, overdraft
protections and otherwise in connection with deposit accounts;

            (j) performance guaranties in the ordinary course of business and
consistent with historic practices of the obligations of suppliers, customers,
franchisees and licensees of Company and its Subsidiaries;

            (k) Indebtedness of any Subsidiary of Company to Company or any
other Subsidiary of Company, so long as the proceeds are used to fund capital
expenditures relating to the modifications to Projects, to the extent required
by applicable legal requirements; provided that if and to the extent that such
additional capital expenditures are estimated by Company to

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exceed $40,000,000 in the aggregate during the term of this Agreement, and are
not otherwise reimbursable by third parties, Company shall provide such estimate
to Administrative Agent for its review, and shall not incur such capital
expenditures in excess of $10,000,000 in connection with any such modification
until Administrative Agent has had an opportunity to review and provide its
comments, except to the extent failure to incur such capital expenditures would
in Company's reasonable judgment either (i) materially compromise its present
ability to continue to operate and maintain one or more of its Projects in
compliance with law or (ii) expose it or its Affiliates to material liability;

            (l) Indebtedness described in Schedule 6.1, but not any extensions,
renewals or replacements of such Indebtedness except (i) renewals, refinancings,
replacements and extensions expressly provided for in, or contemplated by, the
agreements relating to any such Indebtedness (or the related Projects) as the
same are in effect on the date of this Agreement and (ii) refinancings,
renewals, replacements and extensions of any such Indebtedness in whole or in
part at the then prevailing market rates if the non-economic terms and
conditions thereof are not less favorable to the obligor thereon or to the
Lenders than the Indebtedness being renewed, refinanced, replaced or extended,
taken as a whole (considering the economic benefits and disadvantages to Company
and its Subsidiaries from such refinancing, replacement, renewal or extension,
as well as the economic benefits and disadvantages to Company and its
Subsidiaries of the Project to which such Indebtedness relates); provided, that
the average life to maturity of such Indebtedness is greater than or equal to
that of the Indebtedness being refinanced, replaced, renewed or extended (unless
the client with respect thereto undertakes to service such principal through the
lease, service or operating agreement of the applicable Project), and provided
further, that such Indebtedness permitted under the immediately preceding clause
(i) or (ii) above shall not (A) include Indebtedness of an obligor that was not
an obligor with respect to the Indebtedness being extended, renewed, replaced or
refinanced, (B) exceed the principal amount of the Indebtedness being renewed,
extended, replaced or refinanced plus any reasonable and customary transaction
costs and fees and any premium on the Indebtedness required to be paid in
connection with such repayment unless the increase in the principal amount of
such Indebtedness is permitted under another subsection of this Section 6.1
(provided that such limitation shall not apply with respect to Indebtedness that
a client of a Project undertakes to service through the lease, service or
operating agreement of the applicable Project) or (C) be incurred, created or
assumed if any Default or Event of Default has occurred and is continuing or
would result therefrom;

            (m) (i) Indebtedness of Company or its Subsidiaries with respect to
Capital Leases entered into after the Closing Date and (ii) purchase money
Indebtedness of Subsidiaries of Company (including any Indebtedness acquired in
connection with a Permitted Acquisition) in an aggregate amount in the case of
(i) and (ii) together not to exceed $15,000,000 at any time; provided that any
purchase money Indebtedness (A) shall be secured only by the asset acquired in
connection with the incurrence of such Indebtedness, and (B) shall constitute
not less than 85% of the aggregate consideration paid with respect to such
asset;

            (n) (i) any debt securities issued by MSW I, MSW II and/or ARC LLC
in a combined aggregate principal amount not to exceed $665,000,000 plus any
accrued interest and senior subordinated debt securities or other indebtedness
issued by MSW I, MSW II and/or ARC LLC to redeem, refinance, replace, renew or
extend any of the MSW I Notes, the MSW II Notes

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and/or ARC Notes in full, in an amount of up to the then aggregate outstanding
principal amount of the MSW I Notes or the MSW II Notes (in each case, for the
avoidance of doubt, after giving effect to any redemption, refinancing or
replacement thereof pursuant to the Indebtedness permitted under 6.1(n)(ii)), or
ARC Notes, as applicable in each case, plus any reasonable and customary
transaction costs and fees and required premium and debt service reserve
requirements in connection therewith (any such debt securities issued by MSW I
and/or MSW II, the "MSW REFINANCING NOTES" and any such debt securities issued
by ARC LLC, the "ARC REFINANCING NOTES") and guaranties related thereto;
provided that the proceeds thereof are used in each case to prepay or redeem the
MSW Notes and/or ARC Notes so redeemed, refinanced, replaced, renewed or
extended and reasonable and customary fees, commissions, legal fees and other
costs and expenses incurred in connection with such issuance and redemption or
prepayment; provided further that (A) (1) the terms of such additional
Indebtedness shall not contain any cross-default provisions (other than for
material non-payment, and may include a cross-acceleration provision), (2) the
terms of such additional Indebtedness shall not contain any financial
maintenance covenants, (3) such additional Indebtedness shall not be secured by
any asset of Company or any of its Subsidiaries (other than restricted Cash or
Cash Equivalents allocated from the funds representing such Indebtedness
securing principal and interest payments to the extent required pursuant to the
terms of such additional Indebtedness) that do not, in the case of MSW
Refinancing Notes, secure the MSW Notes and in the case of ARC Refinancing
Notes, secure the ARC Notes, (4) no portion of the principal of such additional
Indebtedness shall be scheduled to be redeemed, repurchased or otherwise repaid
or prepaid (other than as a result of a change of control, asset sales, receipt
of equity and indebtedness proceeds, condemnation and eminent domain, change of
control events, acceleration or such other provision as shall be customary for
comparable high-yield debt securities) prior to the earlier of (x) the date on
which the corresponding portion of the refinanced Indebtedness would be payable
under, for MSW Refinancing Notes, the MSW Notes, or for ARC Refinancing Notes,
the ARC Notes, and (y) the date that is six months after the Term Loan Maturity
Date, and (5) such Indebtedness shall otherwise, taken as a whole, be on
non-financial terms no less favorable to the obligors thereon, in any material
respects, than the terms of, for MSW Refinancing Notes, the MSW Notes, or for
ARC Refinancing Notes, the ARC Notes, taken as a whole (considering the economic
benefits and disadvantages of such refinancing, replacement, renewal or
extension); and (B) after giving effect to the incurrence of such Indebtedness,
(1) Company and its Subsidiaries shall be in pro forma compliance with the
financial covenants set forth in Section 6.8 and (2) no Default or Event of
Default shall exist or would result therefrom, (ii) any debt securities issued
by MSW I and/or MSW II to finance MSW Put-Related Costs, in an aggregate amount
up to $425,000,000, plus any reasonable and customary transaction costs and fees
and required premium in connection therewith (the "NEW MSW NOTES"); provided
that the proceeds thereof are used to pay MSW Put-Related Costs and reasonable
and customary fees, commissions, legal fees and other costs and expenses
incurred in connection with such issuance and payment; provided further that (A)
(1) the terms of such additional Indebtedness shall not contain cross-default
provisions to the MSW Indentures, (2) such additional Indebtedness shall not be
secured by any assets (other than Cash or Cash Equivalents allocated from the
funds representing such Indebtedness securing principal and interest payments to
the extent required pursuant to the terms of such additional Indebtedness) that
do not secure the MSW Notes, and (3) no portion of the principal of such
additional Indebtedness shall be scheduled to be redeemed, repurchased or
otherwise repaid or prepaid

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(other than as a result of a change of control, asset sales, receipt of equity
and indebtedness proceeds, condemnation and eminent domain, change of control
events, acceleration or such other provision as shall be customary for
comparable high-yield debt securities) prior to the earlier of (x) the date on
which the corresponding portion of the Indebtedness would be payable under the
MSW Notes and (y) the date that is six months after the Maturity Date; and (B)
after giving effect to the incurrence of such Indebtedness, (1) Company and its
Subsidiaries shall be in pro forma compliance with the financial covenants set
forth in Section 6.8 and (2) no Default or Event of Default shall exist or would
result therefrom, and (iii) any debt securities issued by ARC LLC to finance MSW
Put-Related Costs, in an amount up to $425,000,000, plus any reasonable and
customary transaction costs and fees and required premium in connection
therewith (the "NEW ARC NOTES"); provided that the proceeds thereof are used to
pay MSW Put-Related Costs and reasonable and customary fees, commissions, legal
fees and other costs and expenses incurred in connection with such issuance and
payment; provided further that (A) (1) the terms of such additional Indebtedness
shall not contain cross-default provisions to the ARC Indenture, (2) such
additional Indebtedness shall not be secured by any assets (other than Cash or
Cash Equivalents allocated from the funds representing such Indebtedness
securing principal and interest payments to the extent required pursuant to the
terms of such additional Indebtedness) that do not secure the ARC Notes, and (3)
no portion of the principal of such additional Indebtedness shall be scheduled
to be redeemed, repurchased or otherwise repaid or prepaid (other than as a
result of a change of control, asset sales, receipt of equity and indebtedness
proceeds, condemnation and eminent domain, change of control events,
acceleration or such other provision as shall be customary for comparable
high-yield debt securities) prior to the earlier of (x) the date on which the
corresponding portion of the Indebtedness would be payable under the ARC Notes
and (y) the date that is six months after the Maturity Date; and (B) after
giving effect to the incurrence of such Indebtedness, (1) Company and its
Subsidiaries shall be in pro forma compliance with the financial covenants set
forth in Section 6.8 and (2) no Default or Event of Default shall exist or would
result therefrom;

            (o) the Second Lien Term Loans owed under the Second Lien Credit
Agreement in an aggregate principal amount not to exceed $400,000,000 and the
Second Lien Notes owed under the Second Lien Notes Indenture in an aggregate
principal amount not to exceed $400,000,000 plus any accrued interest, and
guaranties related thereto, and any Indebtedness incurred to refinance, renew,
extend or replace such Indebtedness in whole or in part at the then-prevailing
market rates, and guaranties related thereto; provided that, (i) the
non-economic terms and conditions of such Indebtedness, taken as a whole
(considering the economic benefits and disadvantages of such refinancing,
replacement, renewal or extension), are no less favorable in any material
respect to the obligors thereon than the Second Lien Credit Agreement or Second
Lien Notes Indenture, as applicable, (ii) such refinancing, renewal, extension
or replacement is incurred only by the Person who is the obligor on the Second
Lien Term Loans or Second Lien Notes, as applicable, being refinanced, renewed,
extended or replaced and guaranties related thereto and (iii) the average life
to maturity thereof is greater than or equal to that of the Second Lien Term
Loans and Second Lien Notes, as applicable;

            (p) to the extent no Default or Event of Default shall have occurred
and be continuing or shall be caused thereby at the time of the incurrence
thereof, Limited Recourse Debt, the proceeds of which are applied to make
Expansions, incurred after the Closing Date in an aggregate amount not to exceed
the greater of (i) $60,000,000 and (ii) 50% of the principal

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amount of Limited Recourse Debt of Subsidiaries of Company outstanding as of the
Closing Date which has been permanently repaid (and not otherwise renewed,
refinanced, replaced or extended pursuant to Section 6.1(l) or otherwise) since
the Closing Date (up to a maximum principal amount under this clause (p) of
$250,000,000;

            (q) Company and its Subsidiaries may become and remain liable with
respect to their obligations to pay for services rendered by Holdings to them
under and in accordance with the Corporate Services Reimbursement Agreement;

            (r) Company and its Subsidiaries may become and remain liable with
respect to usual and customary contingent obligations incurred in connection
with insurance deductibles or self-insurance retentions required by third party
insurers in connection with insurance arrangements entered into by Company and
its Subsidiaries with such insurers in compliance with Section 5.5;

            (s) Company and its Subsidiaries may become and remain liable with
respect to Performance Guaranties supporting Projects, provided, that (a) the
terms of any such Performance Guaranty shall be generally consistent with past
practice of Company and its Subsidiaries, (b) in no event shall any such
Performance Guaranty be secured by collateral, and (c) after the occurrence and
during the continuation of an Event of Default, neither Company nor any if its
Subsidiaries shall enter into any such Performance Guaranty or enter into a
contractual commitment to provide any such Performance Guaranty;

            (t) Indebtedness of any Covanta Warren Entity to Company or any of
its Subsidiaries to the extent the proceeds thereof are immediately used to make
the Restricted Junior Payment expressly permitted pursuant to Section 6.5(h) or
to make the payments contemplated under Section 6.7(l)(ii);

            (u) Company may become and remain liable with respect to
Indebtedness consisting solely of its obligations under Insurance Premium
Financing Arrangements, which obligations shall not exceed at any time
$40,000,000 in the aggregate;

            (v) Company and its Subsidiaries may become and remain liable with
respect to Hedge Agreements and with respect to long-term or forward purchase
contracts and option contracts to buy, sell or exchange commodities and similar
agreements or arrangements, so long as such contracts, agreements or
arrangements do not constitute Commodities Agreements;

            (w) Company and its Subsidiaries may become and remain liable with
respect to contingent obligations incurred in exchange (or in consideration) for
(a) the release of cash collateral pledged by Company or its Subsidiaries or (b)
the return and cancellation of undrawn letters of credit for which Company or
its Subsidiaries are liable for reimbursement;

            (x) Indebtedness of any Subsidiary of Company to Company reflecting
non-cash intercompany allocations of overhead and other parent-level costs in
accordance with its customary allocation practices; and

            (y) Additional unsecured Indebtedness of Company and its Guarantor
Subsidiaries in an amount not to exceed $10,000,000 in the aggregate since the
Closing Date.

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                                      107

<PAGE>

      To the extent that the creation, incurrence or assumption of any
Indebtedness could be attributable to more than one subsection of this Section
6.1, Company may allocate such Indebtedness to any one or more of such
subsections and in no event shall the same portion of Indebtedness be deemed to
utilize or be attributable to more than one item.

      6.2. Liens. Neither Company nor any Guarantor Subsidiary shall, and shall
not permit any of its Subsidiaries to, directly or indirectly, create, incur,
assume or permit to exist any Lien on or with respect to any property or asset
of any kind (including any document or instrument in respect of goods or
accounts receivable) of Company or any of its Subsidiaries, whether now owned or
hereafter acquired, or any income or profits therefrom, except:

            (a) Liens in favor of Collateral Agent for the benefit of Secured
Parties granted pursuant to any Credit Document;

            (b) Liens for Taxes if obligations with respect to such Taxes are
being contested in good faith by appropriate proceedings promptly instituted and
diligently conducted;

            (c) statutory Liens of landlords, banks (and rights of set-off), of
carriers, warehousemen, mechanics, repairmen, workmen and materialmen, and other
Liens imposed by law (other than any such Lien imposed pursuant to Section 401
(a)(29) or 412(n) of the Internal Revenue Code or by ERISA), in each case
incurred in the ordinary course of business (i) for amounts not yet overdue or
(ii) for amounts that are overdue and that (in the case of any such amounts
overdue for a period in excess of ten days) are being diligently contested in
good faith by appropriate proceedings, so long as such reserves or other
appropriate provisions, if any, as shall be required by GAAP shall have been
made for any such contested amounts;

            (d) Liens incurred and deposits made in the ordinary course of
business in connection with workers' compensation, unemployment insurance and
other types of social security, or to secure the performance of tenders,
statutory obligations, surety, performance, bid, payment and appeal bonds, bids,
leases, government contracts, trade contracts, performance and return-of-money
bonds and other similar obligations (exclusive of obligations for the payment of
borrowed money) so long as no foreclosure, sale or similar proceedings have been
commenced with respect to any portion of the Collateral on account thereof and
Liens securing, or arising in connection with the establishment of, required
debt service reserve funds, provided that in the case of Liens securing debt
service reserve funds, completion obligations and similar accounts and
obligations (other than Indebtedness) of Subsidiaries of Company to Persons
other than Company and its Subsidiaries and their respective Affiliates, so long
as (a) each such obligation is associated with a Project, (b) such Lien is
limited to (1) assets associated with such Project (which in any event shall not
include assets held by Company or any of its Subsidiaries other than a
Subsidiary whose sole business is the ownership and/or operation of such Project
and substantially all of whose assets are associated with such Project) and/or
(2) the equity interests in such Subsidiary, but in the case of clause (2) only
if such Subsidiary's sole business is the ownership and/or operation of such
Project and substantially all of such Subsidiary's assets are associated with
such Project, and (c) such obligation is otherwise permitted under this
Agreement;

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                                      108

<PAGE>

            (e) easements, rights-of-way, restrictions, encroachments, and other
minor defects or irregularities in title, in each case which do not and will not
interfere with the ordinary conduct of the business of Company or any of its
Subsidiaries;

            (f) any interest or title of a lessor or sublessor under any lease
of real estate permitted hereunder;

            (g) Liens solely on any cash earnest money deposits made by Company
or any of its Subsidiaries in connection with any letter of intent or purchase
agreement permitted hereunder;

            (h) purported Liens evidenced by the filing of precautionary UCC
financing statements relating solely to operating leases of personal property
entered into in the ordinary course of business;

            (i) Lien on Cash or Cash Equivalents to the extent used to secure
principal and interest payments to the extent required pursuant to indentures
otherwise permitted hereunder and funded with the proceeds of the issuance of
notes thereunder;

            (j) Liens in favor of customs and revenue authorities arising as a
matter of law to secure payment of customs duties in connection with the
importation of goods;

            (k) any zoning or similar law or right reserved to or vested in any
governmental office or agency to control or regulate the use of any real
property, in each case which do not and will not interfere with or affect in any
material respect the use, value or operations of any Closing Date Mortgaged
Property or Material Real Estate Asset or the ordinary conduct of the business
of Company or any of its Subsidiaries;

            (l) licenses of patents, trademarks and other intellectual property
rights granted by Company or any of its Subsidiaries in the ordinary course of
business and not interfering in any respect with the ordinary conduct of the
business of Company or such Subsidiary;

            (m) Liens described in Schedule 6.2 or on a Title Policy delivered
pursuant to Section 3.1(h)(iv);

            (n) Liens (i) arising under Capital Leases entered into after the
Closing Date and (ii) securing purchase money Indebtedness in an aggregate
amount in the case of (i) and (ii) together not to exceed at any time
$15,000,000; provided, any such Lien shall encumber only the asset acquired with
the proceeds of such Indebtedness;

            (o) Liens on the Collateral securing obligations under the Second
Lien Credit Agreement and/or Second Lien Notes and all collateral documents
related to either of them including permitted refinancings, renewals,
extensions, refundings and replacements thereof; provided that such Liens are
subordinated to the Liens securing the Obligations in accordance with the terms
of the Intercreditor Agreement;

            (p) Liens on assets of any Subsidiary of Company and/or on the stock
or other equity interests of such Subsidiary, in each case to the extent such
Liens secure Limited

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Recourse Debt of such Subsidiary permitted by Section 6.1(p) and Liens on assets
of any Foreign Subsidiary of Company constituting equity interests in a Joint
Venture to the extent such Liens secure Indebtedness of such Joint Venture in
respect of a Project;

            (q) Liens created pursuant to Insurance Premium Financing
Arrangements otherwise permitted under this Agreement, so long as such Liens
attach only to gross unearned premiums for the insurance policies and related
rights;

            (r) Liens securing refinancing Indebtedness permitted by Section
6.1(l), provided that in each case the Liens securing such refinancing
Indebtedness shall attach only to the assets that were subject to Liens securing
the Indebtedness so refinanced;

            (s) Liens securing Indebtedness permitted by Section 6.1(n)(i) and
Section 6.1(n)(ii);

            (t) rights and claims of creditors of Company and its Subsidiaries
to the bankruptcy reserve funds established in connection with the plan of
reorganization in the bankruptcy cases of Company and its Subsidiaries that
became effective on March 10, 2004 (the "PLAN OF REORGANIZATION") and held in
the designated account permitted under Section 5.17 and indicated on Schedule
5.15 and paid into such account prior to the Closing Date pursuant to such plan
of reorganizations);

            (u) Liens on cash collateral of Company and its Subsidiaries
securing insurance deductibles or self-insurance retentions required by third
party insurers in connection with (i) workers' compensation insurance
arrangements entered into by Company and its Subsidiaries with such insurers and
(ii) other insurance arrangements entered into by Company and its Subsidiaries
with such insurers in an amount not to exceed $2,000,000 in the aggregate;

            (v) Liens on assets acquired (or on the assets of Persons acquired)
in a Permitted Acquisition that existed at the time of such acquisition and that
were not created in contemplation of such acquisition; and

            (w) other Liens on assets other than the Collateral securing
Indebtedness in an aggregate amount not to exceed $2,500,000 at any time
outstanding.

      6.3. [Intentionally left blank].

      6.4. No Further Negative Pledges. Except with respect to (a) property
encumbered to secure payment of particular Indebtedness or to be sold pursuant
to an executed agreement with respect to an asset sale permitted hereunder, (b)
restrictions contained in the MSW Indentures, (c) restrictions contained in
leases and licenses that relate only to the property or rights leased or
licensed thereunder, (d) restrictions contained in the MSW Refinancing Indenture
or the New MSW Indentures and in any documents, instruments or agreements
pursuant to which the MSW Refinancing Notes or New MSW Notes may be refinanced
or replaced that are no more restrictive than those contained in the MSW
Indentures or the New MSW Indentures, as applicable, (e) restrictions contained
in the Second Lien Credit Agreement and all collateral documents related thereto
as of the Closing Date and in Second Lien Notes Indenture, (f) restrictions
contained in any documents, instruments or agreements pursuant to which the

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<PAGE>

Second Lien Notes or Second Lien Term Loans may be refinanced or replaced that
are no more restrictive than those contained in the Second Lien Credit Agreement
or the Second Lien Notes Indenture as applicable, (g) restrictions contained in
the ARC Indenture, (h) restrictions contained in any documents, instruments or
agreements pursuant to which the ARC Notes or the New ARC Notes may be
refinanced or replaced (including any ARC Refinancing Indenture) that are no
more restrictive than those contained in the ARC Indenture, (i) restrictions
contained in any instrument, document or agreement to which any Person acquired
by Company or a Subsidiary in a Permitted Acquisition is a party, provided that
such restrictions (A) were not created in contemplation of such acquisition and
(B) are not applicable to any Person, property or assets other than the Persons
so acquired (and its Subsidiaries), (j) restrictions by reason of customary
provisions restricting assignments, subletting or other transfers contained in
leases, licenses and similar agreements entered into in the ordinary course of
business (provided that such restrictions are limited to the property or assets
secured by such Liens or the property or assets subject to such leases, licenses
or similar agreements, as the case may be) and (k) provisions in the principal
lease, service and operating agreements pertaining to Projects or the
partnership and financing agreements relating to Projects, or any extension,
renewal or replacement thereof so long as in each case such lease, service,
operating, partnership or financing agreement is in effect as of the Closing
Date, is otherwise permitted to be entered into hereunder and, in the case of
any extension, renewal or replacement, such agreement contains no more
restrictive provisions relating to prohibiting the creation or assumption of any
Lien upon the properties or assets of the relevant Subsidiary than the lease,
service, operating, partnership or financing agreement so extended, renewed or
replaced, Company and its Subsidiaries shall not, and shall not permit any of
their Subsidiaries to, enter into any agreement prohibiting the creation or
assumption of any Lien upon any of its properties or assets, whether now owned
or hereafter acquired.

      6.5. Restricted Junior Payments. Neither Company nor any Guarantor
Subsidiary shall, nor shall it permit any of its Subsidiaries to, directly or
indirectly, declare, order, pay, make or set apart any sum for any Restricted
Junior Payment except that (a) MSW I, MSW II and ARC LLC may make regularly
scheduled payments of interest in respect of the MSW Notes, any MSW Refinancing
Notes, the ARC Notes, any ARC Refinancing Notes, the New MSW Notes, the New ARC
Notes and any instrument or agreement in respect of any permitted refinancing
thereof, and may make regularly scheduled payments of principal, mandatory
prepayments and redemptions (including payment of premium) of, or repay at
maturity, the MSW Notes, the ARC Notes, the New MSW Notes, the ARC Refinancing
Notes, the New ARC Notes and any instrument or agreement in respect of any
permitted refinancing thereof, all in accordance with the terms of, and only to
the extent required by, and subject to the subordination provisions, if any,
contained in the MSW Indentures, MSW Refinancing Indentures, the ARC Indentures,
the ARC Refinancing Indentures, the New MSW Indentures, the New ARC Indenture
and any instrument or agreement in respect of any permitted refinancing thereof;
(b) Company may make required payments of principal and interest in respect of
the Indebtedness incurred under the Second Lien Credit Agreement and Second Lien
Notes Indenture and any refinancing thereof permitted hereunder and thereunder
and pursuant to the Intercreditor Agreement; (c) so long as no Event of Default
pursuant to Section 8.1(a) shall have occurred and be continuing, Company may
make payments to Holdings to the extent required under the Corporate Services
Reimbursement Agreement and Company may reimburse Holdings for the fees and
reasonable costs and expenses paid or payable by Holdings within 180 days of the
Closing Date in

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<PAGE>

connection with the Transactions and the Related Transactions; (d) Company and
its Subsidiaries may make payments required under the DHC Tax Sharing Agreement;
provided, that in no event shall the amount paid by Company and its Subsidiaries
exceed the lesser of (i) the consolidated tax liabilities that would be payable
if Company and its Subsidiaries filed a consolidated tax return with Company as
the parent company and (ii) the consolidated tax liabilities of Holdings and its
Subsidiaries; (e) Company may make Restricted Junior Payments to Holdings in
order to allow Holdings to fund regulatory capital or other requirements
relating to the Insurance Subsidiaries of Holdings in an aggregate amount not to
exceed $3,000,000 in any Fiscal Year; provided that (i) no Default or Event of
Default shall have occurred and be continuing or shall be caused thereby and
(ii) Company and its Subsidiaries shall be in compliance with the financial
covenants set forth in Section 6.8 on a pro forma basis after giving effect to
such payment as of the last day of the Fiscal Quarter most recently ended; (f)
so long as no Default or Event of Default shall have occurred and be continuing
or would be caused thereby, Company may make additional Restricted Junior
Payments to Holdings, the proceeds of which may be utilized by Holdings to make
additional Restricted Junior Payments, in an aggregate amount not to exceed
$10,000,000; provided, that notwithstanding the foregoing, until (i) such time
as the Company Leverage Ratio determined on a pro forma basis is less than
4.25:1.00 at any date of determination, (ii) no Default or Event of Default
shall have occurred and be continuing or shall be caused thereby, (iii) Company
and its Subsidiaries shall be in compliance with the financial covenants set
forth in Section 6.8 on a pro forma basis after giving effect to such payment as
of the last day of the Fiscal Quarter most recently ended and (iv) at the time
of such payment and after giving effect thereto, the sum of (y) the amount, if
any, by which (i) the Revolving Commitment exceeds (ii) the sum of the Total
Utilization of Revolving Commitments plus (z) the aggregate amount of
unrestricted Cash and Cash Equivalents of Company at such time, shall not be
less than $50,000,000; (g) so long as no Event of Default shall have occurred
and be continuing, Subsidiaries of Company may and (with respect to Second Lien
Credit Agreement, the Second Lien Notes Indenture and any refinancing thereof
permitted thereunder) Company may, at the time Indebtedness is refinanced or
replaced as permitted under Section 6.1 by other Indebtedness permitted under
such section, pay principal, accrued interest and other amounts owing on the
Indebtedness being refinanced at such time, provided, that such payments may be
made with respect to Limited Recourse Debt during the continuance of an Event of
Default so long as such payments are from the proceeds of Limited Recourse Debt
permitted to be incurred hereunder and such proceeds are required to be applied
to make such payments under a binding Contractual Obligation to a third party
and ARC LLC may make regularly scheduled payments of interest in respect of the
notes issued under the ARC Indenture and under any Indebtedness incurred to
refinance the same and in respect of principal of such notes only mandatorily
prepay or redeem (including payment of any premium) or repay at maturity, all in
accordance with the terms of the ARC Indenture and any Indebtedness incurred to
refinance the same, and only to the extent required by the ARC Indenture or
terms of such refinancing Indebtedness; and (h) so long as no Event of Default
shall have occurred and be continuing, Company or any of its Subsidiaries may
repay the outstanding Covanta Warren Debt pursuant to a confirmed plan of
reorganization up to an aggregate amount not to exceed $18,000,000; provided
that each Covanta Warren Entity immediately thereafter ceases to be an Affected
Entity, becomes a Guarantor hereunder and a Grantor under the Pledge and
Security Agreement and complies with Section 5.10.

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<PAGE>

      6.6. Restrictions on Subsidiary Distributions. Except as provided herein,
in the Second Lien Credit Agreement, the Second Lien Notes Indenture, the ARC
Indentures, the ARC Refinancing Indenture, the New ARC Indenture, the MSW
Indentures, MSW Refinancing Indentures or the New MSW Indentures or any
document, instrument or agreement entered into in connection with a replacement
or refinancing of any of the foregoing permitted hereunder, neither Company nor
any Guarantor Subsidiary shall, nor shall it permit any of its Subsidiaries to,
create or otherwise cause or suffer to exist or become effective any consensual
encumbrance or restriction of any kind on the ability of any Subsidiary of
Company to (a) pay dividends or make any other distributions on any of such
Subsidiary's Capital Stock owned by Company or any other Subsidiary of Company,
(b) repay or prepay any Indebtedness owed by such Subsidiary to Company or any
other Subsidiary of Company, (c) make loans or advances to Company or any other
Subsidiary of Company, or (d) transfer any of its property or assets to Company
or any other Subsidiary of Company other than restrictions (i) in agreements
evidencing Indebtedness permitted by Sections 6.1(j) or (m) that impose
restrictions on the property so acquired, (ii) by reason of customary provisions
restricting assignments, subletting or other transfers contained in leases,
licenses, joint venture agreements and similar agreements, (iii) by reason of
provisions in the principal lease, service or operating agreements, partnership
agreements and financing agreements pertaining to Projects, so long as such
lease, service or operating agreements, partnership agreements and financing
agreements are extensions, renewals or replacements of such agreements are in
effect as of the Closing Date, are otherwise permitted to be entered into
hereunder and, in each case of any extensions, renewals or replacements, contain
no more restrictive provisions relating to the ability of the relevant
Subsidiary to take the actions described in clauses (a) through (d) than the
agreement so extended, renewed or replaced, (iv) that are or were created by
virtue of any transfer of, agreement to transfer or option or right with respect
to any property, assets or Capital Stock not otherwise prohibited under this
Agreement (v) that are of the type set forth in clause (d) above contained in
agreements relating to an asset sale permitted hereunder (or to which Requisite
Lenders have consented) (provided that such restrictions only apply to the
assets that are the subject of such a sale), (vi) that are of the type set forth
in clauses (a) through (d) above contained in agreements relating the sale or
disposition of all of the equity interests of a Subsidiary permitted hereunder
(or to which the Requisite Lenders have consented) (provided that such
restrictions only apply to the Subsidiary being sold or disposed of and its
Subsidiaries), and (vii) by reason of provisions in any instrument, document or
agreement to which any Person acquired by Company or a Subsidiary in a Permitted
Acquisition is a party, provided that such restrictions (A) were not created in
contemplation of such acquisition and (B) are not applicable to any Person,
property or assets other than the Person (and such Person's Subsidiaries) so
acquired and their respective properties and assets. No Credit Party shall, nor
shall it permit any of its Subsidiaries, to enter into any immaterial
Contractual Obligation on or after the Closing Date which would prohibit a
Subsidiary of Company becoming a Credit Party.

      6.7. Investments. Neither Company nor any Guarantor Subsidiary shall, nor
shall it permit any of its Subsidiaries to, directly or indirectly, make or own
any Investment in any Person, including without limitation any Joint Venture,
except:

            (a) Investments in Cash and Cash Equivalents and, to the extent made
in connection therewith, Investments permitted or imposed under the terms of any
cash collateral or

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<PAGE>

debt service reserve agreement (including pursuant to the terms of any Project
bond indenture and the MSW Indentures) permitted hereunder;

            (b) equity Investments owned as of the Closing Date in any
Subsidiary and Investments made after the Closing Date in any wholly-owned
Guarantor Subsidiaries of Company;

            (c) Investments (i) in any Securities or instruments received in
satisfaction or partial satisfaction thereof from financially troubled account
debtors, (ii) received in settlement of disputes or as consideration in any
asset sale or other disposition permitted hereunder and (iii) constituting
deposits, prepayments and other credits to suppliers made in the ordinary course
of business consistent with the past practices of Company and its Subsidiaries;

            (d) intercompany loans and advances to the extent permitted under
Section 6.1(b), (c), (d), (e), (f) or (k);

            (e) Investments by a Subsidiary of Company constituting Consolidated
Capital Expenditures by such Subsidiary permitted by Section 6.8(d);

            (f) Investments made in connection with Permitted Acquisitions
permitted pursuant to Section 6.9;

            (g) Investments described in Schedule 6.7;

            (h) Company and its Subsidiaries may become and remain liable with
respect to contingent obligations consisting of long-term or forward purchase
contracts and option contracts to buy, sell or exchange commodities and similar
agreements or arrangements, so long as such contracts, agreements or
arrangements do not constitute Commodities Agreements;

            (i) Foreign Subsidiaries may make equity Investments in other
Foreign Subsidiaries (including without limitation, Investments made in
connection with the Foreign Subsidiary restructuring as expressly set forth in
Schedule 6.9-B) and Excluded Subsidiaries may make equity Investments in other
Excluded Subsidiaries which are their direct or indirect Subsidiaries;

            (j) to the extent no Default or Event of Default shall have occurred
and be continuing at the time the same are made or shall be caused thereby,
equity Investments in Foreign Subsidiaries and Excluded Subsidiaries by Company
or any Guarantor Subsidiary to provide such Subsidiary with equity
capitalization necessary or advisable in connection with an Expansion of a
Project of such Subsidiary in an amount not to exceed 30% of the amount of
Limited Recourse Debt that such Subsidiary is permitted to incur under (or has
already incurred in reliance on) Section 6.1(p);

            (k) Investments of Persons acquired in a Permitted Acquisition that
existed at the time of such acquisition;

            (l) (i) for so long as the Covanta Warren Entities remain Affected
Entities, loans and advances by Company to the Covanta Warren Entities in an
aggregate principal amount not

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                                      114

<PAGE>

to exceed $3,000,000 pursuant to debtor-in-possession financing provided to the
Covanta Warren Entities by Company and (ii) Investments made by Company in the
Covanta Warren Entities, in an amount not exceed $18,000,000 when aggregated
with payments permitted under Section 6.5(h), on or after the effective date of
the confirmation of a plan of reorganization of the Covanta Warren Entities in
connection with such reorganization;

            (m) equity investments arising from or as a part of (i) the Foreign
Subsidiary Restructuring as expressly set forth in Schedule 6.9-B and (ii) the
cancellation of intercompany indebtedness described in clause (b) of the second
proviso to Section 6.1(e)(v);

            (n) equity Investments in MSW I and/or MSW II; provided that such
Investments shall be made from

                  (i) the proceeds of the Put-Related Equity Offering (less the
            amount of any intercompany loans made pursuant to Section
            6.1(e)(i)(B)),

                  (ii) Cash and Cash Equivalents from Company's operations;
            provided that after giving effect to such Investment and any
            Indebtedness incurred pursuant to Section 6.1(e)(i)(C) unrestricted
            Cash and Cash Equivalents of Company and the Acquired Business shall
            not be less than $50,000,000 (provided further that for the purposes
            of calculating such amount, no more than $5,000,000 of Marketable
            Securities shall be included in such calculation), and

                  (iii) the proceeds of an equity contribution from Holdings to
            Company to occur with 120 days of the Closing Date in an aggregate
            amount not to exceed $25,000,000 (less the amount of any
            intercompany loans made pursuant to Section 6.1(e)(i)(D));

provided further that Investments in MSW I and/or MSW II pursuant to clauses (i)
through (iii) immediately above shall be used to solely pay MSW Put-Related
Costs and when added to Indebtedness on-lent pursuant to Section 6.1(e)(i) shall
not exceed in the aggregate the amount set forth on the certificate delivered
pursuant to Section 5.1(k);

            (o) a one-time Investment in American Ref-Fuel Holdings Corp in an
aggregate amount not to exceed the difference between (x) $740,000,000 and (y)
the amount paid in Cash by Company to purchase the Acquired Business; provided
that such Investment will be used solely to pay transition costs of the type set
out on Schedule 1.1(f) incurred in connection with integration of the Acquired
Business; and

            (p) other Investments in an aggregate amount not to exceed at any
time $5,000,000.

      Notwithstanding the foregoing, in no event shall any of Company or any of
its Subsidiaries make any Investment which results in or facilitates in any
manner any Restricted Junior Payment not otherwise permitted under the terms of
Section 6.5.

      To the extent that the making of any Investment could be deemed a use of
more than one subsection of this Section 6.7, Company may select the subsection
to which such Investment will

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                                      115

<PAGE>

be deemed a use and in no event shall the same portion of an Investment be
deemed a use of more than one subsection.

      6.8. Financial Covenants.

            (a) Cash Flow Coverage Ratio. Company shall not permit the Cash Flow
Coverage Ratio as of the last day of any Fiscal Quarter, beginning with the
Fiscal Quarter ending September 30, 2005, to be less than the correlative ratio
indicated:

<TABLE>
<CAPTION>
                       CASH FLOW
  FISCAL QUARTER     COVERAGE RATIO
------------------   --------------
<S>                  <C>
September 30, 2005      1.5:1.00

December 31, 2005       1.5:1.00

  March 31, 2006        1.5:1.00

  June 30, 2006         1.5:1.00

September 30, 2006      1.5:1.00

 December 31, 2006      1.5:1.00

  March 31, 2007       1.55:1.00

   June 30, 2007       1.55:1.00
</TABLE>

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                                      116

<PAGE>

<TABLE>
<CAPTION>
                       CASH FLOW
  FISCAL QUARTER     COVERAGE RATIO
------------------   --------------
<S>                  <C>
September 30, 2007     1.55:1.00

December 31, 2007      1.55:1.00

  March 31, 2008       1.55:1.00

  June 30, 2008        1.55:1.00

September 30, 2008     1.55:1.00

December 31, 2008      1.55:1.00

  March 31, 2009        1.7:1.00

  June 30, 2009         1.7:1.00

September 30, 2009      1.7:1.00

December 31, 2009       1.7:1.00

  March 31, 2010        1.7:1.00

  June 30, 2010         1.7:1.00

September 30, 2010      1.7:1.00

December 31, 2010       1.7:1.00

  March 31, 2011        1.7:1.00

  June 30, 2011         1.7:1.00

September 30, 2011      1.7:1.00

December 31, 2011       1.7:1.00

    Thereafter         2.00:1.00
</TABLE>

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<PAGE>

            (b) Company Leverage Ratio. Company shall not permit the Company
Leverage Ratio as of the last day of any Fiscal Quarter, beginning with the
Fiscal Quarter ending September 30, 2005, to exceed the correlative ratio
indicated:

<TABLE>
<CAPTION>
                     COMPANY LEVERAGE
FISCAL QUARTER             RATIO
------------------   ----------------
<S>                  <C>
September 30, 2005      6.00:1.00

December 31, 2005       6.00:1.00

  March 31, 2006        6.00:1.00

  June 30, 2006         6.00:1.00

September 30, 2006      6.00:1.00

December 31, 2006       6.00:1.00

  March 31, 2007        5.50:1.00

  June 30, 2007         5.50:1.00

September 30, 2007      5.50:1.00

December 31, 2007       5.50:1.00

  March 31, 2008        5.25:1.00

  June 30, 2008         5.25:1.00

September 30, 2008      5.25:1.00

December 31, 2008       5.25:1.00
</TABLE>

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                                      118

<PAGE>

<TABLE>
<CAPTION>
                     COMPANY LEVERAGE
FISCAL QUARTER             RATIO
------------------   ----------------
<S>                  <C>
  March 31, 2009        5.00:1.00

  June 30, 2009         5.00:1.00

September 30, 2009      5.00:1.00

December 31, 2009       5.00:1.00

  March 31, 2010        4.75:1.00

  June 30, 2010         4.75:1.00

September 30, 2010      4.75:1.00

December 31, 2010       4.75:1.00

  March 31, 2011        4.75:1.00

  June 30, 2011         4.75:1.00

September 30, 2011      4.75:1.00

December 31, 2011       4.75:1.00

    Thereafter          4.00:1.00
</TABLE>

            (c) Consolidated Adjusted EBITDA. Company shall not permit the
Consolidated Adjusted EBITDA as at the end of any Fiscal Quarter, beginning with
the Fiscal Quarter ending September 30, 2005, for the four Fiscal Quarter period
then ended, taken as a single accounting period, to be less than the correlative
amount indicated:

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<TABLE>
<CAPTION>
                     CONSOLIDATED ADJUSTED
  FISCAL QUARTER             EBITDA
------------------   ---------------------
<S>                  <C>
September 30, 2005       $425,000,000

December 31, 2005        $425,000,000

  March 31, 2006         $425,000,000

  June 30, 2006          $425,000,000

September 30, 2006       $425,000,000

December 31, 2006        $425,000,000

  March 31, 2007         $425,000,000

  June 30, 2007          $425,000,000

September 30, 2007       $425,000,000

December 31, 2007        $425,000,000

  March 31, 2008         $425,000,000

  June 30, 2008          $425,000,000

September 30, 2008       $425,000,000

December 31, 2008        $425,000,000
</TABLE>

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<PAGE>

<TABLE>
<CAPTION>
                     CONSOLIDATED ADJUSTED
  FISCAL QUARTER             EBITDA
------------------   ---------------------
<S>                  <C>
  March 31, 2009         $425,000,000

  June 30, 2009          $425,000,000

September 30, 2009       $425,000,000

December 31, 2009        $425,000,000

  March 31, 2010         $425,000,000

  June 30, 2010          $425,000,000

September 30, 2010       $425,000,000

December 31, 2010        $425,000,000

  March 31, 2011         $425,000,000

  June 30, 2011          $425,000,000

September 30, 2011       $425,000,000

December 31, 2011        $425,000,000

    Thereafter           $425,000,000
</TABLE>

            (d) Maximum Consolidated Capital Expenditures. Company shall not
make or incur any Consolidated Capital Expenditures at all after the Closing
Date, and shall not permit its Subsidiaries to, make or incur Consolidated
Capital Expenditures, in any Fiscal Year indicated below, in an aggregate amount
for Subsidiaries of Company in excess of the corresponding amount set forth
below opposite such Fiscal Year; provided, such amount for any Fiscal Year

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<PAGE>

shall be increased by an amount (up to a maximum amount of $65,000,000), equal
to 50% of the excess, if any, of such amount for the previous Fiscal Year (after
giving effect to any adjustment in accordance with this proviso) over the actual
amount of Consolidated Capital Expenditures for such previous Fiscal Year:

<TABLE>
<CAPTION>
              CONSOLIDATED CAPITAL
FISCAL YEAR       EXPENDITURES
-----------   --------------------
<S>           <C>
   2005            $65,000,000

   2006            $65,000,000

   2007            $65,000,000

   2008            $65,000,000

   2009            $65,000,000

   2010            $65,000,000

   2011            $65,000,000

Thereafter         $65,000,000
</TABLE>

      6.9. Fundamental Changes; Disposition of Assets; Acquisitions. Neither
Company nor any Guarantor Subsidiary shall, nor shall it permit any of its
Subsidiaries to, enter into any transaction of merger or consolidation, or
liquidate, wind-up or dissolve itself (or suffer any liquidation or
dissolution), or convey, sell, lease or sub-lease (as lessor or sublessor),
exchange, transfer or otherwise dispose of, in one transaction or a series of
transactions, all or any part of its business, assets or property of any kind
whatsoever, whether real, personal or mixed and whether tangible or intangible,
whether now owned or hereafter acquired, or acquire by purchase or otherwise
(other than purchases or other acquisitions of inventory, materials and
equipment and Consolidated Capital Expenditures in the ordinary course of
business) the business, property or fixed assets of, or stock or other evidence
of beneficial ownership of, any Person or any division or line of business or
other business unit of any Person, except:

            (a) any Subsidiary of Company may be merged with or into Company or
any Guarantor Subsidiary, or be liquidated, wound up or dissolved, or all or any
part of its business,

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<PAGE>

property or assets may be conveyed, sold, leased, transferred or otherwise
disposed of, in one transaction or a series of transactions, to Company or any
Guarantor Subsidiary; provided, in the case of such a merger, Company or such
Guarantor Subsidiary, as applicable shall be the continuing or surviving Person.
In addition, any Subsidiary of Company that is not a Guarantor may be merged
with or into any other Subsidiary of Company that is not a Guarantor which is
its direct parent or Subsidiary, or all or any part of its business, property or
assets may be conveyed, sold, leased, transferred or otherwise disposed of, in
one transaction or a series of transactions, to any other Subsidiary of Company
that is not a Guarantor and which is its direct parent or Subsidiary;

            (b) sales or other dispositions of assets that do not constitute
Asset Sales; and

            (c) Asset Sales, the Net Asset Sale Proceeds of which when
aggregated with the proceeds of all other Asset Sales made within the same
Fiscal Year, do not exceed $7,500,000 and the sale or other dispositions of
those assets identified on Schedule 6.9-A; provided (1) the consideration
received for such assets shall be in an amount at least equal to the fair market
value thereof (determined in good faith by the board of directors of Company or
the relevant Subsidiary (or similar governing body)), (2) no less than 80%
thereof shall be paid in Cash (which limitation shall not apply to the sale or
offer disposition of assets identified on Schedule 6.9-A), and (3) the Net Asset
Sale Proceeds thereof shall be applied as required by Section 2.14(a) to the
extent required thereby;

            (d) Excluded Asset Sales;

            (e) (i) Permitted Acquisitions to the extent, the consideration for
which constitutes less than $15,000,000 in the aggregate from the Closing Date
to the date of determination and (ii) acquisitions by Company of assets
contributed to it by Holdings as equity capital contributions;

            (f) acquisitions of real property that is contiguous to real
property owned by Company or its Subsidiaries at such time; so long as such
acquisition is either (i) by Company or any Guarantor Subsidiary, or (ii) if not
within clause (i) of this provision, is either (A) financed with the proceeds of
Limited Recourse Debt and/or the proceeds of an Investment pursuant to Section
6.7(j) or (B) consummated for consideration in an aggregate amount (together
with any other acquisitions made in reliance on this Section 6.9(f)(ii)(B)
following the Closing Date) not to exceed $3,000,000;

            (g) acquisitions and the Foreign Subsidiary restructuring in each
case to the extent expressly identified on Schedule 6.9-B; and

            (h) Investments permitted under Section 6.7.

      6.10. Disposal of Subsidiary Interests. Except for any sale of all of its
interests in the Capital Stock of any of its Subsidiaries in compliance with the
provisions of Section 6.9, and except as provided in the Second Lien Credit
Agreement or the Second Lien Notes Indenture and related documentation
(including permitted refinancings thereof), neither Company nor any Guarantor
Subsidiary shall, nor shall it permit any of its Subsidiaries to, (a) directly
or indirectly sell, assign, pledge or otherwise encumber or dispose of any
Capital Stock of any of its

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<PAGE>

Guarantor Subsidiaries, except to qualify directors if required by applicable
law; or (b) directly or indirectly to sell or otherwise dispose of any Capital
Stock of any of its Subsidiaries, except to Company or Guarantor Subsidiary
(subject to the restrictions on such disposition otherwise imposed hereunder),
or to qualify directors if required by applicable law. Notwithstanding the
foregoing, (a) Excluded Subsidiaries may transfer Capital Stock in any of its
Subsidiaries to other wholly-owned Excluded Subsidiaries, (b) Foreign
Subsidiaries may transfer Capital Stock in any of its Subsidiaries to other
wholly-owned Foreign Subsidiaries and (c) Company and its Subsidiaries may
consummate the Foreign Subsidiary restructuring identified on Schedule 6.9-B.

      6.11. Prohibition on Sales and Lease-Backs. Neither Company nor any
Guarantor Subsidiary shall, nor shall it permit any of its Subsidiaries to,
directly or indirectly, become or remain liable as lessee or as a guarantor or
other surety with respect to any lease of any property (whether real, personal
or mixed), whether now owned or hereafter acquired, which any of Company or its
Subsidiaries has sold or transferred or is to sell or to transfer to any other
Person (other than Company or any of its Subsidiaries).

      6.12. Transactions with Shareholders and Affiliates. Neither Company nor
any Guarantor Subsidiary shall, nor shall it permit any of its Subsidiaries to,
directly or indirectly, enter into or permit to exist any transaction (including
the purchase, sale, lease or exchange of any property or the rendering of any
service) with any Affiliate, on terms that are less favorable to Company or that
Subsidiary, as the case may be, than those that might be obtained at the time
from a Person who is not an Affiliate; provided, the foregoing restriction shall
not apply to (a) any transaction between Company and any Guarantor Subsidiary;
(b) reasonable and customary fees paid to members of the board of directors (or
similar governing body) of Company and its Subsidiaries; (c) compensation
arrangements for officers and other employees of Company and its Subsidiaries
entered into in the ordinary course of business; (d) payments (and other
transactions) made in accordance with the terms of the DHC Tax Sharing
Agreement, and the Corporate Services Reimbursement Agreement; (e) the Rights
Offering; (f) the Put-Related Equity Offering; (g) transactions described in
Schedule 6.12; (h) the Foreign Subsidiary restructuring identified on Schedule
6.9-B and any Indebtedness, Investments, dispositions of assets and other
transactions permitted hereunder among Company and its Subsidiaries or among
Subsidiaries of Company and (i) reasonable and customary indemnifications and
insurance arrangements for the benefit of Persons that are officers or members
of the boards of directors (or similar governing bodies) of Company and its
Subsidiaries, whether such Persons are current or former officers or members at
the time such indemnifications or arrangements are entered into, provided that
such indemnifications and arrangements are entered into at arms' length and on
terms that are no less favorable to Company or that Subsidiary, as the case may
be, than those that would have been obtained at the relevant time from Persons
who are not Affiliates.

      6.13. Conduct of Business. From and after the Closing Date, neither
Company nor any Guarantor Subsidiary shall, nor shall it permit any of its
Subsidiaries to, engage in any business other than (i) the businesses engaged in
by Company or such Subsidiary on the Closing Date and similar or related
businesses (including the establishment, construction, acquisition and operation
of Projects and ash recycling, scrap metal processing, waste haulings collection
and landfills in connection therewith) and (ii) such other lines of business as
may be consented to by Requisite Lenders.

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<PAGE>

      6.14. Amendments or Waivers of Certain Related Agreements. Except as set
forth in Section 6.15 and Section 6.16, neither Company nor any Guarantor
Subsidiary shall, nor shall it permit any of its Subsidiaries to, agree to any
material amendment, restatement, supplement or other modification to, or waiver
of, any of its material rights under any (i) Related Agreement or (ii) the
principal documents relating to Limited Recourse Debt with respect to a Project
after the Closing Date if such amendment, restatement, modification or waiver
under clauses (i) or (ii), together with all other amendments, restatements,
modifications and waivers made, would reasonably be expected to have a Material
Adverse Effect; without in each case obtaining the prior written consent of
Requisite Lenders to such amendment, restatement, supplement or other
modification or waiver.

      6.15. Amendments or Waivers with respect to MSW Notes, MSW Refinancing
Notes, ARC Notes, ARC Refinancing Notes, New MSW Notes and New ARC Notes.
Company and its Subsidiaries shall not, and shall not permit any of their
Subsidiaries to, amend or otherwise change the terms of any MSW Notes, MSW
Refinancing Notes, ARC Notes, ARC Refinancing Notes, New MSW Notes or New ARC
Notes, or make any payment consistent with an amendment thereof or change
thereto, if the effect of such amendment or change is to increase the interest
rate on such MSW Notes, MSW Refinancing Notes, ARC Notes, ARC Refinancing Notes,
New MSW Notes or New ARC Notes, change (to earlier dates) any dates upon which
payments of principal or interest are due thereon, change any event of default
or condition to an event of default with respect thereto (other than to
eliminate any such event of default or increase any grace period related
thereto), change the redemption, prepayment or defeasance provisions thereof or
otherwise make such event of default or condition less restrictive or burdensome
on Company, or if the effect of such amendment or change, together with all
other amendments or changes made, is to increase materially the obligations of
the obligor thereunder or to confer any additional rights on the holders of such
MSW Notes, MSW Refinancing Notes, ARC Notes, ARC Refinancing Notes, New MSW
Notes or New ARC Notes (or a trustee or other representative on their behalf)
which would be adverse to any Credit Party or Lenders; provided however, that
for the avoidance of doubt this Section 6.15 shall not prohibit the initial
issuance of any of the MSW Refinancing Notes, ARC Refinancing Notes, New MSW
Notes or New ARC Notes, each in accordance with the terms and conditions of
Section 6.1(n).

      6.16. Amendments or Waivers of the Second Lien Credit Agreement and Second
Lien Notes Indenture. Company and its Subsidiaries shall not, and shall not
permit any of their Subsidiaries to, amend or otherwise change the terms of the
Second Lien Credit Agreement or Second Lien Notes Indenture or make any payment
consistent with an amendment thereof or change thereto, if the effect of such
amendment or change is to increase the interest rate applicable thereto, change
(to earlier dates) any dates upon which payments of principal or interest are
due thereon, change any event of default or condition to an event of default
with respect thereto (other than to eliminate any such event of default or
increase any grace period related thereto or otherwise make such event of
default or condition less restrictive or burdensome on Company), change the
prepayment provisions thereof, or change any collateral therefor (other than to
release such collateral), or if the effect of such amendment or change, together
with all other amendments or changes made, is to increase materially the
obligations of the obligor thereunder or to confer any additional rights on the
lenders under the Second Lien Credit Agreement or Second Lien Notes Indenture,
as applicable, (or a representative on their

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<PAGE>

behalf) which would be adverse to any Credit Party or Lenders, in each case
except as otherwise expressly permitted by the Intercreditor Agreement.

      6.17. Fiscal Year. No Credit Party shall, nor shall it permit any of its
Subsidiaries to change its Fiscal Year-end from December 31.

SECTION 7. GUARANTY

      7.1. Guaranty of the Obligations. Subject to the provisions of Section
7.2, Guarantors jointly and severally hereby irrevocably and unconditionally
guaranty to Administrative Agent for the ratable benefit of the Beneficiaries
the due and punctual payment in full of all Obligations when the same shall
become due, whether at stated maturity, by required prepayment, declaration,
acceleration, demand or otherwise (including amounts that would become due but
for the operation of the automatic stay under Section 362(a) of the Bankruptcy
Code, 11 U.S.C. Section 362(a)) (collectively, the "GUARANTEED OBLIGATIONS").

      7.2. Contribution by Guarantors. All Guarantors desire to allocate among
themselves (collectively, the "CONTRIBUTING GUARANTORS"), in a fair and
equitable manner, their obligations arising under this Guaranty. Accordingly, in
the event any payment or distribution is made on any date by a Guarantor (a
"FUNDING GUARANTOR") under this Guaranty such that its Aggregate Payments
exceeds its Fair Share as of such date, such Funding Guarantor shall be entitled
to a contribution from each of the other Contributing Guarantors in an amount
sufficient to cause each Contributing Guarantor's Aggregate Payments to equal
its Fair Share as of such date. "FAIR SHARE" means, with respect to a
Contributing Guarantor as of any date of determination, an amount equal to (a)
the ratio of (i) the Fair Share Contribution Amount with respect to such
Contributing Guarantor to (ii) the aggregate of the Fair Share Contribution
Amounts with respect to all Contributing Guarantors multiplied by (b) the
aggregate amount paid or distributed on or before such date by all Funding
Guarantors under this Guaranty in respect of the obligations Guaranteed. "FAIR
SHARE CONTRIBUTION AMOUNT" means, with respect to a Contributing Guarantor as of
any date of determination, the maximum aggregate amount of the obligations of
such Contributing Guarantor under this Guaranty that would not render its
obligations hereunder or thereunder subject to avoidance as a fraudulent
transfer or conveyance under Section 548 of Title 11 of the United States Code
or any comparable applicable provisions of state law; provided, solely for
purposes of calculating the "FAIR SHARE CONTRIBUTION AMOUNT" with respect to any
Contributing Guarantor for purposes of this Section 7.2, any assets or
liabilities of such Contributing Guarantor arising by virtue of any rights to
subrogation, reimbursement or indemnification or any rights to or obligations of
contribution hereunder shall not be considered as assets or liabilities of such
Contributing Guarantor. "AGGREGATE PAYMENTS" means, with respect to a
Contributing Guarantor as of any date of determination, an amount equal to (1)
the aggregate amount of all payments and distributions made on or before such
date by such Contributing Guarantor in respect of this Guaranty (including,
without limitation, in respect of this Section 7.2), minus (2) the aggregate
amount of all payments received on or before such date by such Contributing
Guarantor from the other Contributing Guarantors as contributions under this
Section 7.2. The amounts payable as contributions hereunder shall be determined
as of the date on which the related payment or distribution is made by the
applicable Funding Guarantor. The allocation among Contributing Guarantors of
their obligations as set forth in this Section 7.2

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shall not be construed in any way to limit the liability of any Contributing
Guarantor hereunder. Each Guarantor is a third party beneficiary to the
contribution agreement set forth in this Section 7.2.

      7.3. Payment by Guarantors. Subject to Section 7.2, Guarantors hereby
jointly and severally agree, in furtherance of the foregoing and not in
limitation of any other right which any Beneficiary may have at law or in equity
against any Guarantor by virtue hereof, that upon the failure of Company to pay
any of the Guaranteed Obligations when and as the same shall become due, whether
at stated maturity, by required prepayment, declaration, acceleration, demand or
otherwise (including amounts that would become due but for the operation of the
automatic stay under Section 362(a) of the Bankruptcy Code, 11 U.S.C. Section
362(a)), Guarantors will upon demand pay, or cause to be paid, in Cash, to
Administrative Agent for the ratable benefit of Beneficiaries, an amount equal
to the sum of the unpaid principal amount of all Guaranteed Obligations then due
as aforesaid, accrued and unpaid interest on such Guaranteed Obligations
(including interest which, but for Company's becoming the subject of a case
under the Bankruptcy Code, would have accrued on such Guaranteed Obligations,
whether or not a claim is allowed against Company for such interest in the
related bankruptcy case) and all other Guaranteed Obligations then owed to
Beneficiaries as aforesaid.

      7.4. Liability of Guarantors Absolute. Each Guarantor 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 the
Guaranteed Obligations. In furtherance of the foregoing and without limiting the
generality thereof, each Guarantor agrees as follows:

            (a) this Guaranty is a guaranty of payment when due and not of
collectibility. This Guaranty is a primary obligation of each Guarantor and not
merely a contract of surety;

            (b) Administrative Agent may enforce this Guaranty upon the
occurrence and during the continuance of an Event of Default notwithstanding the
existence of any dispute between Company and any Beneficiary with respect to the
existence of such Event of Default;

            (c) the obligations of each Guarantor hereunder are independent of
the obligations of Company and the obligations of any other guarantor (including
any other Guarantor) of the obligations of Company, and a separate action or
actions may be brought and prosecuted against such Guarantor whether or not any
action is brought against Company or any of such other guarantors and whether or
not Company is joined in any such action or actions;

            (d) payment by any Guarantor of a portion, but not all, of the
Guaranteed Obligations shall in no way limit, affect, modify or abridge any
Guarantor's liability for any portion of the Guaranteed Obligations which has
not been paid. Without limiting the generality of the foregoing, if
Administrative Agent is awarded a judgment in any suit brought to enforce any
Guarantor's covenant to pay a portion of the Guaranteed Obligations, such
judgment shall not be deemed to release such Guarantor from its covenant to pay
the portion of the Guaranteed Obligations that is not the subject of such suit,
and such judgment shall not, except to the extent satisfied by such Guarantor,
limit, affect, modify or abridge any other Guarantor's liability hereunder in
respect of the Guaranteed Obligations;

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            (e) any Beneficiary, upon such terms as it deems appropriate,
without notice or demand and without affecting the validity or enforceability
hereof or giving rise to any reduction, limitation, impairment, discharge or
termination of any Guarantor's liability hereunder, from time to time may (i)
renew, extend, accelerate, increase the rate of interest on, or otherwise change
the time, place, manner or terms of payment of the Guaranteed Obligations; (ii)
settle, compromise, release or discharge, or accept or refuse any offer of
performance with respect to, or substitutions for, the Guaranteed Obligations or
any agreement relating thereto and/or subordinate the payment of the same to the
payment of any other obligations; (iii) request and accept other guaranties of
the Guaranteed Obligations and take and hold security for the payment hereof or
the Guaranteed Obligations; (iv) release, surrender, exchange, substitute,
compromise, settle, rescind, waive, alter, subordinate or modify, with or
without consideration, any security for payment of the Guaranteed Obligations,
any other guaranties of the Guaranteed Obligations, or any other obligation of
any Person (including any other Guarantor) with respect to the Guaranteed
Obligations; (v) enforce and apply any security now or hereafter held by or for
the benefit of such Beneficiary in respect hereof or the Guaranteed Obligations
and direct the order or manner of sale thereof, or exercise any other right or
remedy that such Beneficiary may have against any such security, in each case as
such Beneficiary in its discretion may determine consistent herewith or the
applicable Hedge Agreement 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 even though such action operates to impair or extinguish any right of
reimbursement or subrogation or other right or remedy of any Guarantor against
Company or any security for the Guaranteed Obligations; and (vi) exercise any
other rights available to it under the Credit Documents or the Hedge Agreements;
and

            (f) this Guaranty and the obligations of Guarantors hereunder shall
be valid and enforceable and shall not be subject to any reduction, limitation,
impairment, discharge or termination for any reason (other than payment in full
of the Guaranteed Obligations), including the occurrence of any of the
following, whether or not any Guarantor shall have had notice or knowledge of
any of them: (i) any failure or omission to assert or enforce or agreement or
election not to assert or enforce, or the stay or enjoining, by order of court,
by operation of law or otherwise, of the exercise or enforcement of, any claim
or demand or any right, power or remedy (whether arising under the Credit
Documents or the Hedge Agreements, at law, in equity or otherwise) with respect
to the Guaranteed Obligations or any agreement relating thereto, or with respect
to any other guaranty of or security for the payment of the Guaranteed
Obligations; (ii) any rescission, waiver, amendment or modification of, or any
consent to departure from, any of the terms or provisions (including provisions
relating to events of default) hereof, any of the other Credit Documents, any of
the Hedge Agreements or any agreement or instrument executed pursuant thereto,
or of any other guaranty or security for the Guaranteed Obligations, in each
case whether or not in accordance with the terms hereof or such Credit Document,
such Hedge Agreement or any agreement relating to such other guaranty or
security; (iii) the Guaranteed Obligations, or any agreement relating thereto,
at any time being found to be illegal, invalid or unenforceable in any respect;
(iv) the application of payments received from any source (other than payments
received pursuant to the Credit Documents or any of the Hedge Agreements or from
the proceeds of any security for the Guaranteed Obligations, except to the
extent such security also serves as collateral for Indebtedness other than the
Guaranteed Obligations) to the payment of Indebtedness other than the Guaranteed
Obligations, even though any Beneficiary

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<PAGE>

might have elected to apply such payment to any part or all of the Guaranteed
Obligations; (v) any Beneficiary's consent to the change, reorganization or
termination of the corporate structure or existence of Holdings or any of its
Subsidiaries and to any corresponding restructuring of the Guaranteed
Obligations; (vi) any failure to perfect or continue perfection of a security
interest in any collateral which secures any of the Guaranteed Obligations;
(vii) any defenses, set-offs or counterclaims which Company may allege or assert
against any Beneficiary in respect of the Guaranteed Obligations, including
failure of consideration, breach of warranty, payment, statute of frauds,
statute of limitations, accord and satisfaction and usury; and (viii) 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 any Guarantor as an
obligor in respect of the Guaranteed Obligations.

      7.5. Waivers by Guarantors. Each Guarantor hereby waives, for the benefit
of Beneficiaries: (a) any right to require any Beneficiary, as a condition of
payment or performance by such Guarantor, to (i) proceed against Company, any
other guarantor (including any other Guarantor) of the Guaranteed Obligations or
any other Person, (ii) proceed against or exhaust any security held from
Company, any such other guarantor or any other Person, (iii) proceed against or
have resort to any balance of any Deposit Account or credit on the books of any
Beneficiary in favor of Company or any other Person, or (iv) pursue any other
remedy in the power of any Beneficiary whatsoever; (b) any defense arising by
reason of the incapacity, lack of authority or any disability or other defense
of Company or any other Guarantor including any defense based on or arising out
of the lack of validity or the unenforceability of the Guaranteed Obligations or
any agreement or instrument relating thereto or by reason of the cessation of
the liability of Company or any other Guarantor from any cause other than
payment in full of the Guaranteed Obligations; (c) 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; (d) any defense based upon any Beneficiary's errors or omissions in
the administration of the Guaranteed Obligations, except behavior which amounts
to bad faith; (e) (i) any principles or provisions of law, statutory or
otherwise, which are or might be in conflict with the terms hereof and any legal
or equitable discharge of such Guarantor's obligations hereunder, (ii) the
benefit of any statute of limitations affecting such Guarantor's liability
hereunder or the enforcement hereof, (iii) any rights to set-offs, recoupments
and counterclaims, and (iv) promptness, diligence and any requirement that any
Beneficiary protect, secure, perfect or insure any security interest or lien or
any property subject thereto; (f) notices, demands, presentments, protests,
notices of protest, notices of dishonor and notices of any action or inaction,
including acceptance hereof, notices of default hereunder, the Hedge Agreements
or any agreement or instrument related thereto, notices of any renewal,
extension or modification of the Guaranteed Obligations or any agreement related
thereto, notices of any extension of credit to Company and notices of any of the
matters referred to in Section 7.4 and any right to consent to any thereof; and
(g) 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 hereof.

      7.6. Guarantors' Rights of Subrogation, Contribution, etc. Until the
Guaranteed Obligations shall have been indefeasibly paid in full and the
Revolving Commitments shall have terminated and all Letters of Credit shall have
expired or been cancelled, each Guarantor hereby waives any claim, right or
remedy, direct or indirect, that such Guarantor now has or may

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hereafter have against Company or any other Guarantor or any of its assets in
connection with this Guaranty or the performance by such Guarantor 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 such Guarantor now has or may hereafter have against
Company with respect to the Guaranteed Obligations, (b) any right to enforce, or
to participate in, any claim, right or remedy that any Beneficiary now has or
may hereafter have against Company, and (c) any benefit of, and any right to
participate in, any collateral or security now or hereafter held by any
Beneficiary. In addition, until the Guaranteed Obligations shall have been
indefeasibly paid in full and the Revolving Commitments shall have terminated
and all Letters of Credit shall have expired or been cancelled, each Guarantor
shall withhold exercise of any right of contribution such Guarantor may have
against any other guarantor (including any other Guarantor) of the Guaranteed
Obligations, including, without limitation, any such right of contribution as
contemplated by Section 7.2. Each Guarantor further agrees that, to the extent
the waiver or agreement to withhold the 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 such Guarantor may have
against Company or against any collateral or security, and any rights of
contribution such Guarantor may have against any such other guarantor, shall be
junior and subordinate to any rights any Beneficiary may have against Company,
to all right, title and interest any Beneficiary may have in any such collateral
or security, and to any right any Beneficiary may have against such other
guarantor. If any amount shall be paid to any Guarantor on account of any such
subrogation, reimbursement, indemnification or contribution rights at any time
when all Guaranteed Obligations shall not have been finally and indefeasibly
paid in full, such amount shall be held in trust for Administrative Agent on
behalf of Beneficiaries and shall forthwith be paid over to Administrative Agent
for the benefit of Beneficiaries to be credited and applied against the
Guaranteed Obligations, whether matured or unmatured, in accordance with the
terms hereof.

      7.7. Subordination of Other Obligations. Any Indebtedness of Company or
any Guarantor now or hereafter held by any Guarantor (the "OBLIGEE GUARANTOR")
is hereby subordinated in right of payment to the Guaranteed Obligations, and
any such Indebtedness collected or received by the Obligee Guarantor after
receipt of notice of an Event of Default (which has occurred and is continuing)
by Administrative Agent shall be held in trust for Administrative Agent on
behalf of Beneficiaries and shall forthwith be paid over to Administrative Agent
for the benefit of Beneficiaries to be credited and applied against the
Guaranteed Obligations but without affecting, impairing or limiting in any
manner the liability of the Obligee Guarantor under any other provision hereof.

      7.8. Continuing Guaranty. This Guaranty is a continuing guaranty and shall
remain in effect until all of the Guaranteed Obligations shall have been paid in
full and the Revolving Commitments shall have terminated and all Letters of
Credit shall have expired or been cancelled. Each Guarantor hereby irrevocably
waives any right to revoke this Guaranty as to future transactions giving rise
to any Guaranteed Obligations.

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      7.9. Authority of Guarantors or Company. It is not necessary for any
Beneficiary to inquire into the capacity or powers of any Guarantor or Company
or the officers, directors or any agents acting or purporting to act on behalf
of any of them.

      7.10. Financial Condition of Company. Any Credit Extension may be made to
Company or continued from time to time, and any Hedge Agreements may be entered
into from time to time, in each case without notice to or authorization from any
Guarantor regardless of the financial or other condition of Company at the time
of any such grant or continuation or at the time such Hedge Agreement is entered
into, as the case may be. No Beneficiary shall have any obligation to disclose
or discuss with any Guarantor its assessment, or any Guarantor's assessment, of
the financial condition of Company. Each Guarantor has adequate means to obtain
information from Company on a continuing basis concerning the financial
condition of Company and its ability to perform its obligations under the Credit
Documents and the Hedge Agreements, and each Guarantor assumes the
responsibility for being and keeping informed of the financial condition of
Company and of all circumstances bearing upon the risk of nonpayment of the
Guaranteed Obligations. Each Guarantor hereby waives and relinquishes any duty
on the part of any Beneficiary to disclose any matter, fact or thing relating to
the business, operations or conditions of Company now known or hereafter known
by any Beneficiary.

      7.11. Bankruptcy, etc. (a) So long as any Guaranteed Obligations remain
outstanding, no Guarantor shall, without the prior written consent of
Administrative Agent acting pursuant to the instructions of Requisite Lenders,
commence or join with any other Person in commencing any involuntary bankruptcy,
reorganization or insolvency case or proceeding of or against Company or any
other Guarantor. The obligations of Guarantors hereunder shall not be reduced,
limited, impaired, discharged, deferred, suspended or terminated by any case or
proceeding, voluntary or involuntary, involving the bankruptcy, insolvency,
receivership, reorganization, liquidation or arrangement of Company or any other
Guarantor or by any defense which Company or any other Guarantor may have by
reason of the order, decree or decision of any court or administrative body
resulting from any such proceeding.

            (b) Each Guarantor acknowledges and agrees that any interest on any
portion of the Guaranteed Obligations which accrues after the commencement of
any case or proceeding referred to in clause (a) above against Company (or, if
interest on any portion of the Guaranteed Obligations ceases to accrue by
operation of law by reason of the commencement of such case or proceeding, such
interest as would have accrued on such portion of the Guaranteed Obligations if
such case or proceeding had not been commenced) shall be included in the
Guaranteed Obligations because it is the intention of Guarantors and
Beneficiaries that the Guaranteed Obligations which are guaranteed by Guarantors
pursuant hereto should be determined without regard to any rule of law or order
which may relieve Company of any portion of such Guaranteed Obligations.
Guarantors will permit any trustee in bankruptcy, receiver, debtor in
possession, assignee for the benefit of creditors or similar person to pay
Administrative Agent, or allow the claim of Administrative Agent in respect of,
any such interest accruing after the date on which such case or proceeding is
commenced.

            (c) In the event that all or any portion of the Guaranteed
Obligations are paid by Company, the obligations of Guarantors hereunder shall
continue and remain in full force and effect or be reinstated, as the case may
be, in the event that all or any part of such payment(s) are

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rescinded or recovered directly or indirectly from any Beneficiary as a
preference, fraudulent transfer or otherwise, and any such payments which are so
rescinded or recovered shall constitute Guaranteed Obligations for all purposes
hereunder.

      7.12. Discharge of Guaranty Upon Sale of Guarantor. If all of the Capital
Stock of any Guarantor or any of its successors in interest hereunder shall be
sold or otherwise disposed of (including by merger or consolidation) in
accordance with the terms and conditions hereof, the Guaranty of such Guarantor
or such successor in interest, as the case may be, hereunder shall automatically
be discharged and released without any further action by any Beneficiary or any
other Person effective as of the time of such sale or disposition.

SECTION 8. EVENTS OF DEFAULT

      8.1. Events of Default. If any one or more of the following conditions or
events shall occur:

            (a) Failure to Make Payments When Due. Failure by Company to pay (i)
when due any installment of principal of any Loan, whether at stated maturity,
by acceleration, by notice of voluntary prepayment, by mandatory prepayment or
otherwise; (ii) when due any amount payable to an Issuing Bank in reimbursement
of any drawing under a Letter of Credit; or (iii) any interest on any Loan or
any fee or any other amount due hereunder within five days after the date due;
or

            (b) Default in Other Agreements. (i) Failure of any of Company or
its Subsidiaries or Holdings to pay when due any principal of or interest on or
any other amount payable in respect of one or more items of Indebtedness (other
than Indebtedness referred to in Section 8.1(a) and other than Limited Recourse
Debt permitted to be incurred hereunder and incurred in connection with one or
more Projects to which less than $5,000,000 in the aggregate of the operating
income of Company and its Subsidiaries (on a consolidated basis) is attributable
for the 12-month period immediately preceding the failure to pay such interest,
principal or other amounts) in an individual principal amount of $10,000,000 or
more or with an aggregate principal amount of $10,000,000 or more, in each case
beyond the grace period, if any, provided therefor; or (ii) breach or default by
any of Company or its Subsidiaries or Holdings with respect to any other
material term of (1) one or more items of Indebtedness in the individual or
aggregate principal amounts referred to in clause (i) above or (2) any loan
agreement, mortgage, indenture or other agreement relating to such item(s) of
Indebtedness, in each case beyond the grace period, if any, provided therefor,
if the effect of such breach or default is to cause, or to permit the holder or
holders of that Indebtedness (or a trustee on behalf of such holder or holders),
to cause, that Indebtedness to become or be declared due and payable (or
redeemable), or to require the prepayment, redemption, repurchase or defeasance
of, or to cause Company or any of its Subsidiaries or Holdings to make any offer
to prepay, redeem, repurchase or defease that Indebtedness (other than an offer
under the MSW Notes, MSW Refinancing Notes or the New MSW Notes or as required
under the ARC Indenture, the ARC Refinancing Indenture or the New ARC Indenture
with the proceeds of asset sales, debt and equity insurances and insurance
casualty and condemnation and to the extent required in connection with changes
in control directly resulting from the Acquisition), prior to its stated
maturity or the stated maturity of any

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underlying obligation, as the case may be; or (iii) any Event of Default (under
and as defined in the MSW I Indenture, MSW II Indenture, MSW Refinancing
Indentures, New MSW I Indenture, New MSW II Indenture, ARC Indenture, ARC
Refinancing Indenture or the New ARC Indenture), shall occur; or (iv) any Event
of Default (as defined in the Second Lien Credit Agreement and the Second Lien
Notes) shall occur; or

            (c) Breach of Certain Covenants. Failure of any Credit Party to
perform or comply with any term or condition contained in Section 2.6, Section
5.2, Section 5.15, Section 5.16 or Section 6; or

            (d) Breach of Representations, etc. Any representation, warranty,
certification or other statement made or deemed made by any Credit Party in any
Credit Document or in any statement or certificate at any time given by any
Credit Party or any of its Subsidiaries in writing pursuant hereto or thereto or
in connection herewith or therewith shall be false in any material respect as of
the date made or deemed made; or

            (e) Other Defaults Under Credit Documents. Any Credit Party shall
default in the performance of or compliance with any term contained herein or
any of the other Credit Documents, other than any such term referred to in any
other provision of this Section 8.1, and such default shall not have been
remedied or waived within thirty days after the earlier of (i) an Authorized
Officer becoming aware of such default or (ii) receipt by Company of notice from
Administrative Agent or any Lender of such default; or

            (f) Involuntary Bankruptcy; Appointment of Receiver, etc. (i) A
court of competent jurisdiction shall enter a decree or order for relief in
respect of Holdings, Company or any of its Material Subsidiaries in an
involuntary case under the Bankruptcy Code or under any other applicable
bankruptcy, insolvency or similar law now or hereafter in effect, which decree
or order is not stayed; or any other similar relief shall be granted under any
applicable federal or state law; or (ii) an involuntary case shall be commenced
against Holdings, Company or any of its Material Subsidiaries under the
Bankruptcy Code or under any other applicable bankruptcy, insolvency or similar
law now or hereafter in effect; or a decree or order of a court having
jurisdiction in the premises for the appointment of a receiver, liquidator,
sequestrator, trustee, custodian or other officer having similar powers over
Holdings, Company or any of its Material Subsidiaries, or over all or a
substantial part of its property, shall have been entered; or there shall have
occurred the involuntary appointment of an interim receiver, trustee or other
custodian of Holdings, Company or any of its Material Subsidiaries for all or a
substantial part of its property; or a warrant of attachment, execution or
similar process shall have been issued against any substantial part of the
property of Holdings, Company or any of its Material Subsidiaries, and any such
event described in this clause (ii) shall continue for sixty days without having
been dismissed, bonded or discharged; or

            (g) Voluntary Bankruptcy; Appointment of Receiver, etc.. (i)
Holdings, any Company or any of its Material Subsidiaries shall have an order
for relief entered with respect to it or shall commence a voluntary case under
the Bankruptcy Code or under any other applicable bankruptcy, insolvency or
similar law now or hereafter in effect, or shall consent to the entry of an
order for relief in an involuntary case, or to the conversion of an involuntary
case to a voluntary case, under any such law, or shall consent to the
appointment of or taking possession

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by a receiver, trustee or other custodian for all or a substantial part of its
property; or Holdings, Company or any of its Material Subsidiaries shall make
any assignment for the benefit of creditors; or (ii) Holdings, Company or any of
its Material Subsidiaries shall be unable, or shall fail generally, or shall
admit in writing its inability, to pay its debts as such debts become due; or
the board of directors (or similar governing body of Holdings, Company or any of
its Material Subsidiaries (or any committee thereof) shall adopt any resolution
or otherwise authorize any action to approve any of the actions referred to
herein or in Section 8.1(f); or

            (h) Judgments and Attachments. Any money judgment, writ or warrant
of attachment or similar process involving (i) in any individual case an amount
in excess of $5,000,000 or (ii) in the aggregate at any time an amount in excess
of $10,000,000 (in either case to the extent not adequately covered by insurance
as to which a solvent and unaffiliated insurance company has not denied
coverage) shall be entered or filed against Company or any of its Subsidiaries
or any of their respective assets and shall remain undischarged, unvacated,
unbonded or unstayed for a period of sixty days (or in any event later than five
days prior to the date of any proposed sale thereunder); or

            (i) Dissolution. Any order, judgment or decree shall be entered
against any Material Subsidiary of Company decreeing the dissolution or split up
of such Material Subsidiary and such order shall remain undischarged or unstayed
for a period in excess of thirty days; or

            (j) Employee Benefit Plans. (i) There shall occur one or more ERISA
Events which individually or in the aggregate results in or might reasonably be
expected to result in liability of Company, any of its Subsidiaries or any of
their respective ERISA Affiliates in excess of $10,000,000 during the term
hereof; or

            (k) Change of Control. A Change of Control shall occur; or

            (l) Net Operating Losses. If, based on (A) a final, non-appealable
determination by a court, (B) a closing agreement between Holdings and/or any of
its Subsidiaries and the Internal Revenue Service or (C) a transaction or event
occurring after the Closing Date (e.g., ownership change or deconsolidation),
the net operating losses available to Holdings or Company to offset taxable
income are less than $315,000,000 (which amount shall be reduced by net
operating losses used by Holdings to reduce taxable income of Holdings or
Company after December 31, 2004); provided, that in determining the amount of
net operating losses available or used for purposes of this default, the
principles applied in any final determination or closing agreement shall be
applied to any similar items in other open tax years that were not the subject
of such determination or closing agreement solely as a result of not being
included in the tax years at issue; or

            (m) Guaranties, Collateral Documents and other Credit Documents. At
any time after the execution and delivery thereof, (i) the Guaranty for any
reason, other than the satisfaction in full of all Obligations, shall cease to
be in full force and effect (other than in accordance with its terms) or shall
be declared to be null and void or any Guarantor shall repudiate its obligations
thereunder, (ii) this Agreement or any Collateral Document ceases to be in full
force and effect (other than by reason of a release of Collateral in accordance
with the

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terms hereof or thereof or the satisfaction in full of the Obligations in
accordance with the terms hereof) or shall be declared null and void, or
Collateral Agent shall not have or shall cease to have a valid and perfected
Lien in any de minimis portion of the Collateral purported to be covered by the
Collateral Documents with the priority required by the relevant Collateral
Document, in each case for any reason other than the failure of Collateral Agent
or any Secured Party to take any action within its control, or (iii) any Credit
Party shall contest the validity or enforceability of any Credit Document in
writing or deny in writing that it has any further liability, including with
respect to future advances by Lenders, under any Credit Document to which it is
a party, or (iv) the Loans shall cease to constitute First Priority secured
Indebtedness under the intercreditor provisions of the Second Lien Term Loans or
Second Lien Notes or the Intercreditor Agreement or, in any case, such
intercreditor provisions shall be invalidated or otherwise cease to be legal,
valid and binding obligations of the parties thereto, enforceable in accordance
with their terms.

THEN, (1) upon the occurrence of any Event of Default described in Section
8.1(f) or 8.1(g), automatically, and (2) upon the occurrence and continuance of
any other Event of Default, at the request of (or with the consent of) Requisite
Lenders, upon notice to Company by Administrative Agent, (A) the Revolving
Commitments, if any, of each Lender having such Revolving Commitments and the
obligation of an Issuing Bank to issue any Revolving Letter of Credit or Funded
Letter of Credit shall immediately terminate; (B) each of the following shall
immediately become due and payable, in each case without presentment, demand,
protest or other requirements of any kind, all of which are hereby expressly
waived by each Credit Party: (I) the unpaid principal amount of and accrued
interest on the Loans, (II) an amount equal to the maximum amount that may at
any time be drawn under all Letters of Credit then outstanding (regardless of
whether any beneficiary under any such Letter of Credit shall have presented, or
shall be entitled at such time to present, the drafts or other documents or
certificates required to draw under such Letters of Credit), and (III) all other
Obligations; provided, the foregoing shall not affect in any way the obligations
of Lenders under Section 2.3(b)(iv) or Section 2.4(e); (C) Administrative Agent
may cause Collateral Agent to enforce any and all Liens and security interests
created pursuant to Collateral Documents; and (D) Administrative Agent shall
direct Company to pay (and Company hereby agrees upon receipt of such notice, or
upon the occurrence and continuance of any Event of Default specified in Section
8.1(f) and (g)(i) to pay) to Administrative Agent such additional amounts of
cash, to be held as security for Company's reimbursement Obligations in respect
of Revolving Letters of Credit then outstanding, equal to the Revolving Letter
of Credit Usage at such time.

SECTION 9. AGENTS

      9.1. Appointment of Agents. GSCP and Credit Suisse are hereby appointed
Co-Syndication Agents hereunder, and each Lender hereby authorizes
Co-Syndication Agents to act as its agent in accordance with the terms hereof
and the other Credit Documents. GSCP is hereby appointed Administrative Agent
hereunder and under the other Credit Documents and each Lender hereby authorizes
Administrative Agent to act as its agent in accordance with the terms hereof and
the other Credit Documents. GSCP is hereby appointed Collateral Agent hereunder
and under the other Credit Documents and each Lender hereby authorizes
Collateral Agent to act as its agent in accordance with the terms hereof and the
other Credit Documents.

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Each of JPMC, UBS and Calyon is hereby appointed Co-Documentation Agent
hereunder, and each Lender hereby authorizes Co-Documentation Agent to act as
its agent in accordance with the terms hereof and the other Credit Documents.
Each Agent hereby agrees to act upon the express conditions contained herein and
the other Credit Documents, as applicable. The provisions of this Section 9 are
solely for the benefit of Agents and Lenders and no Credit Party shall have any
rights as a third party beneficiary of any of the provisions thereof. In
performing its functions and duties hereunder, each Agent shall act solely as an
agent of Lenders and does not assume and shall not be deemed to have assumed any
obligation towards or relationship of agency or trust with or for the Credit
Parties. Each of the Co-Syndication Agents and each of the Co-Documentation
Agents, without consent of or notice to any party hereto, may assign any and all
of its rights or obligations hereunder to any of its Affiliates. As of the
Closing Date, neither GSCP nor Credit Suisse, each in its capacity as a
Co-Syndication Agent, nor any of JPMC, UBS nor Calyon each in its capacity as
Co-Documentation Agent, shall have any obligations but shall be entitled to all
benefits of this Section 9.

      9.2. Powers and Duties. Each Lender irrevocably authorizes each Agent to
take such action on such Lender's behalf and to exercise such powers, rights and
remedies hereunder and under the other Credit Documents as are specifically
delegated or granted to such Agent by the terms hereof and thereof, together
with such powers, rights and remedies as are reasonably incidental thereto. Each
Agent shall have only those duties and responsibilities that are expressly
specified herein and the other Credit Documents. Each Agent may exercise such
powers, rights and remedies and perform such duties by or through its agents or
employees. No Agent shall have, by reason hereof or any of the other Credit
Documents, a fiduciary relationship in respect of any Lender; and nothing herein
or any of the other Credit Documents, expressed or implied, is intended to or
shall be so construed as to impose upon any Agent any obligations in respect
hereof or any of the other Credit Documents except as expressly set forth herein
or therein.

      9.3. General Immunity.

            (a) No Responsibility for Certain Matters. No Agent shall be
responsible to any Lender for the execution, effectiveness, genuineness,
validity, enforceability, collectibility or sufficiency hereof or any other
Credit Document or for any representations, warranties, recitals or statements
made herein or therein or made in any written or oral statements or in any
financial or other statements, instruments, reports or certificates or any other
documents furnished or made by any Agent to Lenders or by or on behalf of any
Credit Party, to any Agent or any Lender in connection with the Credit Documents
and the transactions contemplated thereby or for the financial condition or
business affairs of any Credit Party or any other Person liable for the payment
of any Obligations, nor shall any Agent be required to ascertain or inquire as
to the performance or observance of any of the terms, conditions, provisions,
covenants or agreements contained in any of the Credit Documents or as to the
use of the proceeds of the Loans or as to the existence or possible existence of
any Event of Default or Default or to make any disclosures with respect to the
foregoing. Anything contained herein to the contrary notwithstanding,
Administrative Agent shall not have any liability arising from confirmations of
the amount of outstanding Loans or Letters of Credit or the component amounts
thereof.

            (b) Exculpatory Provisions. No Agent nor any of its officers,
partners, directors, employees or agents shall be liable to Lenders for any
action taken or omitted by any Agent

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under or in connection with any of the Credit Documents except to the extent
caused by such Agent's gross negligence or willful misconduct. Each Agent shall
be entitled to refrain from any act or the taking of any action (including the
failure to take an action) in connection herewith or any of the other Credit
Documents or from the exercise of any power, discretion or authority vested in
it hereunder or thereunder unless and until such Agent, in the case of any Agent
other than Collateral Agent, shall have received instructions in respect thereof
from Requisite Lenders (or such other Lenders as may be required to give such
instructions under Section 10.5) or, in the case of Collateral Agent, in
accordance with the Pledge and Security Agreement, Intercreditor Agreement or
other applicable Collateral Document, and, upon receipt of such instructions
from Requisite Lenders (or such other Lenders, as the case may be), or in
accordance with the Pledge and Security Agreement, Intercreditor Agreement or
other applicable Collateral Document, as the case may be, such Agent shall be
entitled to act or (where so instructed) refrain from acting, or to exercise
such power, discretion or authority, in accordance with such instructions.
Without prejudice to the generality of the foregoing, (i) each Agent shall be
entitled to rely, and shall be fully protected in relying, upon any
communication, instrument or document believed by it to be genuine and correct
and to have been signed or sent by the proper Person or Persons, and shall be
entitled to rely and shall be protected in relying on opinions and judgments of
attorneys (who may be attorneys for the Credit Parties), accountants, experts
and other professional advisors selected by it; and (ii) no Lender shall have
any right of action whatsoever against any Agent as a result of such Agent
acting or (where so instructed) refraining from acting hereunder or any of the
other Credit Documents, in the case of any Agent other than Collateral Agent, in
accordance with the instructions of Requisite Lenders (or such other Lenders as
may be required to give such instructions under Section 10.5) or, in the case of
the Collateral Agent, in accordance with the Pledge and Security Agreement,
Intercreditor Agreement or other applicable Collateral Document.

            (c) Delegation of Duties. Administrative Agent may perform any and
all of its duties and exercise its rights and powers under this Agreement or
under any other Credit Document by or through any one or more sub-agents
appointed by Administrative Agent. Administrative Agent and any such sub-agent
may perform any and all of its duties and exercise its rights and powers by or
through their respective Affiliates. The exculpatory, indemnification and other
provisions of this Section 9.3 and of Section 9.6 shall apply to any the
Affiliates of Administrative Agent and shall apply to their respective
activities in connection with the syndication of the credit facilities provided
for herein as well as activities as Administrative Agent. All of the rights,
benefits, and privileges (including the exculpatory and indemnification
provisions) of this Section 9.3 and of Section 9.6 shall apply to any such
sub-agent and to the Affiliates of any such sub-agent, and shall apply to their
respective activities as sub-agent as if such sub-agent and Affiliates were
named herein. Notwithstanding anything herein to the contrary, with respect to
each sub-agent appointed by Administrative Agent, (i) such sub-agent shall be a
third party beneficiary under this Agreement with respect to all such rights,
benefits and privileges (including exculpatory rights and rights to
indemnification) and shall have all of the rights and benefits of a third party
beneficiary, including an independent right of action to enforce such rights,
benefits and privileges (including exculpatory rights and rights to
indemnification) directly, without the consent or joinder of any other Person,
against any or all of the Credit Parties and the Lenders, (ii) such rights,
benefits and privileges (including exculpatory rights and rights to
indemnification) shall not be modified or amended without the consent of such
sub-agent, and (iii) such sub-agent shall only have obligations to
Administrative Agent and

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not to any Credit Party, Lender or any other Person and no Credit Party, Lender
or any other Person shall have any rights, directly or indirectly, as a third
party beneficiary or otherwise, against such sub-agent.

      9.4. Agents Entitled to Act as Lender. The agency hereby created shall in
no way impair or affect any of the rights and powers of, or impose any duties or
obligations upon, any Agent in its individual capacity as a Lender hereunder.
With respect to its participation in the Loans and the Letters of Credit, each
Agent shall have the same rights and powers hereunder as any other Lender and
may exercise the same as if it were not performing the duties and functions
delegated to it hereunder, and the term "Lender" shall, unless the context
clearly otherwise indicates, include each Agent in its individual capacity. Any
Agent and its Affiliates may accept deposits from, lend money to, own securities
of, and generally engage in any kind of banking, trust, financial advisory or
other business with the Credit Parties or any of their Affiliates as if it were
not performing the duties specified herein, and may accept fees and other
consideration from Company for services in connection herewith and otherwise
without having to account for the same to Lenders.

      9.5. Lenders' Representations, Warranties and Acknowledgment.

            (a) Each Lender represents and warrants that it has made its own
independent investigation of the financial condition and affairs of the Credit
Parties in connection with Credit Extensions hereunder and that it has made and
shall continue to make its own appraisal of the creditworthiness of the Credit
Parties. No Agent shall have any duty or responsibility, either initially or on
a continuing basis, to make any such investigation or any such appraisal on
behalf of Lenders or to provide any Lender with any credit or other information
with respect thereto, whether coming into its possession before the making of
the Loans or at any time or times thereafter, and no Agent shall have any
responsibility with respect to the accuracy of or the completeness of any
information provided to Lenders.

            (b) Each Lender, by delivering its signature page to this Agreement
(and funding its Term Loan or Credit Linked Deposit on the Closing Date,) shall
be deemed to have acknowledged receipt of, and consented to and approved, each
Credit Document and each other document required to be approved by any Agent,
Requisite Lenders or Lenders, as applicable on the Closing Date.

      9.6. Right to Indemnity. Each Lender, in proportion to its Pro Rata Share,
severally agrees to indemnify each Agent, to the extent that such Agent shall
not have been reimbursed by any Credit Party, for and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses (including counsel fees and disbursements) or disbursements of
any kind or nature whatsoever which may be imposed on, incurred by or asserted
against such Agent in exercising its powers, rights and remedies or performing
its duties hereunder or under the other Credit Documents or otherwise in its
capacity as such Agent in any way relating to or arising out of this Agreement
or the other Credit Documents; provided, no Lender shall be liable for any
portion of such liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements resulting from such Agent's
gross negligence or willful misconduct. If any indemnity furnished to any Agent
for any purpose shall, in the opinion of such Agent, be insufficient or become
impaired, such Agent may call for

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additional indemnity and cease, or not commence, to do the acts indemnified
against until such additional indemnity is furnished; provided, in no event
shall this sentence require any Lender to indemnify any Agent against any
liability, obligation, loss, damage, penalty, action, judgment, suit, cost,
expense or disbursement in excess of such Lender's Pro Rata Share thereof; and
provided further, this sentence shall not be deemed to require any Lender to
indemnify any Agent against any liability, obligation, loss, damage, penalty,
action, judgment, suit, cost, expense or disbursement described in the proviso
in the immediately preceding sentence.

      9.7. Successor Administrative Agent and Swing Line Lender Administrative
Agent may resign at any time by giving thirty days' prior written notice thereof
to Lenders and Company, and Administrative Agent may be removed at any time with
or without cause by an instrument or concurrent instruments in writing delivered
to Company and Administrative Agent and signed by Requisite Lenders. Upon any
such notice of resignation or any such removal, Requisite Lenders shall have the
right, upon five Business Days' notice to Company; provided that Company shall
have the right to approve (such approval not to be unreasonably withheld) any
such successor Administrative Agent unless an Event of Default then exists, to
appoint a successor Administrative Agent. Upon the acceptance of any appointment
as Administrative Agent hereunder by a successor Administrative Agent, that
successor Administrative Agent shall thereupon succeed to and become vested with
all the rights, powers, privileges and duties of the retiring or removed
Administrative Agent and the retiring or removed Administrative Agent shall
promptly (i) transfer to such successor Administrative Agent all sums,
Securities and other items of Collateral held under the Collateral Documents,
together with all records and other documents necessary or appropriate in
connection with the performance of the duties of the successor Administrative
Agent under the Credit Documents, and (ii) execute and deliver to such successor
Administrative 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 Administrative Agent of the security interests
created under the Collateral Documents, whereupon such retiring or removed
Administrative Agent shall be discharged from its duties and obligations
hereunder. After any retiring or removed Administrative Agent's resignation or
removal hereunder as Administrative Agent, the provisions of this Section 9
shall inure to its benefit as to any actions taken or omitted to be taken by it
while it was Administrative Agent hereunder. Any resignation or removal of GSCP
or its successor as Administrative Agent pursuant to this Section shall also
constitute the resignation or removal of GSCP or its successor as Swing Line
Lender, and any successor Administrative Agent appointed pursuant to this
Section shall, upon its acceptance of such appointment, become the successor
Swing Line Lender for all purposes hereunder. In such event (a) Company shall
prepay any outstanding Swing Line Loans made by the retiring or removed
Administrative Agent in its capacity as Swing Line Lender, (b) upon such
prepayment, the retiring or removed Administrative Agent and Swing Line Lender
shall surrender any Swing Line Note held by it to Company for cancellation, and
(c) Company shall issue, if so requested by successor Administrative Agent and
Swing Line Loan Lender, a new Swing Line Note to the successor Administrative
Agent and Swing Line Lender, in the principal amount of the Swing Line Sublimit
then in effect and with other appropriate insertions.

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      9.8. Collateral Documents and Guaranty.

            (a) Agents under Collateral Documents and Guaranty. Each Lender
hereby further authorizes Administrative Agent or Collateral Agent, as
applicable, on behalf of and for the benefit of Lenders, to (i) be the agent for
and representative of Lenders with respect to the Guaranty, the Collateral and
the Collateral Documents and (ii) enter into the Intercreditor Agreement, and
each Lender agrees to be bound by the terms of the Intercreditor Agreement.
Subject to Section 10.5, without further written consent or authorization from
Lenders, Administrative Agent or Collateral Agent, as applicable may execute any
documents or instruments necessary to (i) release any Lien encumbering any item
of Collateral that is the subject of a sale or other disposition of assets
permitted hereby or to which Requisite Lenders (or such other Lenders as may be
required to give such consent under Section 10.5) have otherwise consented or
(ii) release any Guarantor from the Guaranty pursuant to Section 7.12 or with
respect to which Requisite Lenders (or such other Lenders as may be required to
give such consent under Section 10.5) have otherwise consented.

            (b) Right to Realize on Collateral and Enforce Guaranty. Anything
contained in any of the Credit Documents to the contrary notwithstanding,
Company, Administrative Agent, Collateral Agent and each Lender hereby agree
that (i) no Lender shall have any right individually to realize upon any of the
Collateral or to enforce the Guaranty, it being understood and agreed that all
powers, rights and remedies hereunder may be exercised solely by Administrative
Agent, on behalf of Lenders in accordance with the terms hereof and all powers,
rights and remedies under the Collateral Documents may be exercised solely by
Collateral Agent, and (ii) in the event of a foreclosure by Collateral Agent on
any of the Collateral pursuant to a public or private sale, Collateral Agent or
any Lender may be the purchaser of any or all of such Collateral at any such
sale and Collateral Agent, as agent for and representative of Secured Parties
(but not any Lender or Lenders in its or their respective individual capacities
unless Requisite Lenders 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 Obligations as a credit on account of the purchase
price for any collateral payable by Collateral Agent at such sale.

SECTION 10. MISCELLANEOUS

      10.1. Notices. Unless otherwise specifically provided herein, any notice
or other communication herein required or permitted to be given to a Credit
Party, either Co-Syndication Agent, Collateral Agent, Administrative Agent,
Swing Line Lender, an Issuing Bank or any Co-Documentation Agent, shall be sent
to such Person's address as set forth on Appendix B or in the other relevant
Credit Document, and in the case of any Lender, the address as indicated on
Appendix B or otherwise indicated to Administrative Agent in writing. Each
notice hereunder shall be in writing (which, in the case of any Notice, shall
include notice by electronic mail or other electronic means agreed to between
Company and Administrative Agent) and may be personally served, telexed 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 and signed for
against receipt thereof, upon receipt of telefacsimile or telex, or three
Business Days after depositing it in the United States mail with postage prepaid
and properly addressed; provided, no

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notice to any Agent shall be effective until received by such Agent; provided
further, any such notice or other communication shall at the request of
Administrative Agent be provided to any sub-agent appointed pursuant to Section
9.3(c) hereto as designated by Administrative Agent from time to time.

      10.2. Expenses. Whether or not the transactions contemplated hereby shall
be consummated, Company agrees to pay promptly (a) all the actual and reasonable
costs and expenses incurred by each Agent of preparation of the Credit Documents
and any consents, amendments, waivers or other modifications thereto; (b) all
the costs of furnishing all opinions by counsel for Company and the other Credit
Parties; (c) the reasonable fees, expenses and disbursements of counsel to
Administrative Agent and Collateral Agent, and JPMC in its capacity as a Funded
LC Issuing Bank and a Lender, in connection with the negotiation, preparation,
execution and administration of the Credit Documents and any consents,
amendments, waivers or other modifications thereto and any other documents or
matters requested by Company; (d) all the actual costs and reasonable expenses
of creating and perfecting Liens in favor of Collateral Agent, for the benefit
of Secured Parties, including filing and recording fees, expenses and taxes,
stamp or documentary taxes, search fees, title insurance premiums and reasonable
fees, expenses and disbursements of counsel to each Agent and of counsel
providing any opinions required hereunder; (e) all the actual costs and
reasonable fees, expenses and disbursements of any auditors, accountants,
consultants or appraisers (prior to any Default or Event of Default subject to
the consent of Company); (f) all the actual costs and reasonable expenses
(including the reasonable fees, expenses and disbursements of any appraisers,
consultants, advisors and agents employed or retained by Collateral Agent and
its counsel) in connection with the custody or preservation of any of the
Collateral; (g) all other actual and reasonable costs and expenses incurred by
each Agent in connection with the syndication of the Loans and Commitments; and
(h) after the occurrence of an Event of Default and during its continuance, all
costs and expenses, including reasonable attorneys' fees costs of settlement,
incurred by any Agent and Lenders in enforcing any Obligations of or in
collecting any payments due from any Credit Party hereunder or under the other
Credit Documents by reason of such Event of Default (including in connection
with the sale of, collection from, or other realization upon any of the
Collateral or the enforcement of the Guaranty) or in connection with any
refinancing or restructuring of the credit arrangements provided hereunder in
the nature of a "work-out" or pursuant to any insolvency or bankruptcy cases or
proceedings. The agreements in this Section 10.2 shall survive repayment of the
Loans and all other amounts payable hereunder and the return of the Credit
Linked Deposits to the applicable Lenders.

      10.3. Indemnity.

            (a) In addition to the payment of expenses pursuant to Section 10.2,
whether or not the transactions contemplated hereby shall be consummated, each
Credit Party agrees to defend (subject to Indemnitees' selection of counsel),
indemnify, pay and hold harmless, each Agent, Lender and Issuing Bank and the
officers, partners, directors, trustees, employees, agents, sub-agents and
Affiliates of each Agent, each Lender and each Issuing Bank (each, an
"INDEMNITEE"), from and against any and all Indemnified Liabilities; provided,
no Credit Party shall have any obligation to any Indemnitee hereunder with
respect to any Indemnified Liabilities to the extent such Indemnified
Liabilities arise from the gross negligence, bad faith or willful misconduct of
that Indemnitee and, provided further, that neither Credit Suisse nor any of

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its officers, partners, directors, trustees, employees, agents, sub-Agents or
Affiliates shall be entitled to any indemnification or contribution hereunder
except to the extent of losses, claims, damages or liabilities suffered as a
result of Credit Suisse acting as Joint Lead Arranger, a Lender or an Agent
hereunder. To the extent that the undertakings to defend, indemnify, pay and
hold harmless set forth in this Section 10.3 may be unenforceable in whole or in
part because they are violative of any law or public policy, the applicable
Credit Party shall contribute the maximum portion that it is permitted to pay
and satisfy under applicable law to the payment and satisfaction of all
Indemnified Liabilities incurred by Indemnitees or any of them.

            (b) To the extent permitted by applicable law, no Credit Party shall
assert, and each Credit Party hereby waives, any claim against Lenders, Agents,
Issuing Banks and their respective Affiliates, directors, employees, attorneys,
agents or sub-agents, on any theory of liability, for special, indirect,
consequential or punitive damages (as opposed to direct or actual damages)
(whether or not the claim therefor is based on contract, tort or duty imposed by
any applicable legal requirement) arising out of, in connection with, arising
out of, as a result of, or in any way related to, this Agreement or any Credit
Document or any agreement or instrument contemplated hereby or thereby or
referred to herein or therein, the transactions contemplated hereby or thereby,
any Loan or the use of the proceeds thereof or any act or omission or event
occurring in connection therewith, and each Credit Party hereby waives, releases
and agrees not to sue upon any such claim or any such damages, whether or not
accrued and whether or not known or suspected to exist in its favor provided,
that Credit Suisse and it officers, partners, directors, trustees, employees,
agents, sub-agents and Affiliates shall be entitled to the benefits of this
paragraph for claims arising out of the Credit Documents or its acting as Joint
Lead Arranger, a Lender or an Agent hereunder.

      The agreements in this Section 10.3 shall survive repayment of the Loans
and all other amounts payable hereunder and the return of the Credit Linked
Deposits to the applicable Lenders.

      10.4. Set-Off. In addition to any rights now or hereafter granted under
applicable law and not by way of limitation of any such rights, upon the
occurrence and during the continuance of any Event of Default each Lender and
each Funded LC Issuing Bank is hereby authorized by each Credit Party at any
time or from time to time subject to the consent of Administrative Agent (such
consent not to be unreasonably withheld or delayed), without notice to any
Credit Party or to any other Person (other than Administrative Agent), any such
notice being hereby expressly waived, to set off and to appropriate and to apply
any and all deposits (general or special, including Indebtedness evidenced by
certificates of deposit, whether matured or unmatured, but not including trust
accounts) and any other Indebtedness at any time held or owing by such Lender or
Funded LC Issuing Bank to or for the credit or the account of any Credit Party
(other than Holdings) against and on account of the obligations and liabilities
of any Credit Party to such Lender or Funded LC Issuing Bank hereunder, the
Letters of Credit and participations therein and under the other Credit
Documents, including all claims of any nature or description arising out of or
connected hereto, the Letters of Credit and participations therein or with any
other Credit Document, irrespective of whether or not (a) such Lender or Funded
LC Issuing Bank shall have made any demand hereunder or (b) the principal of or
the interest on the Loans or any amounts in respect of the Letters of Credit or
any other amounts due hereunder shall have become due and payable pursuant to
Section 2 and although such obligations and liabilities, or

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any of them, may be contingent or unmatured. The Funded LC Issuing Banks agree
that payments from the Credit Linked Deposits shall be made only to the extent
expressly provided for under this Agreement.

      10.5. Amendments and Waivers.

            (a) Requisite Lenders' Consent. Subject to Section 10.5(b) and
10.5(c), no amendment, modification, termination or waiver of any provision of
the Credit Documents, or consent to any departure by any Credit Party therefrom,
shall in any event be effective without the written concurrence of the Requisite
Lenders.

            (b) Affected Lenders' Consent. Without the written consent of each
Lender (other than a Defaulting Lender) that would be directly affected thereby,
no amendment, modification, termination, or consent shall be effective if the
effect thereof would:

               (i) extend the scheduled final maturity of any Loan or Note of
   such Lender;

               (ii) extend the date on which the Funded LC Participation
   Interests must be repurchased in full from such Lender or any Lender's Pro
   Rate Share of the Credit Linked Deposits is required to be paid to such
   Lender in full (it being acknowledged that any such repurchase or payment is
   subject to the express provisions of Section 2.4);

               (iii)waive, reduce or postpone any scheduled repayment of
   principal on the Term Loans under Section 2.12 due such Lender (but not
   prepayment);

               (iv) extend the stated expiration date of any Revolving Letter of
   Credit beyond the Revolving Commitment Termination Date;

               (v) extend the stated expiration date of any Funded Letter of
   Credit beyond the Funded Letter of Credit Termination Date;

               (vi) reduce the rate of interest on any Loan of such Lender
   (other than any waiver of any increase in the interest rate applicable to any
   Loan pursuant to Section 2.10) or any fee or other payment obligations
   (including without limitation with respect to Funded LC Participation
   Interests) payable hereunder to such Lender;

               (vii) extend the time for payment of any such interest or fees to
   such Lender;

               (viii) reduce the principal amount of any Loan or any
   reimbursement obligation in respect of any Letter of Credit due to such
   Lender or (except as expressly provided for herein) any Credit Linked Deposit
   funded by such Lender;

               (ix) amend, modify, terminate or waive any provision of this
   Section 10.5(b) or Section 10.5(c);

               (x) amend the definition of "REQUISITE LENDERS" or "PRO RATA
   SHARE"; provided, with the consent of Requisite Lenders additional extensions
   of credit pursuant hereto may be included in the determination of "REQUISITE
   LENDERS" or "PRO RATA SHARE"

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   on substantially the same basis as the Term Loan Commitments, the Term Loan,
   the Revolving Commitments, the Revolving Loans, the Funded Letter of Credit
   Commitments, and the Funded Letters of Credit are included on the Closing
   Date;

               (xi) release all or substantially all of the Collateral or all or
   substantially all of the Guarantors from the Guaranty except as expressly
   provided in the Credit Documents; or

               (xii)consent to the assignment or transfer by any Credit Party of
   any of its rights and obligations under any Credit Document.

            (c) Other Consents. No amendment, modification, termination or
waiver of any provision of the Credit Documents, or consent to any departure by
any Credit Party therefrom, shall:

               (i) increase any Revolving Commitment of any Lender over the
   amount thereof then in effect without the consent of such Lender; provided,
   no amendment, modification or waiver of any condition precedent, covenant,
   Default or Event of Default shall constitute an increase in any Revolving
   Commitment of any Lender;

               (ii) amend, modify, terminate or waive any provision hereof
   relating to the Swing Line Sublimit or the Swing Line Loans without the
   consent of Swing Line Lender;

               (iii)amend the definition of "REQUISITE CLASS LENDERS" without
   the consent of Requisite Class Lenders of each Class; provided, with the
   consent of the Requisite Lenders, additional extensions of credit pursuant
   hereto may be included in the determination of such "REQUISITE CLASS LENDERS"
   on substantially the same basis as the Term Loan Commitments, the Term Loans,
   the Revolving Commitments, the Revolving Loans, the Funded Letter of Credit
   Commitments, and the Funded Letters of Credit are included on the Closing
   Date;

               (iv) alter the required application of any repayments or
   prepayments as between Classes pursuant to Section 2.15 without the consent
   of Requisite Class Lenders of each Class which is being allocated a lesser
   repayment or prepayment as a result thereof; provided, Requisite Lenders may
   waive, in whole or in part, any prepayment so long as the application, as
   between Classes, of any portion of such prepayment which is still required to
   be made is not altered;

               (v) amend, modify, terminate or waive any obligation of Lenders
   or Company (as the same applies to its obligation to any Funded LC Issuing
   Bank) or any Funded LC Issuing Bank as provided in Section 2.4 directly
   relating to Funded Letters of Credit and the Credit Linked Deposits (and
   definitions used in Section 2.4 that relate specifically to Funded Letters of
   Credit and Credit Linked Deposits) without the written consent of Company,
   Administrative Agent and each Funded LC Issuing Bank; or

               (vi) amend, modify, terminate or waive any provision of Section 9
   as the same applies to any Agent, or any other provision hereof as the same
   applies to the rights or obligations of any Agent, in each case without the
   consent of such Agent; or

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               (vii) amend, modify or waive any condition precedent in Section
   3.2 to the making of any Revolving Loan without the consent of Requisite
   Class Lenders having Revolving Credit Exposure (it being understood that no
   waiver of any Default or Event of Default by Requisite Lenders, nor any
   waiver or amendment of any covenant, representation, or other provision not
   in Section 3.2 shall constitute an amendment, modification or waiver).

            (d) Execution of Amendments, etc. Administrative Agent may, but
shall have no obligation to, with the concurrence of any Lender, execute
amendments, modifications, waivers or consents on behalf of such Lender. Any
waiver or consent shall be effective only in the specific instance and for the
specific purpose for which it was given. No notice to or demand on any Credit
Party in any case shall entitle any Credit Party to any other or further notice
or demand in similar or other circumstances. Any amendment, modification,
termination, waiver or consent effected in accordance with this Section 10.5
shall be binding upon each Lender at the time outstanding, each future Lender
and, if signed by a Credit Party, on such Credit Party.

      10.6. Successors and Assigns; Participations.

            (a) Generally. This Agreement shall be binding upon the parties
hereto and their respective successors and assigns and shall inure to the
benefit of the parties hereto and the successors and assigns of Lenders. No
Credit Party's rights or obligations hereunder nor any interest therein may be
assigned or delegated by any Credit Party without the prior written consent of
all Lenders. No Lender may assign, sell, participate or otherwise transfer any
of its rights under the Credit Documents except as set forth in this Section
10.6 and the penultimate sentence of Section 2.23. Nothing in this Agreement,
expressed or implied, shall be construed to confer upon any Person (other than
the parties hereto, their respective successors and assigns permitted hereby
and, to the extent expressly contemplated hereby, Affiliates of each of the
Agents and Lenders) any legal or equitable right, remedy or claim under or by
reason of this Agreement.

            (b) Register. Company, Administrative Agent and Lenders shall deem
and treat the Persons listed as Lenders in the Register as the holders and
owners of the corresponding Commitments, Loans and Funded Letter of Credit
Participations listed therein for all purposes hereof, and no assignment or
transfer of any such Commitment or Loan shall be effective, in each case, unless
and until recorded in the Register following receipt of an Assignment Agreement
effecting the assignment or transfer thereof, in each case, as provided in
Section 10.6(d). Each assignment shall be recorded in the Register on the
Business Day the Assignment Agreement is received by Administrative Agent, if
received by 12:00 noon New York City time, and on the following Business Day if
received after such time, prompt notice thereof shall be provided to Company and
a copy of such Assignment Agreement shall be maintained, as applicable. The date
of such recordation of a transfer shall be referred to herein as the "ASSIGNMENT
EFFECTIVE DATE." Any request, authority or consent of any Person who, at the
time of making such request or giving such authority or consent, is listed in
the Register as a Lender shall be conclusive and binding on any subsequent
holder, assignee or transferee of the corresponding Commitments or Loans.

            (c) Right to Assign. Each Lender shall have the right at any time to
sell, assign or transfer all or a portion of its rights and obligations under
this Agreement, including, without

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limitation, all or a portion of its Commitment, Funded Letter of Credit
Participations or Loans owing to it or other Obligation (provided, however, that
each such assignment shall be of a uniform, and not varying, percentage of all
rights and obligations under and in respect of any Funded Letter of Credit
Participations, Loan and any related Commitments):

               (i) to any Person meeting the criteria of clause (i) of the
   definition of the term of "Eligible Assignee" upon the giving of notice to
   Company and Administrative Agent; and

               (ii) to any Person meeting the criteria of clause (ii) of the
   definition of the term of "Eligible Assignee", consented to by each of
   Company and Administrative Agent (such consent not to be (x) unreasonably
   withheld or delayed or, (y) in the case of Company, required at any time an
   Event of Default shall have occurred and then be continuing); provided,
   further each such assignment pursuant to this Section 10.6(c)(ii) shall be in
   an aggregate amount of not less than (A) $5,000,000 (or such lesser amount as
   may be agreed to by Company and Administrative Agent (it being agreed that
   Company shall not unreasonably withhold its consent to assignments in an
   amount of not less than $2,500,000) or as shall constitute the aggregate
   amount of the Revolving Commitments and Revolving Loans of the assigning
   Lender) with respect to the assignment of the Revolving Commitments and
   Revolving Loans, (B) $1,000,000 (or such lesser amount as may be agreed to by
   Company and Administrative Agent or as shall constitute the aggregate amount
   of the Funded Letter of Credit Commitments and Funded Letter of Credit
   Participations of the assigning Lender) with respect to the assignment of the
   Funded Letter of Credit Commitments and Funded Letter of Credit
   Participations, and (C) $1,000,000 (or such lesser amount as may be agreed to
   by Company and Administrative Agent or as shall constitute the aggregate
   amount of the Term Loan of the assigning Lender) with respect to the
   assignment of Term Loans.

   Anything in the foregoing to the contrary notwithstanding, no assignment of
   any Revolving Commitment (except in the case of an assignment to a Revolving
   Lender or an Affiliate thereof) shall be effective unless and until consented
   to in writing by the Revolving Issuing Bank (such consent not to be
   unreasonably withheld)

            (d) Mechanics. Assignments and assumptions of Loans, Commitments and
Credit Linked Deposits shall only be effected by manual execution and delivery
to Administrative Agent of an Assignment Agreement. Assignments made pursuant to
the foregoing provision shall be effective as of the Assignment Effective Date.
In connection with all assignments there shall be delivered to Administrative
Agent and Company such forms, certificates or other evidence, if any, with
respect to United States federal income tax withholding matters as the assignee
under such Assignment Agreement may be required to deliver pursuant to Section
2.20(c). Without the consent of Company (which consent shall not be unreasonably
withheld), each Funded LC Issuing Bank and Administrative Agent, no Credit
Linked Deposit shall be released in connection with any assignment by a Funded
Letter of Credit Participant, but the Funded LC Participation Interests shall
instead be purchased by the relevant assignee and the Credit Linked Deposits
continue to be held by the Funded LC Issuing Banks for application (to the
extent not already applied) in accordance with Sections 2.4(f) and (h).

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            (e) Representations and Warranties of Assignee. Each Lender, upon
execution and delivery hereof or upon succeeding to an interest in the
Commitments and Loans, as the case may be, represents and warrants as of the
Closing Date or as of the Assignment Effective Date that (i) it is an Eligible
Assignee; (ii) it has experience and expertise in the making of or investing in
commitments or loans such as the applicable Commitments, Credit Linked Deposits
or Loans, as the case may be; and (iii) it will make or invest in, as the case
may be, its Commitments, Funded Letter of Credit Participations or Loans for its
own account in the ordinary course of its business and without a view to
distribution of such Commitments, Funded Letter of Credit Participations or
Loans within the meaning of the Securities Act or the Exchange Act or other
federal securities laws (it being understood that, subject to the provisions of
this Section 10.6, the disposition of such Revolving Commitments, Funded Letter
of Credit Participations or Loans or any interests therein shall at all times
remain within its exclusive control).

            (f) Effect of Assignment. Subject to the terms and conditions of
this Section 10.6, as of the "Assignment Effective Date" (i) the assignee
thereunder shall have the rights and obligations of a "Lender" hereunder to the
extent of its interest in the Loans and Commitments as reflected in the Register
and shall thereafter be a party hereto and a "Lender" for all purposes hereof;
(ii) the assigning Lender thereunder shall, to the extent that rights and
obligations hereunder have been assigned to the assignee, relinquish its rights
(other than any rights which survive the termination hereof under Section 10.8)
and be released from its obligations hereunder (and, in the case of an
assignment covering all or the remaining portion of an assigning Lender's rights
and obligations hereunder, such Lender shall cease to be a party hereto on the
Assignment Effective Date; provided, anything contained in any of the Credit
Documents to the contrary notwithstanding, (y) an assigning Issuing Bank shall
continue to have all rights and obligations thereof with respect to such Letters
of Credit until the cancellation or expiration of such Letters of Credit and the
reimbursement of any amounts drawn thereunder and (z) such assigning Lender
shall continue to be entitled to the benefit of all indemnities hereunder as
specified herein with respect to matters arising out of the prior involvement of
such assigning Lender as a Lender hereunder to the extent provided hereunder);
(iii) the Commitments shall be modified to reflect the Commitment of such
assignee and any Revolving Commitment of such assigning Lender, if any; and (iv)
if any such assignment occurs after the issuance of any Note hereunder, the
assigning Lender shall, upon the effectiveness of such assignment or as promptly
thereafter as practicable, surrender its applicable Notes to Administrative
Agent for cancellation, and thereupon Company, at its expense, shall issue and
deliver new Notes, if so requested by the assignee and/or assigning Lender, to
such assignee and/or to such assigning Lender, with appropriate insertions, to
reflect the new Revolving Commitments and/or outstanding Loans of the assignee
and/or the assigning Lender.

            (g) Participations. Each Lender shall have the right at any time to
sell one or more participations to any Person (other than Holdings, any of its
Subsidiaries or any of its Affiliates) in all or any part of its Commitments,
Funded Letter of Credit Participations, Loans or in any other Obligation. The
holder of any such participation, other than an Affiliate of the Lender granting
such participation, shall not be entitled to require such Lender to take or omit
to take any action hereunder except with respect to any amendment, modification
or waiver that would (i) extend the final scheduled maturity of any Loan, Note
or Letter of Credit (unless such Letter of Credit is not extended beyond the
Revolving Commitment Termination Date or the

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Funded Letter of Credit Termination Date, as applicable) in which such
participant is participating, or reduce the rate or extend the time of payment
of interest or fees thereon (except in connection with a waiver of applicability
of any post-default increase in interest rates) or reduce the principal amount
thereof, or increase the amount of the participant's participation over the
amount thereof then in effect (it being understood that a waiver of any Default
or Event of Default or of a mandatory reduction in the Commitment shall not
constitute a change in the terms of such participation, and that an increase in
any Commitment, Funded Letter of Credit Participations or Loan shall be
permitted without the consent of any participant if the participant's
participation is not increased as a result thereof), (ii) consent to the
assignment or transfer by any Credit Party of any of its rights and obligations
under this Agreement or (iii) release all or substantially all of the Collateral
under the Collateral Documents (except as expressly provided in the Credit
Documents) supporting the Loans and Funded Letter of Credit Participations
hereunder in which such participant is participating. Company agrees that each
participant shall be entitled to the benefits of Sections 2.18(c), 2.19 and 2.20
to the same extent as if it were a Lender and had acquired its interest by
assignment pursuant to paragraph (c) of this Section; provided, (i) a
participant shall not be entitled to receive any greater payment under Sections
2.18(c), 2.19 or 2.20 than the applicable Lender would have been entitled to
receive with respect to the participation sold to such participant, unless the
sale of the participation to such participant is made with Company's prior
written consent and (ii) a participant that would be a Non-US Lender (or that
would otherwise be required to deliver a form referred to in Section 2.20(c) to
avoid deduction or withholding of United States federal income tax with respect
to payments made by a Credit Party under any of the Credit Documents) if it were
a Lender shall not be entitled to the benefits of Section 2.20 unless Company is
notified of the participation sold to such participant and such participant
agrees, for the benefit of Company, to be subject to Section 2.20 as though it
were a Lender. To the extent permitted by law, each participant also shall be
entitled to the benefits of Section 10.4 as though it were a Lender, provided
such Participant agrees to be subject to Section 2.17 as though it were a
Lender.

            (h) Certain Other Assignments. In addition to any other assignment
permitted pursuant to this Section 10.6, any Lender may assign and/or pledge all
or any portion of its Loans, Funded Letter of Credit Participations, the other
Obligations owed by or to such Lender, and its Notes (excluding in all instances
the Credit Linked Deposits, which shall be held as the property of the Funded LC
Issuing Banks as provided for in Section 2.4), if any, to secure obligations of
such Lender including, without limitation, any Federal Reserve Bank or any
pledge or assignment to any holders of obligations owed, or securities issued,
by such Lender as collateral security for such obligations or securities, or to
any trustee for, or any other representative of, such holders as collateral
security pursuant to Regulation A of the Board of Governors of the Federal
Reserve System and any operating circular issued by such Federal Reserve Bank;
provided, no Lender, as between Company and such Lender, shall be relieved of
any of its obligations hereunder as a result of any such assignment and pledge,
and provided further, in no event shall the applicable Federal Reserve Bank,
pledgee or trustee be considered to be a "Lender" or be entitled to require the
assigning Lender to take or omit to take any action hereunder.

      10.7. Independence of Covenants. All covenants hereunder shall be given
independent effect so that if a particular action or condition is not permitted
by any of such covenants, the fact that it would be permitted by an exception
to, or would otherwise be within the limitations of,

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                                      148

<PAGE>

another covenant shall not avoid the occurrence of a Default or an Event of
Default if such action is taken or condition exists.

      10.8. Survival of Representations, Warranties and Agreements. All
representations, warranties and agreements made herein shall survive the
execution and delivery hereof and the making of any Credit Extension.
Notwithstanding anything herein or implied by law to the contrary, the
agreements of each Credit Party set forth in Sections 2.18(c), 2.19, 2.20, 10.2,
10.3 and 10.4 and the agreements of Lenders set forth in Sections 2.17, 9.3(b)
and 9.6 shall survive the payment of the Loans, the cancellation or expiration
of the Letters of Credit, the reimbursement of any amounts drawn thereunder, the
final payment made to Lenders pursuant to Section 2.4(j)(iv), and the
termination hereof.

      10.9. No Waiver; Remedies Cumulative. No failure or delay on the part of
any Agent or any Lender in the exercise of any power, right or privilege
hereunder or under any other Credit Document 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 other or further exercise thereof or of any other power, right or
privilege. The rights, powers and remedies given to each Agent and each Lender
hereby are cumulative and shall be in addition to and independent of all rights,
powers and remedies existing by virtue of any statute or rule of law or in any
of the other Credit Documents. Any forbearance or failure to exercise, and any
delay in exercising, any right, power or remedy hereunder shall not impair any
such right, power or remedy or be construed to be a waiver thereof, nor shall it
preclude the further exercise of any such right, power or remedy.

      10.10. Marshalling; Payments Set Aside. Neither any Agent nor any Lender
shall be under any obligation to marshal any assets in favor of any Credit Party
or any other Person or against or in payment of any or all of the Obligations.
To the extent that any Credit Party makes a payment or payments to
Administrative Agent or Lenders (or to Administrative Agent, on behalf of
Lenders), or Administrative Agent or Lenders enforce any security interests or
exercise their rights of setoff, and such payment or payments or the proceeds of
such enforcement or setoff or any part thereof are subsequently invalidated,
declared to be fraudulent or preferential, set aside and/or required to be
repaid to a trustee, receiver or any other party under any bankruptcy law, any
other state or federal law, common law or any equitable cause, then, to the
extent of such recovery, the obligation or part thereof originally intended to
be satisfied, and all Liens, rights and remedies therefor or related thereto,
shall be revived and continued in full force and effect as if such payment or
payments had not been made or such enforcement or setoff had not occurred.

      10.11. Severability. In case any provision in or obligation hereunder or
any Note 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.

      10.12. Obligations Several; Independent Nature of Lenders' Rights. The
obligations of Lenders hereunder are several and no Lender shall be responsible
for the obligations or Commitment of any other Lender hereunder. Nothing
contained herein or in any other Credit Document, and no action taken by Lenders
pursuant hereto or thereto, shall be deemed to

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                                      149

<PAGE>

constitute Lenders as a partnership, an association, a joint venture or any
other kind of entity. The amounts payable at any time hereunder to each Lender
shall be a separate and independent debt, and, subject to Section 9.8(b), each
Lender shall be entitled to protect and enforce its rights arising out hereof
and it shall not be necessary for any other Lender to be joined as an additional
party in any proceeding for such purpose.

      10.13. Headings. Section headings herein are included herein for
convenience of reference only and shall not constitute a part hereof for any
other purpose or be given any substantive effect.

      10.14. APPLICABLE LAW. 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 LAWS OF THE STATE OF NEW YORK.

      10.15. CONSENT TO JURISDICTION. ALL JUDICIAL PROCEEDINGS BROUGHT AGAINST
ANY CREDIT PARTY ARISING OUT OF OR RELATING HERETO OR ANY OTHER CREDIT DOCUMENT,
OR ANY OF THE OBLIGATIONS, 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 CREDIT PARTY, FOR ITSELF AND IN CONNECTION
WITH ITS PROPERTIES, IRREVOCABLY (a) ACCEPTS GENERALLY AND UNCONDITIONALLY THE
NONEXCLUSIVE JURISDICTION AND VENUE OF SUCH COURTS; (b) WAIVES ANY DEFENSE OF
FORUM NON CONVENIENS; (c) 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 THE APPLICABLE CREDIT PARTY AT ITS ADDRESS PROVIDED IN
ACCORDANCE WITH SECTION 10.1; (d) AGREES THAT SERVICE AS PROVIDED IN CLAUSE (c)
ABOVE IS SUFFICIENT TO CONFER PERSONAL JURISDICTION OVER THE APPLICABLE CREDIT
PARTY IN ANY SUCH PROCEEDING IN ANY SUCH COURT, AND OTHERWISE CONSTITUTES
EFFECTIVE AND BINDING SERVICE IN EVERY RESPECT; AND (e) AGREES AGENTS AND
LENDERS RETAIN THE RIGHT TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW
OR TO BRING PROCEEDINGS AGAINST ANY CREDIT PARTY IN THE COURTS OF ANY OTHER
JURISDICTION.

      10.16. WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO HEREBY AGREES TO
WAIVE ITS RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION
BASED UPON OR ARISING HEREUNDER OR UNDER ANY OF THE OTHER CREDIT DOCUMENTS OR
ANY DEALINGS BETWEEN THEM RELATING TO THE SUBJECT MATTER OF THIS LOAN
TRANSACTION OR THE LENDER/COMPANY RELATIONSHIP THAT IS BEING ESTABLISHED. THE
SCOPE OF THIS WAIVER IS INTENDED TO BE ALL-ENCOMPASSING OF ANY AND ALL DISPUTES
THAT MAY BE FILED IN ANY COURT AND THAT RELATE TO THE SUBJECT MATTER OF THIS
TRANSACTION, INCLUDING CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS AND
ALL OTHER

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                                      150

<PAGE>

COMMON LAW AND STATUTORY CLAIMS. EACH PARTY HERETO ACKNOWLEDGES THAT THIS WAIVER
IS A MATERIAL INDUCEMENT TO ENTER INTO A BUSINESS RELATIONSHIP, THAT EACH HAS
ALREADY RELIED ON THIS WAIVER IN ENTERING INTO THIS AGREEMENT, AND THAT EACH
WILL CONTINUE TO RELY ON THIS WAIVER IN ITS RELATED FUTURE DEALINGS. EACH PARTY
HERETO FURTHER WARRANTS AND REPRESENTS THAT IT HAS REVIEWED THIS WAIVER WITH ITS
LEGAL COUNSEL AND THAT IT 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 10.16 AND EXECUTED BY THE
PARTY AGAINST WHICH ENFORCEMENT IS SOUGHT), AND THIS WAIVER SHALL APPLY TO ANY
SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS HERETO OR ANY OF
THE OTHER CREDIT DOCUMENTS OR TO ANY OTHER DOCUMENTS OR AGREEMENTS RELATING TO
THE LOANS MADE HEREUNDER. IN THE EVENT OF LITIGATION, THIS AGREEMENT MAY BE
FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.

      10.17. Confidentiality. Each Lender shall hold all non-public information
regarding Company and its Subsidiaries and their businesses identified as such
by Company and obtained by such Lender pursuant to the requirements hereof in
accordance with such Lender's customary procedures for handling confidential
information of such nature and in accordance with sound industry practice, it
being understood and agreed by Company that, in any event, a Lender may make (i)
disclosures of such information to Affiliates of such Lender and to their
agents, employees, officers, directors, trustees, attorneys, accountants and
advisors (and to other persons authorized by a Lender or Agent to organize,
present or disseminate such information in connection with disclosures otherwise
made in accordance with this Section 10.17), (ii) disclosures of such
information reasonably required by any bona fide or potential assignee,
transferee or participant in connection with the contemplated assignment,
transfer or participation by such Lender of any Loans or any participations
therein or by any direct or indirect contractual counterparties (or the
professional advisors thereto) in Hedge Agreements (provided, such bona fide or
potential assignee, transferee or Participant and counterparties and advisors
are advised of and agree to be bound by the provisions of this Section 10.17),
(iii) disclosure to any rating agency when required by it, provided that, prior
to any disclosure, such rating agency shall undertake in writing to preserve the
confidentiality of any confidential information relating to the Credit Parties
received by it from any of the Agents or any Lender, and (iv) disclosures
required or requested by any governmental agency or representative thereof or by
the NAIC or pursuant to legal or judicial process; provided, unless specifically
prohibited by applicable law or court order, each Lender shall make reasonable
efforts to notify Company of any request by any governmental agency or
representative thereof (other than any such request in connection with any
examination of the financial condition or other routine examination of such
Lender by such governmental agency) for disclosure of any such non-public
information prior to disclosure of such information. Notwithstanding anything to
the contrary set forth herein, each party (and each of their respective
employees, representatives or other agents) may disclose to any and all persons,
without limitations of any kind, the tax treatment and tax

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<PAGE>

structure of the transactions contemplated by this Agreement and all materials
of any kind (including opinions and other tax analyses) that are provided to any
such party relating to such tax treatment and tax structure. However, any
information relating to the tax treatment or tax structure shall remain subject
to the confidentiality provisions hereof (and the foregoing sentence shall not
apply) to the extent reasonably necessary to enable the parties hereto, their
respective Affiliates, and their and their respective Affiliates' directors and
employees to comply with applicable securities laws. For this purpose, "tax
structure" means any facts relevant to the federal income tax treatment of the
transactions contemplated by this Agreement but does not include information
relating to the identity of any of the parties hereto or any of their respective
Affiliates.

      10.18. Usury Savings Clause. Notwithstanding any other provision herein,
the aggregate interest rate charged with respect to any of the Obligations,
including all charges or fees in connection therewith deemed in the nature of
interest under applicable law shall not exceed the Highest Lawful Rate. If the
rate of interest (determined without regard to the preceding sentence) under
this Agreement at any time exceeds the Highest Lawful Rate, the outstanding
amount of the Loans made hereunder shall bear interest at the Highest Lawful
Rate until the total amount of interest due hereunder equals the amount of
interest which would have been due hereunder if the stated rates of interest set
forth in this Agreement had at all times been in effect. In addition, if when
the Loans made hereunder are repaid in full the total interest due hereunder
(taking into account the increase provided for above) is less than the total
amount of interest which would have been due hereunder if the stated rates of
interest set forth in this Agreement had at all times been in effect, then to
the extent permitted by law, Company shall pay to Administrative Agent an amount
equal to the difference between the amount of interest paid and the amount of
interest which would have been paid if the Highest Lawful Rate had at all times
been in effect. Notwithstanding the foregoing, it is the intention of Lenders
and Company to conform strictly to any applicable usury laws. Accordingly, if
any Lender contracts for, charges, or receives any consideration which
constitutes interest in excess of the Highest Lawful Rate, then any such excess
shall be cancelled automatically and, if previously paid, shall at such Lender's
option be applied to the outstanding amount of the Loans made hereunder or be
refunded to Company.

      10.19. Counterparts. This Agreement may be executed in any number of
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.

      10.20. Effectiveness. This Agreement shall become effective upon the
execution of a counterpart hereof by each of the parties hereto and receipt by
Company and Administrative Agent of written, electronic or telephonic
notification of such execution and authorization of delivery thereof.

      10.21. Patriot Act. Each Lender and Administrative Agent (for itself and
not on behalf of any Lender) hereby notifies Company that pursuant to the
requirements of the Act, it is REQUIRED to obtain, verify and record information
that identifies Company, which information includes the name and address of
Company and other information that will allow such Lender or Administrative
Agent, as applicable, to identify Company in accordance with the Act.

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                                      152

<PAGE>

      10.22. ELECTRONIC EXECUTION OF ASSIGNMENTS. The words "execution,"
"signed," "signature," and words of like import in any Assignment Agreement
shall be deemed to include electronic signatures or the keeping of records in
electronic form, each of which shall be of the same legal effect, validity or
enforceability as a manually executed signature or the use of a paper-based
recordkeeping system, as the case may be, to the extent and as provided for in
any applicable law, including the Federal Electronic Signatures in Global and
National Commerce Act, the New York State Electronic Signatures and Records Act,
or any other similar state laws based on the Uniform Electronic Transactions
Act.

                  [Remainder of page intentionally left blank]

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                                      153

<PAGE>

      IN WITNESS WHEREOF, the parties hereto 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 CORPORATION, A DELAWARE
                                CORPORATION, AND EACH OF ITS SUBSIDIARIES LISTED
                                ON EXHIBIT A HERETO

                                By: /s/ ANTHONY ORLANDO
                                    --------------------------------------------
                                    Name: Anthony Orlando
                                    Title: President

                                DANIELSON HOLDING CORPORATION, A DELAWARE
                                CORPORATION

                                By: /s/ ANTHONY ORLANDO
                                    --------------------------------------------
                                    Name: Anthony Orlando
                                    Title: Chief Financial Officer and President

Execution Copy

                                     S - 1

<PAGE>

                            GOLDMAN SACHS CREDIT PARTNERS L.P.,
                            as Joint Lead Arranger, Co-Syndication Agent,
                            Administrative Agent, Collateral Agent, and a Lender

                            By: /s/
                                -------------------------------
                                     Authorized Signatory

Execution Copy

                                      S - 2

<PAGE>

                                 CREDIT SUISSE, Cayman Islands Branch
                                 as Joint Lead Arranger and Co-Syndication Agent

                                 By: /s/
                                     -------------------------------------------
                                     Name:
                                     Title:

                                 By: /s/
                                     -------------------------------------------
                                     Name:
                                     Title:

Execution Copy

                                      S - 3

<PAGE>

                                    JPMORGAN CHASE BANK, N.A.
                                    as Co-Documentation Agent, Revolving Issuing
                                    Bank and a Funded LC Issuing Bank

                                    By: /s/
                                        ----------------------------------------
                                        Name:
                                        Title:

Execution Copy

                                      S - 4

<PAGE>

                                    UBS SECURITIES LLC
                                    as Co-Documentation Agent

                                    By: /s/
                                        ----------------------------------------
                                        Name:
                                        Title:

                                    By: /s/
                                        ----------------------------------------
                                        Name:
                                        Title:

                                    UBS AG, STAMFORD BRANCH,
                                    as a Funded LC Issuing Bank

                                    By: /s/
                                        ----------------------------------------
                                        Name:
                                        Title:

                                    By: /s/
                                        ----------------------------------------
                                        Name:
                                        Title:

Execution Copy

                                      S - 5

<PAGE>

                                    CALYON NEW YORK BRANCH,
                                    as Co-Documentation Agent

                                    By: /s/
                                        ----------------------------------------
                                        Name:
                                        Title:

                                    By: /s/
                                        ----------------------------------------
                                        Name:
                                        Title

Execution Copy

                                      S - 6
<PAGE>

                                    EXHIBIT A

                                  SUBSIDIARIES

<TABLE>
<CAPTION>
      Name
      ----
<S>   <C>
2.    8309 Tujunga Avenue Corp., a California corporation

3.    Amor 14 Corporation, a Delaware corporation

4.    Burney Mountain Power, a California corporation

5.    Covanta Acquisition, Inc., a Delaware corporation

6.    Covanta Bessemer, Inc.,a Delaware corporation

7.    Covanta Cunningham Environmental Support, Inc., a New York corporation

8.    Covanta Energy Americas, Inc., a Delaware corporation

9.    Covanta Energy Construction, Inc.,a Delaware corporation

10.   Covanta Energy Group, Inc., a Delaware corporation

11.   Covanta Energy International, Inc.,a Delaware corporation

12.   Covanta Energy Resource Corp., a Delaware corporation

13.   Covanta Energy Services, Inc., a Delaware corporation

14.   Covanta Energy West, Inc., a Delaware corporation

15.   Covanta Engineering Services, Inc., a New Jersey corporation

16.   Covanta Geothermal Operations Holdings, Inc., a Delaware corporation

17.   Covanta Geothermal Operations, Inc., a Delaware corporation

18.   Covanta Haverhill Properties, Inc., a Massachusetts corporation

19.   Covanta Heber Field Energy, Inc., a Delaware corporation

20.   Covanta Hennepin Energy Resource Co., Limited Partnership, a
      Delaware limited partnership
           By: Covanta Energy Resource Corp., its General
               Partner
</TABLE>

Execution Copy

                                 APPENDIX A-1-1

<PAGE>

<TABLE>
<CAPTION>
      Name
      ----
<S>   <C>
21.   Covanta Hillsborough, Inc., a Florida corporation

22.        Covanta Honolulu Resource Recovery Venture, a Hawaii
           General Partnership
                By: Covanta Oahu Waste Energy Recovery, Inc.,
                    its General Partner
                By: Covanta Projects of Hawaii, Inc., its General Partner

23.   Covanta Huntsville, Inc., an Alabama corporation

24.   Covanta Hydro Energy, Inc., a Delaware corporation

25.   Covanta Hydro Operations West, Inc., Delaware corporation

26.   Covanta Hydro Operations, Inc., a Tennessee corporation

27.   Covanta Imperial Power Services, Inc., a California corporation

28.   Covanta Kent, Inc.,a Michigan corporation

29.   Covanta Lancaster, Inc., a Pennsylvania corporation

30.   Covanta Lee, Inc., a Florida corporation

31.   Covanta Long Island, Inc., a Delaware corporation

32.   Covanta Marion Land Corp., an Oregon corporation

33.   Covanta Marion, Inc., an Oregon corporation

34.   Covanta Mid-Conn, Inc., a Connecticut corporation

35.   Covanta Montgomery, Inc., Maryland corporation

36.   Covanta New Martinsville Hydroelectric Corporation, a Delaware corporation

37.   Covanta New Martinsville Hydro-Operations Corporation, a West Virginia corporation

38.   Covanta Oahu Waste Energy Recovery, Inc., a California corporation

39.   Covanta Onondaga Operations, Inc., a Delaware corporation

40.   Covanta Operations of Union, LLC, a New Jersey limited liability company

41.   Covanta OPW Associates, Inc., a  Connecticut corporation
</TABLE>

Execution Copy

                                 APPENDIX A-1-2

<PAGE>

<TABLE>
<CAPTION>
      Name
      ----
<S>   <C>
42.   Covanta OPWH, Inc., a Delaware corporation

43.   Covanta Otay 3 Company, a California corporation

44.   Covanta Pasco, Inc., a Florida corporation

45.   Covanta Plant Services of New Jersey, Inc., a New Jersey corporation

46.   Covanta Power Equity Corporation, a Delaware corporation

47.   Covanta Power International Holdings, Inc., a Delaware corporation

48.   Covanta Power Pacific, Inc., a California corporation

49.   Covanta Power Plant Operations, a California corporation

50.   Covanta Projects of Hawaii, Inc., a Hawaii corporation

51.   Covanta Projects, Inc., a Delaware corporation

52.   Covanta RRS Holdings, Inc., a Delaware corporation

53.   Covanta Secure Services, Inc., a Delaware corporation

54.   Covanta SIGC Energy II, Inc., a California corporation

55.   Covanta SIGC Energy, Inc., a Delaware corporation

56.   Covanta SIGC Geothermal Operations, Inc., a California corporation

57.   Covanta Systems, LLC, a Delaware limited liability company

58.   Covanta Tampa Bay, Inc., a Florida corporation

59.   Covanta Tampa Construction, Inc., a Delaware corporation

60.   Covanta Wallingford Associates, Inc., a Connecticut corporation

61.   Covanta Waste to Energy, LLC, a Delaware limited liability company

62.   Covanta Water Holdings, Inc., a Delaware corporation

63.   Covanta Water Systems, Inc., a Delaware corporation

64.   Covanta Water Treatment Services, Inc., a Delaware corporation
</TABLE>

Execution Copy

                                 APPENDIX A-1-3

<PAGE>

<TABLE>
<CAPTION>
      Name
      ----
<S>   <C>
65.   DSS Environmental, Inc., a New York corporation

66.   ERC Energy II, Inc., a Delaware corporation

67.   ERC Energy, Inc., a Delaware corporation

68.   Heber Field Energy II, Inc., a Delaware corporation

69.   Heber Loan  Partners, a California general partnership
           By: ERC Energy, Inc., its General Partner
           By: ERC Energy II, Inc., its General Partner

70.   LMI, Inc., a Massachusetts corporation

71.   Mammoth Geothermal Company, a California corporation

72.   Mammoth Power Company, a California corporation

73.   Michigan Waste Energy, Inc., a Delaware corporation

74.   Mt. Lassen Power, a California corporation

75.   Pacific Geothermal Company, a California corporation

76.   Pacific Oroville Power, Inc., a California corporation

77.   Pacific Recovery Corporation, a California corporation

78.   Pacific Wood Fuels Company, a California corporation

79.   Three Mountain Operations, Inc., a Delaware corporation

80.   Three Mountain Power, LLC, a Delaware corporation

81.   American Ref-Fuel Holdings Corp., a Delaware corporation

82.   Ref-Fuel Corp., a Delaware corporation

83.   Ref-Fuel LLC, a Delaware limited liability company

84.   UAH Management Corp., a New York corporation
</TABLE>

Execution Copy

                                 APPENDIX A-1-4

<PAGE>

                                                                    APPENDIX A-1
                                                TO CREDIT AND GUARANTY AGREEMENT

                              TERM LOAN COMMITMENTS

<TABLE>
<CAPTION>
                                                               PRO
              LENDER                 TERM LOAN COMMITMENT   RATA SHARE
----------------------------------   --------------------   ----------
<S>                                  <C>                    <C>
Goldman Sachs Credit Partners L.P.     $275,000,000.00         100.0%
                                       ---------------         -----
                   TOTAL               $275,000,000.00         100.0%
                                       ===============         =====
</TABLE>

Execution Copy

                                 APPENDIX A-1-5

<PAGE>

                                                                    APPENDIX A-2
                                                TO CREDIT AND GUARANTY AGREEMENT

                              REVOLVING COMMITMENTS

<TABLE>
<CAPTION>
               LENDER                REVOLVING COMMITMENT   PRO RATA SHARE
----------------------------------   --------------------   --------------
<S>                                  <C>                    <C>
Goldman Sachs Credit Partners L.P.     $100,000,000.00          100.0%
                                       ---------------          -----
                    TOTAL              $100,000,000.00          100.0%
                                       ===============          =====
</TABLE>

Execution Copy

                                 APPENDIX A-2-1

<PAGE>

                                                                    APPENDIX A-3
                                                TO CREDIT AND GUARANTY AGREEMENT

                            FUNDED LETTERS OF CREDIT

<TABLE>
<CAPTION>
                                     FUNDED LETTER OF CREDIT
              LENDER                       COMMITMENT          PRO RATA SHARE
----------------------------------   -----------------------   --------------
<S>                                  <C>                       <C>
Goldman Sachs Credit Partners L.P.       $340,000,000.00          100.0%
                                         ---------------          -----
               TOTAL                     $340,000,000.00          100.0%
                                         ===============          =====
</TABLE>

Execution Copy

                                 APPENDIX A-3-1

<PAGE>

                                                                      APPENDIX B
                                                TO CREDIT AND GUARANTY AGREEMENT

                                NOTICE ADDRESSES

COVANTA ENERGY CORPORATION
         40 Lane Road
         Fairfield, New Jersey  07004
         Attention: Chief Financial Officer
         CC: General Counsel
         Telecopier: (973) 882-7357

DANIELSON HOLDING CORPORATION
         40 Lane Road
         Fairfield, New Jersey  07004
         Attention: Chief Financial Officer
         CC: General Counsel
         Telecopier: (973) 882-7357

CERTAIN SUBSIDIARIES OF COVANTA ENERGY
CORPORATION, AS GUARANTORS:
         Care of: Covanta Energy Corporation
         40 Lane Road
         Fairfield, New Jersey 07004
         Attention: Chief Financial Officer
         CC: General Counsel
         Telecopier: (973) 882-7357

GOLDMAN SACHS CREDIT PARTNERS L.P.,
as Joint Lead Arranger, Co-Syndication Agent
Administrative Agent, Collateral Agent and a Lender
         Goldman Sachs Credit Partners L.P.
         85 Broad Street
         New York, New York  10004
         Attention: Pedro Ramirez
         Telecopier: (917) 343-8319

Administrative Agent's Principal Office:

Execution Copy

                                  Appendix B-1

<PAGE>

         Goldman Sachs Credit Partners L.P.
         85 Broad Street
         New York, New York  10004
         Attention: Lawrence Writer
         Telecopier: (212) 902-7862

Swing Line Lender's Principal Office:
         Goldman Sachs Credit Partners L.P.
         85 Broad Street
         New York, New York  10004
         Attention: Pedro Ramirez
         Telecopier: (917) 343-8319

Administrative Agent's Principal Office:
         Goldman Sachs Credit Partners L.P.
         85 Broad Street
         New York, New York  10004
         Attention: Lawrence Writer
         Telecopier: (212) 902-7862

CREDIT SUISSE, CAYMAN ISLANDS BRANCH
as Joint Lead Arranger, Co-Syndication Agent,
and a Lender

Issuing Bank's Principal Office:
         Credit Suisse First Boston
         Eleven Madison Avenue
         New York, New York 10010
         Attention: Ronald Davis
         Telecopier: (212) 325-8320

JPMORGAN CHASE BANK,
as Co-Documentation Agent, Revolving
Issuing Bank and a Funded LC Issuing Bank
         JPMorgan Chase Bank
         120 S. LaSalle
         Chicago, IL 60603
         Attention: Douglas P. Boersma
         Telecopier: (312) 661-3566

with a copy to:
         JPMorgan Chase Bank
         120 S. LaSalle
         Chicago, IL 60603

Execution Copy

                                  Appendix B-2

<PAGE>

         Attention: Brady B. Bird
         Telecopier: (312) 661-3566

         JPMorgan Chase Bank
         120 S. LaSalle
         Chicago, IL 60603
         Attention: Christina M. Lowe
         Telecopier: (312) 661-1862

UBS SECURITIES LLC
as Co-Documentation Agent
         UBS Securities LLC
         677 Washington Boulevard
         Stamford, CT 06901
         Attention: Marie Haddad
         Telecopier: (203) 719-3888

UBS AG, STAMFORD BRANCH,
as Funded LC Issuing Bank
         UBS AG, Stamford Branch
         677 Washington Boulevard
         Stamford, CT 06901
         Attention: Marie Haddad
         Telecopier: (203) 719-3888

CALYON, NEW YORK BRANCH,
as Co-Documentation Agent
         Calyon, New York Branch
         85 Broad Street, 29th Floor
         New York, NY 10004
         Attention: Shonda Fisher
         Telecopier: (917) 849-5456

with a copy to:
         Calyon, New York Branch
         85 Broad Street, 29th Floor
         New York, NY 10004
         Attention: Anne LeGoulven
         Telecopier: (212) 261-3375

Execution Copy

                                  Appendix B-3
<PAGE>
                                 SCHEDULE 1.1(a)

              CERTAIN ADJUSTMENTS TO FINANCIAL COVENANT DEFINITIONS

In determining the Cash Flow Coverage Ratio, the Company Leverage Ratio and
Consolidated Adjusted EBITDA with respect to any calculation period ending prior
to the first anniversary of the Closing Date, Consolidated Adjusted EBITDA,
Adjusted Company Operating Cash Flow and Company Cash Interest Expense for each
Fiscal Quarter ending on the dates set forth below shall be the amounts
identified under such period:

<Table>
<Caption>
                                   Fiscal Quarter            Fiscal Quarter             Fiscal Quarter
                                    ending on on               ending on                   ending on
                                 December 31, 2004            March 31, 2005             June 30, 2005
---------------------------- -------------------------- -------------------------- --------------------------
<S>                          <C>                        <C>                        <C>
Consolidated Adjusted              $143,831,000                $92,587,000               $126,953,000
EBITDA

Adjusted Company Operating          $33,456,000                $50,193,000                $24,881,000
Cash Flow

Company Cash Interest               $16,717,000                $16,717,000                $16,717,000
Expense
</Table>

<PAGE>

                                 SCHEDULE 1.1(b)

                       CLOSING DATE EXCLUDED SUBSIDIARIES

                  Schedule 1.1(b) - 1:

<Table>
<S>                      <C>
                         OPI Quezon, Inc.
                         Pacific Energy Resources Incorporated
                         Pacific Hydropower Company
                         Penstock Power Company
                         UAH Groveville Hydro Associates
</Table>

                  Schedule 1.1(b) - 2:

<Table>
<S>                      <C>
                         American Ref-Fuel Company LLC
                         ARC Ref-Fuel Management LLC
                         ARC Ref-Fuel Management II, Inc.
                         American Ref-Fuel Company (a general partnership)
                         ARC Hempstead LLC
                         ARC Hempstead II, Inc.
                         American Ref-Fuel Company of Hempstead
                         ARC Essex LLC
                         ARC Essex II, Inc.
                         American Ref-Fuel Company of Essex County
                         ARC SECONN LLC
                         ARC of Connecticut (S.E.), Inc.
                         ARC of Southeastern Connecticut, L.P.
                         American Ref-Fuel Company of Southeastern Connecticut
                         ARC Niagara LLC
                         ARC Niagara II, Inc.
                         American Ref-Fuel Company of Niagara, L.P.
                         ARC Operations of SEMASS LLC
                         ARC Operations of SEMASS II, Inc.
                         American Ref-Fuel Operations of SEMASS, L.P.
                         American Ref-Fuel Company of SEMASS, L.P.
                         ARC SEMASS LLC
                         ARC SEMASS II, Inc.
                         SEMASS Partnership
                         ARC Delaware Valley LLC
                         ARC Delaware Valley II, Inc.
                         American Ref-Fuel Company of Delaware Valley, L.P.
                         ARC TransRiver LLC
                         ARC TransRiver II, Inc.
                         TransRiver Marketing Company, L.P.
                         ARC Transfer Systems LLC
                         ARC Waste LLC
                         ARC Capital District LLC
</Table>

<PAGE>

<Table>
<S>                      <C>
                         ARC Capital District II LLC
                         American Ref-Fuel Company of the Capital District, L.P.
                         ARC II Corp.
                         Ref-Fuel Holdings LLC
                         MSW Energy Holdings LLC
                         MSW Energy Holdings II LLC
                         MSW Energy Finance Co., Inc.
                         MSW Energy Finance Co. II, Inc.
                         MSW Energy Hudson LLC
                         MSW I Sub, Inc.
                         American Ref-Fuel Company of Camden LLC
                         Covanta Alexandria/Arlington, Inc.
                         Covanta Babylon, Inc.
                         Covanta Bristol, Inc.
                         Covanta Fairfax, Inc.
                         Covanta Haverhill, Inc.
                         Covanta Haverhill Associates
                         Covanta Huntington Limited Partnership
                         Covanta Huntington Resource Recovery One Corp.
                         Covanta Huntington Resource Recovery Seven Corp.
                         Covanta Indianapolis, Inc.
                         Covanta Lake II, Inc.
                         Covanta Omega Lease, Inc.
                         Covanta Onondaga Five Corp.
                         Covanta Onondaga Four Corp.
                         Covanta Onondaga Three Corp.
                         Covanta Onondaga Two Corp.
                         Covanta Onondaga, Inc.
                         Covanta Onondaga, LP
                         Covanta Power Development of Bolivia, Inc.
                         Covanta Power Development, Inc.
                         Covanta Projects of Wallingford, LP
                         Covanta SBR Associates
                         Covanta Stanislaus, Inc.
                         Covanta Union, Inc.
                         Covanta Warren Energy Resource Co., Limited Partnership
                         Covanta Warren Holdings I, Inc.
                         Covanta Warren Holdings II, Inc.
                         Covanta Waste to Energy of Italy, Inc.
                         Haverhill Power, LLC.
                         Ogden HCI Services(1)
                         Pacific Energy Operating Group, L.P.
                         Generating Resource Recovery Partners L.P.
</Table>
----------
(1) Entity is inactive and is believed to be dissolved.
<PAGE>

                                 SCHEDULE 1.1(c)

                           EXISTING LETTERS OF CREDIT

<Table>
<Caption>
                                                                                                    Req'd Extension
   Project             Type                    Amount          Maturity            Issuing Bank          Date
 -------------      -----------            --------------      --------            ------------     ---------------
<S>                 <C>                    <C>                 <C>                 <C>              <C>
   Hennepin           Standby              $17,000,000.00      03/31/06              Bank One              01/30/06
 Quezon DSRF          Standby              $11,773,298.00      03/31/06              Bank One              03/01/06
   Fairfax          Performance               $900,000.00      03/31/06              Bank One              03/01/06
   Haripur            Standby                 $676,500.00      03/31/06              Bank One              03/31/06
  Montgomery          Standby               35,000,000.00      03/31/06              Bank One              03/31/06
   Workers            Standby               $3,000,000.00      03/31/06              Bank One              01/30/06
 Compensation
    (ACE)
   Workers
 Compensation         Standby               $2,600,000.00      03/31/06              Bank One               03/01/06
    (AIG)
 Detroit (PMCC)       Standby              $76,151,141.46       7/01/09                UBS AG                3/10/07
 Detroit (GECC)       Standby              $32,637,502.36       7/01/09                UBS AG                3/10/07
</Table>

<PAGE>

                               SCHEDULE 1.1(c)(1)

                          JPMC FUNDED LETTERS OF CREDIT

<Table>
<Caption>
            Applicant/Type                      Amount        Maturity                   Beneficiary
-----------------------------------------     -----------     ---------     -----------------------------------
<S>                                           <C>             <C>           <C>
American Ref-Fuel Company                     $   200,000     6/24/2006        National Union Fire Insurance
LLC/Performance Bond                                                        Company of Pittsburgh, PA (AIG) and
Collateral                                                                       certain of its affiliates

American Ref-Fuel Company                     $   650,000     6/24/2006      Zurich American Insurance Company
LLC/Workers' Comp Collateral

American Ref-Fuel Company LLC                 $700,000.00     6/24/2006      Liberty Mutual Insurance Company
Workers' Comp Collateral

American Ref-Fuel Company                     $25,000,000     6/24/2006                Viacom, Inc.
LLC/Credit Support

American Ref-Fuel Company                     $ 8,011,770     7/2/2006             Bank of America, N.A.
LLC/Master Letter of Credit

MSW Energy Holdings LLC                       $50,000,000.00  6/24/06         American Ref-Fuel Company, LLC

Ref-Fuel Corp.                                $50,000,000.00  6/24/06         American Ref-Fuel Company, LLC
</Table>

<PAGE>

                               SCHEDULE 1.1(c)(2)

                          UBS FUNDED LETTERS OF CREDIT

<Table>
<Caption>
                                                                                                               Req'd Extension
       Project             Type                    Amount           Maturity            Issuing Bank                Date
    --------------        -------              --------------       --------            ------------           ---------------
<S>                       <C>                  <C>                  <C>                 <C>                    <C>
    Detroit (PMCC)        Standby              $76,151,141.46       7/01/09                UBS AG                3/10/07

    Detroit (GECC)        Standby              $32,637,502.36       7/01/09                UBS AG                3/10/07
</Table>

<PAGE>

                                 SCHEDULE 1.1(d)

                        CLOSING DATE FOREIGN SUBSIDIARIES

1.       Edison (Bataan) Cogeneration Corporation (Philippines)

2.       Hidro Operaciones Don Pedro S.A. (Costa Rica)

3.       Covanta Energy India (Balaji) Limited (Mauritius)

4.       Covanta Energy India Investments, Ltd.(Mauritius)

5.       Covanta Energy India (Samalpatti) Ltd.(Mauritius)

6.       Covanta Energy Philippine Holdings, Inc.(Philippines)

7.       Ogden Power Development-Cayman, Inc.(Cayman Islands)

8.       Covanta Philippines Operating, Inc.(Cayman Islands)

9.       Madurai Power Corporation Pvt. Ltd. (India)

10.      Covanta Bangladesh Operating Ltd. (Bangladesh)

11.      Covanta Chinese Investments Ltd. (Mauritius)

12.      Covanta Energy China (Alpha) Ltd. (Mauritius)

13.      Linan Ogden-Jinjiang Cogeneration Co. Ltd. (China)

14.      Covanta Energy China (Beta) Ltd. (Mautitius)

15.      Zibo Ogden Bohui Cogeneration Co. Ltd. (China)

16.      Covanta Energy China (Delta) Ltd. (Mauritius)

17.      Ogden-Yanjiang Cogeneration Co. Ltd. (China)

18.      Covanta Energy China (Gamma) Ltd. (Mauritius)

19.      Covanta One Ltd. (Mauritius)

20.      Covanta Five Ltd. (Mauritius)

21.      Covanta Samalpatti Operating Pvt. Ltd. (India)

22.      Covanta Madurai Operating Pvt. Ltd. (India)

<PAGE>

23.      Goa Holdings Ltd.(Mauritius)

24.      Magellan Cogeneration, Inc. (Philippines)

25.      El Gorguel Energia S.L. (Spain)

26.      Covanta Operaciones LICA S.L. (Spain)

27.      Ogden Energy of Bongaigon Pvt. Ltd. (India)

28.      Enereurope Holdings III, B.V. (Netherlands)

29.      Ogden Energy (Gulf) Limited (Mauritius)

30.      Ogden Energy India (Bakreshwar) Ltd. (Mauritius)

31.      Bal-Sam India Holdings, Ltd. (Mauritius)

32.      Covanta Energy India (CBM) Ltd. (Mauritius)

33.      Covanta Two Ltd. (Mauritius)

34.      Covanta Cayman (Sahacogen) Ltd. (Cayman Islands)

35.      Covanta Three Ltd. (Mauritius)

36.      Covanta Cayman (Rojana) Ltd. (Cayman Islands)

37.      Covanta Four Ltd. (Mauritius)

38.      Power Operations and Maintenance Ltd. (Bermuda)

39.      Covanta India Operating Pvt. Ltd. (India)

40.      Ogden Taiwan Investments Ltd. (Mauritius)

41.      OPDB, Ltd. (Cayman Islands)

42.      Covanta Energy India Pvt. Ltd. (India)

43.      Covanta Energy (Thailand) Ltd. (Thailand)

44.      Covanta Energy Asia Pacific Ltd. (Hong Kong)

45.      Covanta Waste to Energy Asia Investments (Mauritius)

46.      Olmec Insurance Ltd. (Bermuda)

<PAGE>

47.      OPI Carmona Limited (Cayman Islands)

48.      OPI Carmona One Limited (Cayman Islands)

49.      Covanta Energy Europe Limited (UK)

<PAGE>

                                 SCHEDULE 1.1(e)

                            DETROIT LETTERS OF CREDIT

<Table>
<Caption>
                                                                                                                     Req'd Extension
             Project             Type                 Amount(1)             Maturity             Issuing Lender           Date
          --------------        -------             --------------          --------             --------------      ---------------
<S>       <C>                   <C>                 <C>                     <C>                  <C>                 <C>
          Detroit (PMCC)        Standby             $76,151,141.46          7/01/09                  UBS AG              3/10/07
          Detroit (GECC)        Standby             $32,637,502.36          7/01/09                  UBS AG              3/10/07
</Table>

<PAGE>

                                 SCHEDULE 1.1(f)

                                TRANSITION COSTS

The following represent categories of transition costs, which transition costs
for the purposes of calculating the Cash Flow Coverage Ratio and Company
Leverage Ratio shall not exceed $22,000,000 in the aggregate for Items 1 through
4 below:

1.  Consulting costs (including travel and meals) related to the integration
    such as:

    o   Accounting

    o   Information Technology

    o   Human Resources

    o   Purchasing

    o   Inventory Management

    o   Billing

    o   Payroll

    o   Outage Planning

    o   Safety

    o   Environmental

2.  Termination of employment costs such as:

    o   Severances for Senior Managers

    o   Severances for all other terminated employees

    o   MIP & LTC plan payouts

    o   Supplemental Retirement Savings Plan payouts

    o   Retention payments

    o   Retention extended severances

    o   Outplacement services

3.  Costs of Headquarters consolidation such as:

    o   Moving costs

    o   Office modification at Fairfield

    o   Lease termination/payout on Montvale office

    o   Lease termination/payout on Woodcliff Lake office

4.  Other costs:

    o   Duplicate insurance already paid

    o   Costs related to putting the Acquired Business and its entities,
        employees, properties, plants, etc. on Covanta insurance policies

    o   New signs, flags, uniforms, hardhats, stationary, business cards, etc.

    o   Filing and legal costs to change names of the Acquired Business
        companies

5.  Transaction Costs

6.  Related Transaction Costs

<PAGE>

                                 SCHEDULE 2.4(f)

                      ALLOCATION OF CREDIT LINKED DEPOSITS

<Table>
<Caption>
                    JPMC                                    UBS
               ---------------                        ---------------
<S>                                                   <C>
               $231,211,356.20                        $108,788,643.80
</Table>
<PAGE>

                                 SCHEDULE 3.1(d)

                    CERTAIN CLOSING DATE INDEBTEDNESS EVENTS

o   Madurai Project (India): Madurai Power Corporation Pvt. Ltd., a Subsidiary,
    is currently in technical default on its limited recourse project debt due
    to the failure of the project power purchase agreement off-taker to fund a
    required escrow account and post a required letter of credit.

<PAGE>

                                 SCHEDULE 3.1(h)

                        CLOSING DATE MORTGAGED PROPERTIES

FEE INTERESTS IN REAL PROPERTY ASSETS

    o   Parcel of approximately 5.6 acres located at 40 Lane Road, Township of
        Fairfield, Essex County, New Jersey, owned by Covanta Projects, Inc.

    o   Parcel of approximately 43.29 acres situated in the City of Oroville,
        County of Butte, California, owned by Pacific Oroville Power, Inc.

    o   Parcel of approximately 59 acres situated in County of Lassen,
        California, owned by Mt. Lassen Power.

<PAGE>

                                  SCHEDULE 4.1

                          JURISDICTIONS OF ORGANIZATION

<Table>
<Caption>
                COMPANY NAME                                                             JURISDICTION OF
                                                                                         INCORPORATION
<S>             <C>                                                                      <C>
                8309 Tujunga Avenue Corp.                                                California
                Amor 14 Corporation                                                      Delaware
                Burney Mountain Power                                                    California
                Covanta Acquisition, Inc.                                                Delaware
                Covanta Alexandria /Arlington, Inc.                                      Virginia
                Covanta Babylon, Inc.                                                    New York
                Covanta Bessemer, Inc.                                                   Delaware
                Covanta Bristol, Inc.                                                    Connecticut
                Covanta Cunningham Environmental Support, Inc.                           New York
                Covanta Energy Americas, Inc.                                            Delaware
                Covanta Energy Construction, Inc                                         Delaware
                Covanta Energy Corporation                                               Delaware
                Covanta Energy Group, Inc.                                               Delaware
                Covanta Energy International, Inc.                                       Delaware
                Covanta Energy Resource Corp.                                            Delaware
                Covanta Energy Services, Inc.                                            Delaware
                Covanta Energy West, Inc.                                                Delaware
                Covanta Engineering Services, Inc.                                       New Jersey
                Covanta Fairfax, Inc.                                                    Virginia
                Covanta Geothermal Operations Holdings, Inc.                             Delaware
                Covanta Geothermal Operations, Inc.                                      Delaware
                Covanta Haverhill Associates                                             Massachusetts
                Covanta Haverhill Properties, Inc.                                       Massachusetts
                Covanta Haverhill, Inc.                                                  Massachusetts
                Covanta Heber Field Energy, Inc.                                         Delaware
                Covanta Hennepin Energy Resource Co., Limited Partnership                Delaware
                Covanta Hillsborough, Inc.                                               Florida
                Covanta Honolulu Resource Recovery Venture                               Hawaii
                Covanta Huntington Limited Partnership                                   Delaware
                Covanta Huntington Resource Recovery One Corp.                           Delaware
                Covanta Huntington Resource Recovery Seven Corp.                         Delaware
                Covanta Huntsville, Inc.                                                 Alabama
                Covanta Hydro Energy, Inc.                                               Delaware
                Covanta Hydro Operations West, Inc.                                      Delaware
                Covanta Hydro Operations, Inc.                                           Tennessee
                Covanta Imperial Power Services, Inc.                                    California
                Covanta Indianapolis, Inc.                                               Indiana
                Covanta Kent, Inc.                                                       Michigan
</Table>

<PAGE>

<Table>
<Caption>
                COMPANY NAME                                                             JURISDICTION OF
                                                                                         INCORPORATION
<S>             <C>                                                                      <C>
                Covanta Lake II, Inc.                                                    Florida
                Covanta Lancaster, Inc.                                                  Pennsylvania
                Covanta Lee, Inc.                                                        Florida
                Covanta Long Island, Inc.                                                Delaware
                Covanta Marion Land Corp.                                                Oregon
                Covanta Marion, Inc.                                                     Oregon
                Covanta Mid-Conn, Inc.                                                   Connecticut
                Covanta Montgomery, Inc.                                                 Maryland
                Covanta New Martinsville Hydroelectric Corporation                       Delaware
                Covanta New Martinsville Hydro-Operations Corporation                    West Virginia
                Covanta Oahu Waste Energy Recovery, Inc.                                 California
                Covanta Omega Lease, Inc.                                                Delaware
                Covanta Onondaga Five Corp.                                              Delaware
                Covanta Onondaga Four Corp.                                              Delaware
                Covanta Onondaga, Limited Partnership                                    Delaware
                Covanta Onondaga Operations, Inc.                                        Delaware
                Covanta Onondaga Three Corp.                                             Delaware
                Covanta Onondaga Two Corp.                                               Delaware
                Covanta Onondaga, Inc.                                                   New York
                Covanta Operations of Union, LLC                                         New Jersey
                Covanta OPW Associates, Inc.                                             Connecticut
                Covanta OPWH, Inc.                                                       Delaware
                Covanta Pasco, Inc.                                                      Florida
                Covanta Plant Services of New Jersey, Inc.                               New Jersey
                Covanta Power Development of Bolivia, Inc.                               Delaware
                Covanta Power Development, Inc.                                          Delaware
                Covanta Power Equity Corporation                                         Delaware
                Covanta Power International Holdings, Inc.                               Delaware
                Covanta Power Pacific, Inc.                                              California
                Covanta Power Plant Operations                                           California
                Covanta Projects of Hawaii, Inc.                                         Hawaii
                Covanta Projects of Wallingford, L.P.                                    Delaware
                Covanta Projects, Inc.                                                   Delaware
                Covanta RRS Holdings, Inc.                                               Delaware
                Covanta SBR Associates                                                   Massachusetts
                Covanta Secure Services, Inc.                                            Delaware
                Covanta SIGC Energy II, Inc.                                             California
                Covanta SIGC Energy, Inc.                                                Delaware
                Covanta SIGC Geothermal Operations, Inc.                                 California
                Covanta Stanislaus, Inc.                                                 California
                Covanta Systems, LLC                                                     Delaware
                Covanta Tampa Bay, Inc.                                                  Florida
</Table>

<PAGE>

<Table>
<Caption>
                COMPANY NAME                                                             JURISDICTION OF
                                                                                         INCORPORATION
<S>             <C>                                                                      <C>
                Covanta Tampa Construction, Inc.                                         Delaware
                Covanta Union, Inc.                                                      New Jersey
                Covanta Wallingford Associates, Inc.                                     Connecticut
                Covanta Warren Energy Resource Co., Limited Partnership                  Delaware
                Covanta Warren Holdings I, Inc.                                          Virginia
                Covanta Warren Holdings II, Inc.                                         California
                Covanta Waste to Energy of Italy, Inc.                                   Delaware
                Covanta Waste to Energy, LLC                                             Delaware
                Covanta Water Holdings, Inc.                                             Delaware
                Covanta Water Systems, Inc.                                              Delaware
                Covanta Water Treatment Services, Inc.                                   Delaware
                DSS Environmental, Inc.                                                  New York
                ERC Energy II, Inc.                                                      Delaware
                ERC Energy, Inc.                                                         Delaware
                Generating Resource Recovery Partners L.P.                               California
                Great River Insurance Company                                            California
                Haverhill Power, LLC                                                     Massachusetts
                Heber Field Energy II, Inc.                                              Delaware
                Heber Loan Partners                                                      California
                LMI, Inc.                                                                Massachusetts
                Mammoth Geothermal Company                                               California
                Mammoth Power Company                                                    California
                Michigan Waste Energy, Inc.                                              Delaware
                Mt. Lassen Power                                                         California
                OPI Quezon, Inc.                                                         Delaware
                Pacific Energy Operating Group, L.P.                                     California
                Pacific Energy Resources Incorporated                                    California
                Pacific Geothermal Company                                               California
                Pacific Hydropower Company                                               California
                Pacific Oroville Power, Inc.                                             California
                Pacific Recovery Corporation                                             California
                Pacific Wood Fuels Company                                               California
                Covanta Otay 3 Company                                                   California
                Penstock Power Company                                                   California
                Three Mountain Operations, Inc.                                          Delaware
                Three Mountain Power, LLC                                                Delaware
                American Ref-Fuel Holdings Corp.                                         Delaware
                American Ref-Fuel Company LLC                                            Delaware
                ARC Ref-Fuel Management LLC                                              Delaware
                ARC Ref-Fuel Management II, Inc.                                         Delaware
                American Ref-Fuel Company (a general partnership)                        Delaware
</Table>

<PAGE>

<Table>
<Caption>
                COMPANY NAME                                                             JURISDICTION OF
                                                                                         INCORPORATION
<S>             <C>                                                                      <C>
                ARC Hempstead LLC                                                        Delaware
                ARC Hempstead II, Inc.                                                   Delaware
                American Ref-Fuel Company of Hempstead                                   New York
                ARC Essex LLC                                                            Delaware
                ARC Essex II, Inc.                                                       Delaware
                American Ref-Fuel Company of Essex County                                New Jersey
                ARC SECONN LLC                                                           Delaware
                ARC of Connecticut (S.E.), Inc.                                          Delaware
                ARC of Southeastern Connecticut, L.P.                                    Delaware
                American Ref-Fuel Company of Southeastern Connecticut                    Connecticut
                ARC Niagara LLC                                                          Delaware
                ARC Niagara II, Inc.                                                     Delaware
                American Ref-Fuel Company of Niagara, L.P.                               Delaware
                ARC Operations of SEMASS LLC                                             Delaware
                ARC Operations of SEMASS II, Inc.                                        Delaware
                American Ref-Fuel Operations of SEMASS, L.P.                             Delaware
                American Ref-Fuel Company of SEMASS, L.P.                                Delaware
                ARC SEMASS LLC                                                           Delaware
                ARC SEMASS II, Inc.                                                      Delaware
                SEMASS Partnership                                                       Massachusetts
                ARC Delaware Valley LLC                                                  Delaware
                ARC Delaware Valley II, Inc.                                             Delaware
                American Ref-Fuel Company of Delaware Valley, L.P.                       Delaware
                ARC TransRiver LLC                                                       Delaware
                ARC TransRiver II, Inc.                                                  Delaware
                TransRiver Marketing Company, L.P.                                       Delaware
                ARC Transfer Systems LLC                                                 Delaware
                ARC Waste LLC                                                            Delaware
                ARC Capital District LLC                                                 Delaware
                ARC Capital District II LLC                                              Delaware
                American Ref-Fuel Company of the Capital District, L.P.                  Delaware
                Ref-Fuel Corp.                                                           Delaware
                UAH-Groveville Hydro Associates                                          New York
                UAH Management Corp.                                                     New York
                Ref-Fuel LLC                                                             Delaware
                ARC II Corp.                                                             Delaware
                Ref-Fuel Holdings LLC                                                    Delaware
                MSW Energy Holdings LLC                                                  Delaware
                MSW Energy Holdings II LLC                                               Delaware
                MSW Energy Finance Co., Inc.                                             Delaware
                MSW Energy Finance Co. II, Inc.                                          Delaware
                MSW Energy Hudson LLC                                                    Delaware
</Table>

<PAGE>

<Table>
<Caption>
                COMPANY NAME                                                             JURISDICTION OF
                                                                                         INCORPORATION
<S>             <C>                                                                      <C>
                MSW I Sub, Inc.                                                          Delaware
                American Ref-Fuel Company of Camden LLC                                  Delaware
                Ogden HCI Services                                                       N/A(1)
                Edison (Bataan) Cogeneration Corporation                                 Philippines
                Hidro Operaciones Don Pedro S.A.                                         Costa Rica
                Covanta Energy India (Balaji) Limited                                    Mauritius
                Covanta Energy India Investments, Ltd.                                   Mauritius
                Covanta Energy India (Samalpatti) Ltd.                                   Mauritius
                Covanta Energy Philippine Holdings, Inc.                                 Philippines
                Ogden Power Development-Cayman, Inc.                                     Cayman Islands
                Covanta Philippines Operating, Inc.                                      Cayman Islands
                Madurai Power Corporation Pvt. Ltd.                                      India
                Covanta Bangladesh Operating Ltd.                                        Bangladesh
                Covanta Chinese Investments Ltd.                                         Mauritius
                Covanta Energy China (Alpha) Ltd.                                        Mauritius
                Linan Ogden-Jinjiang Cogeneration Co. Ltd.                               China
                Covanta Energy China (Beta) Ltd.                                         Mauritius
                Zibo Ogden Bohui Cogeneration Co. Ltd.                                   China
                Covanta Energy China (Delta) Ltd.                                        Mauritius
                Taixing Ogden-Yanjiang Cogeneration Co. Ltd.                             China
                Covanta Energy China (Gamma) Ltd.                                        Mauritius
                Covanta One Ltd.                                                         Mauritius
                Covanta Five Ltd.                                                        Mauritius
                Covanta Samalpatti Operating Pvt. Ltd.                                   India
                Covanta Madurai Operating Pvt. Ltd.                                      India
                Goa Holdings Ltd.                                                        Mauritius
                Magellan Cogeneration, Inc.                                              Philippines
                El Gorguel Energia S.L.                                                  Spain
                Covanta Operaciones LICA S.L.                                            Spain
                Ogden Energy of Bongaigon Pvt. Ltd.                                      India
                Enereurope Holdings III, B.V.                                            Netherlands
                Ogden Energy (Gulf) Limited                                              Mauritius
                Ogden Energy India (Bakreshwar) Ltd.                                     Mauritius
                Bal-Sam India Holdings, Ltd.                                             Mauritius
                Covanta Energy India (CBM) Ltd.                                          Mauritius
                Covanta Two Ltd.                                                         Mauritius
                Covanta Cayman (Sahacogen) Ltd.                                          Cayman Islands
                Covanta Three Ltd.                                                       Mauritius
                Covanta Cayman (Rojana) Ltd.                                             Cayman Islands
                Covanta Four Ltd.                                                        Mauritius
</Table>
-----------
(1) Entity inactive and jurisdiction of formation is not determinable
<PAGE>

<Table>
<Caption>
                COMPANY NAME                                                             JURISDICTION OF
                                                                                         INCORPORATION
<S>             <C>                                                                      <C>
                Power Operations and Maintenance Ltd.                                    Bermuda
                Covanta India Operating Pvt. Ltd.                                        India
                Ogden Taiwan Investments Ltd.                                            Mauritius
                OPDB, Ltd.                                                               Cayman Islands
                Covanta Energy India Pvt. Ltd.                                           India
                Covanta Energy (Thailand) Ltd.                                           Thailand
                Covanta Energy Asia Pacific Ltd.                                         Hong Kong
                Covanta Waste to Energy Asia Investments                                 Mauritius
                Olmec Insurance Ltd.                                                     Bermuda
                OPI Carmona Limited                                                      Cayman Islands
                OPI Carmona One Limited                                                  Cayman Islands
                Covanta Energy Europe Limited                                            United Kingdom
</Table>

<PAGE>

                                  SCHEDULE 4.2

                           CAPITAL STOCK AND OWNERSHIP

(A) Covanta and Certain of its Domestic Subsidiaries

<Table>
<Caption>
                        NAME                                                                              DESCRIPTION OF
                                                                                                           ANTICIPATED
                   (JURISDICTION OF                                                                    OWNERSHIP AS OF THE
                     ORGANIZATION)                      CAPITAL STOCK OR EQUITY INTERESTS                  CLOSING DATE
          ----------------------------------- ------------------------------------------------- -------------------------------
<S>       <C>                                 <C>                                               <C>
1.         8309 Tujunga Avenue Corp.            Issued: 10 shares
           (California)                                                                           100% owned by Covanta Power
                                                                                                  Pacific, Inc.

2.         AMOR 14 Corporation (Delaware)       Issued:  5,000 shares
                                                                                                  100% owned by Covanta SIGC
                                                                                                  Energy Inc.

3.         Burney Mountain Power                Issued: 10 shares
           (California)                                                                           100% owned by Covanta Power
                                                                                                  Pacific, Inc.

4.         Covanta Acquisition, Inc.            Issued: 100 shares
           (Delaware)                                                                             100% owned by Covanta Water
                                                                                                  Systems, Inc.

5.         Covanta Alexandria/Arlington,        Issued: 1,000 shares
           Inc.                                                                                   100% owned by Covanta
           (Virginia)                                                                             Systems, LLC.

6.         Covanta Babylon, Inc.                Issued: 100 shares
           (New York)                                                                             100% owned by Covanta
                                                                                                  Systems, LLC

7.         Covanta Bessemer, Inc. (Delaware)    Issued: 100 shares
                                                                                                  100% owned by Covanta Water
                                                                                                  Systems, Inc.

8.         Covanta Bristol, Inc.                Issued: 100 shares
           (Connecticut)                                                                          100% owned by Covanta
                                                                                                  Systems, LLC

9.         Covanta Cunningham                   Issued: 10 shares issued; no par value
           Environmental Support                                                                  100% owned by Covanta
           Services, Inc.                                                                         Acquisition, Inc.
           (New York)

10.        Covanta Energy Americas, Inc.        Issued: 1,000 shares
           (Delaware)                                                                             100% owned by Covanta
                                                                                                  Energy West, Inc.
</Table>

<PAGE>

<Table>
<Caption>
                        NAME                                                                              DESCRIPTION OF
                                                                                                           ANTICIPATED
                   (JURISDICTION OF                                                                    OWNERSHIP AS OF THE
                     ORGANIZATION)                      CAPITAL STOCK OR EQUITY INTERESTS                  CLOSING DATE
          ----------------------------------- ------------------------------------------------- -------------------------------
<S>       <C>                                 <C>                                               <C>
11.        Covanta Energy Construction, Inc.    Issued: 100 shares
           (Delaware)                                                                             100% owned by Covanta
                                                                                                  Energy Americas, Inc.

12.        Covanta Energy Europe Limited        Issued: 1,000,000 shares
           (UK)
                                                                                                  100% owned by Covanta Energy
                                                                                                  West, Inc.

13.        Covanta Energy Group, Inc.           Issued: 100 shares
           (Delaware)                                                                             100% owned by Covanta
                                                                                                  Energy Corporation

14.        Covanta Energy International,        Issued: 100 shares
           Inc.                                                                                   100% owned by Covanta
           (Delaware)                                                                             Projects, Inc.

15.        Covanta Energy Resource Corp.        Issued: 1,000 shares
           (Delaware)                                                                             100% owned by Covanta Waste
                                                                                                  to Energy, LLC

16.        Covanta Energy Services, Inc.        Issued: 100 shares
           (Delaware)                                                                             100% owned by Covanta Waste
                                                                                                  to Energy, LLC

17.        Covanta Energy West, Inc.            Issued: 100 shares
           (Delaware)                                                                             100% owned by Covanta
                                                                                                  Energy International, Inc.

18.        Covanta Engineering Services,        Issued: 100 shares
           Inc.                                                                                   100% owned by Covanta
           (New Jersey)                                                                           Systems, LLC

19.        Covanta Warren Holdings, Inc.        Issued: 100 shares
           (f/k/a Covanta Equity of                                                               100% owned by Covanta
           Arlington/Alexandria, Inc.)                                                            Systems, LLC
           (Virginia)

20.        Covanta Warren Holdings II, Inc.     Issued: 100 shares
           (f/k/a Covanta Equity of                                                               100% owned by Covanta
           Stanislaus, Inc.)                                                                      Systems, LLC
           (California)

21.        Covanta Fairfax, Inc.                Issued: 100 shares
           (Virginia)                                                                             100% owned by Covanta
                                                                                                  Systems, LLC
</Table>

<PAGE>

<Table>
<Caption>
                        NAME                                                                              DESCRIPTION OF
                                                                                                           ANTICIPATED
                   (JURISDICTION OF                                                                    OWNERSHIP AS OF THE
                     ORGANIZATION)                      CAPITAL STOCK OR EQUITY INTERESTS                  CLOSING DATE
          ----------------------------------- ------------------------------------------------- -------------------------------
      <C>                                 <C>                                               <C>
22.        Covanta Geothermal Operations        Issued: 100 shares
           Holdings, Inc.                                                                         100% owned by Covanta
           (Delaware)                                                                             Energy Americas, Inc.

23.        Covanta Geothermal Operations,       Issued: 1,500 shares
           Inc.                                                                                   100% owned by Covanta
           (Delaware)                                                                             Energy Americas, Inc.

24.        Covanta Haverhill Properties,        Issued: 100 shares
           Inc.                                                                                   100% owned by Covanta
           (Massachusetts)                                                                        Systems, LLC

25.        Covanta Haverhill, Inc.              Issued: 100 shares
           (Massachusetts)                                                                        100% owned by Covanta
                                                                                                  Systems, LLC

26.        Covanta Heber Field Energy, Inc.     Issued: 1500 shares
           (Delaware)                                                                             100% owned by Covanta Power
                                                                                                  Equity Corporation

27.        Covanta Hillsborough, Inc.           Issued:  100 shares
           (Florida)                                                                              100% owned by Covanta
                                                                                                  Systems, LLC

28.        Covanta Huntington Resource          Issued:  1,000 shares
           Recovery One Corp.                                                                     100% owned by Covanta
           (Delaware)                                                                             Systems, LLC

29.        Covanta Huntington Resource          Issued: 100 shares
           Recovery Seven Corp.                                                                   100% owned by Covanta
           (Delaware)                                                                             Systems, LLC

30.        Covanta Huntsville, Inc.             Issued: 100 shares
           (Alabama)                                                                              100% owned by Covanta
                                                                                                  Systems, LLC

31.        Covanta Hydro Energy, Inc.           Issued: 1,500 shares
           (Delaware)                                                                             100% owned by Covanta Power
                                                                                                  Equity Corporation

32.        Covanta Hydro Operations             Issued: 100 shares
           West, Inc.                                                                             100% owned by Covanta
           (Delaware)                                                                             Energy Americas, Inc.
</Table>

<PAGE>

<Table>
<Caption>
                        NAME                                                                              DESCRIPTION OF
                                                                                                           ANTICIPATED
                   (JURISDICTION OF                                                                    OWNERSHIP AS OF THE
                     ORGANIZATION)                      CAPITAL STOCK OR EQUITY INTERESTS                  CLOSING DATE
          ----------------------------------- ------------------------------------------------- -------------------------------
      <C>                                 <C>                                               <C>
33.        Covanta Hydro Operations, Inc.       Issued: 100 shares
           (Tennessee)                                                                            100% owned by Covanta
                                                                                                  Energy Americas, Inc.

34.        Covanta Imperial Power               Issued: 1,000 shares
           Services, Inc.                                                                         100% owned by Covanta
           (California)                                                                           Energy Americas, Inc.

35.        Covanta Indianapolis, Inc.           Issued: 100 shares
           (Indiana)                                                                              100% owned by Covanta
                                                                                                  Systems, LLC

36.        Covanta Kent, Inc.                   Issued: 100 shares
           (Michigan)                                                                             100% owned by Covanta
                                                                                                  Systems, LLC

37.        Covanta Lake II, Inc.                Issued: 750 shares common
           (Florida)                                                                              75% owned by Covanta
                                                Issued: 250 shares preferred                      Systems, LLC

38.        Covanta Lancaster, Inc.              Issued: 100 shares
           (Pennsylvania)                                                                         100% owned by Covanta
                                                                                                  Systems, LLC

39.        Covanta Lee, Inc.                    Issued: 100 shares
           (Florida)                                                                              100% owned by Covanta
                                                                                                  Systems, LLC

40.        Covanta Long Island, Inc.            Issued: 100 shares
           (Delaware)                                                                             100% owned by Covanta
                                                                                                  Systems, LLC

41.        Covanta Marion Land Corp.            Issued to Covanta: 1000 common shares
           (Oregon)                                                                               76.923% owned by Covanta
                                                                                                  Systems, LLC

                                                                                                  23.177% owned by a third
                                                                                                  party

42.        Covanta Marion, Inc.                 Issued: 10 shares
           (Oregon)                                                                               100% owned by Covanta
                                                                                                  Systems, LLC

43.        Covanta Mid-Conn, Inc.               Issued: 1,000 shares
           (Connecticut)
                                                                                                  100% owned by Covanta RRS
                                                                                                  Holdings, Inc.
</Table>

<PAGE>

<Table>
<Caption>
                        NAME                                                                              DESCRIPTION OF
                                                                                                           ANTICIPATED
                   (JURISDICTION OF                                                                    OWNERSHIP AS OF THE
                     ORGANIZATION)                      CAPITAL STOCK OR EQUITY INTERESTS                  CLOSING DATE
          ----------------------------------- ------------------------------------------------- -------------------------------
      <C>                                 <C>                                               <C>
44.        Covanta Montgomery, Inc.             Issued: 100 shares
           (Maryland)                                                                             100% owned by Covanta
                                                                                                  Systems, LLC

45.        Covanta New Martinsville             Issued: 10 shares
           Hydroelectric Corporation                                                              100% owned by Covanta Power
           (Delaware)                                                                             Equity Corporation

46.        Covanta New Martinsville             Issued: 400 shares
           Hydro-Operations Corporation                                                           100% owned by Covanta
           (West Virginia)                                                                        Energy Americas, Inc.

47.        Covanta Oahu Waste Energy            Issued: 1,000 shares
           Recovery Inc.                                                                          100% owned by Covanta RRS
           (California)                                                                           Holdings, Inc.

48.        Covanta Omega Lease, Inc.
           (Delaware)                                                                             100% owned by Covanta
                                                Issued: 1,000 shares                              Haverhill, Inc.

49.        Covanta Onondaga Five Corp.          Issued: 100 shares
           (Delaware)                                                                             100% owned by Covanta
                                                                                                  Systems, LLC

50.        Covanta Onondaga Four Corp.          Issued: 100 shares
           (Delaware)                                                                             100% owned by Covanta
                                                                                                  Systems, LLC

51.        Covanta Onondaga Operations, Inc.    Issued: 100 shares
           (Delaware)                                                                             100% owned by Covanta
                                                                                                  Systems, LLC

52.        Covanta Onondaga Three Corp.         Issued: 100 shares
           (Delaware)                                                                             100% owned by Covanta
                                                                                                  Systems, LLC

53.        Covanta Onondaga Two Corp.           Issued: 100 shares
           (Delaware)                                                                             100% owned by Covanta
                                                                                                  Systems, LLC

54.        Covanta Onondaga, Inc.               Issued: 100 shares
           (New York)                                                                             100% owned by Covanta
                                                                                                  Systems, LLC

55.        Covanta OPW Associates, Inc.         Issued: 100 shares
           (Connecticut)                                                                          100% owned by Covanta Waste
                                                                                                  to Energy, LLC
</Table>

<PAGE>

<Table>
<Caption>
                        NAME                                                                              DESCRIPTION OF
                                                                                                           ANTICIPATED
                   (JURISDICTION OF                                                                    OWNERSHIP AS OF THE
                     ORGANIZATION)                      CAPITAL STOCK OR EQUITY INTERESTS                  CLOSING DATE
          ----------------------------------- ------------------------------------------------- -------------------------------
      <C>                                 <C>                                               <C>
56.        Covanta OPWH, Inc.                   Issued: 100 shares
           (Delaware)                                                                             100% owned by Covanta Waste
                                                                                                  to Energy, LLC

57.        Covanta Pasco, Inc.                  Issued: 100 shares
           (Florida)                                                                              100% owned by Covanta
                                                                                                  Systems, LLC

58.        Covanta Plant Services of New        Issued: 100 shares
           Jersey, Inc.                                                                           100% owned by Covanta
           (New Jersey)                                                                           Energy Services, Inc.

59.        Covanta Power Equity                 Issued: 1,000 shares of Common Class A
           Corporation                                                                            100% owned by Covanta
           (Delaware)                                                                             Energy Americas, Inc.

60.       Covanta Power International           Issued:  1,000 shares
          Holdings, Inc.                                                                          100% owned by Covanta
           (Delaware)                                                                             Energy Americas, Inc.

61.        Covanta Power Pacific, Inc.          Issued: 10 shares
           (California)                                                                           100% owned by Covanta
                                                                                                  Energy Americas, Inc.

62.        Covanta Power Plant                  Issued: 10 shares
           Operations                                                                             100% owned by Covanta Power
           (California)                                                                           Pacific, Inc.

63.        Covanta Projects of Hawaii, Inc.     Issued: 1,000 shares
           (Hawaii)
                                                                                                  100% owned by Covanta RRS
                                                                                                  Holdings, Inc.

64.        Covanta Projects, Inc.               Issued: 1,000 shares
           (Delaware)                                                                             100% owned by Covanta
                                                                                                  Energy Group, Inc.

65.        Covanta RRS Holdings Inc.            Issued: 100 shares
           (Delaware)                                                                             100% owned by Covanta Waste
                                                                                                  to Energy, LLC

66.        Covanta Secure Services, Inc         Issued: 100 shares
           (Delaware)                                                                             100% owned by Covanta Waste
                                                                                                  to Energy, LLC

67.        Covanta SIGC Energy, Inc.            Issued:  1,000 shares
           (California)                                                                           100% owned by Covanta
                                                                                                  Energy Americas, Inc.
</Table>

<PAGE>

<Table>
<Caption>
                        NAME                                                                              DESCRIPTION OF
                                                                                                           ANTICIPATED
                   (JURISDICTION OF                                                                    OWNERSHIP AS OF THE
                     ORGANIZATION)                      CAPITAL STOCK OR EQUITY INTERESTS                  CLOSING DATE
          ----------------------------------- ------------------------------------------------- -------------------------------
      <C>                                 <C>                                               <C>

68.        Covanta SIGC Energy II, Inc.         Issued:  1,000 shares
           (California                                                                            100% owned by Covanta
                                                                                                  Energy Americas, Inc.

69.        Covanta SIGC Geothermal              Issued: 500 shares
           Operations, Inc.                                                                       100% owned by Covanta
           (Delaware)                                                                             Energy Americas, Inc.

70.        Covanta Stanislaus, Inc.             Issued: 100 shares
           (California)                                                                           100% owned by Covanta
                                                                                                  Systems, LLC

71.        Covanta Systems LLC                  Limited Liability Company
           (Delaware)                                                                             100% owned by Covanta Waste
                                                                                                  to Energy, LLC

72.        Covanta Tampa Bay, Inc.              Issued: 100 shares
           (Florida)                                                                              100% owned by Covanta Water
                                                                                                  Systems, Inc.

73.        Covanta Tampa Construction, Inc.     Issued: 100 shares
           (Delaware)                                                                             100% owned by Covanta Water
                                                                                                  Systems, Inc.

74.        Covanta Union, Inc.                  Issued: 100 shares                                100% owned by Covanta
           (New Jersey)                                                                           Systems, LLC.

75.        Covanta Wallingford Associates,      Issued: 100 shares
           Inc.                                                                                   100% owned by Covanta Waste
           (Connecticut)                                                                          to Energy, LLC

76.        Covanta Waste to Energy Asia         Issued: 2 shares issued at $1.00
           Investments*                         par value                                         100% owned by Covanta Waste
           (Mauritius)                                                                            to Energy, LLC

77.        Covanta Waste to Energy LLC          Issued: 100 shares
           (Delaware)                                                                             100% owned by Covanta
                                                                                                  Projects, Inc.

78.        Covanta Water Holdings, Inc.         Issued: 100 shares
           (Delaware)                                                                             100% owned by Covanta
                                                                                                  Projects, Inc.

79.        Covanta Water Systems, Inc.          Issued: 100 shares
           (Delaware)                                                                             100% owned by Covanta Water
                                                                                                  Holdings, Inc.
</Table>

<PAGE>

<Table>
<Caption>
                        NAME                                                                              DESCRIPTION OF
                                                                                                           ANTICIPATED
                   (JURISDICTION OF                                                                    OWNERSHIP AS OF THE
                     ORGANIZATION)                      CAPITAL STOCK OR EQUITY INTERESTS                  CLOSING DATE
          ----------------------------------- ------------------------------------------------- -------------------------------
      <C>                                 <C>                                               <C>
80.        Covanta Water Treatment              Issued: 100 shares
           Services, Inc.                                                                         100% owned by Covanta Water
           (Delaware)                                                                             Holdings, Inc.

81.        ERC Energy II, Inc.                  Issued: 100 shares
           (Delaware)                                                                             100% owned by Covanta Power
                                                                                                  Equity Corporation

82.        ERC Energy, Inc.                     Issued: 1,000 shares
           (Delaware)                                                                             100% owned by Covanta Power
                                                                                                  Equity Corporation

83.        Haverhill Power LLC                  Issued: 10,000 shares
           (Delaware)                                                                             100% owned by Covanta
                                                                                                  Haverhill, Inc.

84.        Heber Field Energy II, Inc.          Issued: 100 shares
           (Delaware)                                                                             100% owned by Covanta Power
                                                                                                  Equity Corporation

85.        LMI, Inc.                            Issued:  10,000 shares
           (Massachusetts)                                                                        100% owned by Haverhill
                                                                                                  Power,LLC

86.        Mammoth Geothermal Company           Issued: 10 shares
           (California)                                                                           100% owned by Covanta Power
                                                                                                  Pacific, Inc.

87.        Mammoth Power Company                Issued: 10 shares
           (California)                                                                           100% owned by Covanta Power
                                                                                                  Pacific, Inc.

88.        Michigan Waste Energy, Inc.          Issued: 1,000 shares
                                                                                                  100% owned by Covanta RRS
                                                                                                  Holdings, Inc.

89.        Mt. Lassen Power                     Issued: 10 shares
           (California)                                                                           100% owed by Covanta
                                                                                                  Power Pacific, Inc.

90.        Olmec Insurance, Ltd. (Bermuda)      Issued: 1,000,000 common shares
                                                                                                  100% owned by Covanta
                                                                                                  Energy Group, Inc.

91.        OPI Carmona Limited                  Issued: 100 shares issued at $1.00 par value
           (Cayman Islands)                                                                       100% owned by Covanta Waste
           (To be dissolved)                                                                      to Energy, LLC
</Table>

<PAGE>

<Table>
<Caption>
                        NAME                                                                              DESCRIPTION OF
                                                                                                           ANTICIPATED
                   (JURISDICTION OF                                                                    OWNERSHIP AS OF THE
                     ORGANIZATION)                      CAPITAL STOCK OR EQUITY INTERESTS                  CLOSING DATE
          ----------------------------------- ------------------------------------------------- -------------------------------
<S>      <C>                                 <C>                                               <C>

92.        OPI Carmona One Limited              Issued: 100 shares issued $1.00 par value
           (Cayman Islands)                                                                       100% owned by Covanta Waste
           (To be dissolved)                                                                      to Energy, LLC

93.        Pacific Energy Resources             Issued: 10 shares
           Incorporated                                                                           100% owned by Covanta Power
           (California)                                                                           Pacific, Inc.

94.        Pacific Geothermal Company           Issued: 10 shares
           (California)                                                                           100% owned by Covanta Power
                                                                                                  Pacific, Inc.

95.        Pacific Hydropower Company           Issued: 10 shares
           (California)                                                                           100% owned by Covanta Power
                                                                                                  Pacific, Inc.

96.        Pacific Oroville Power, Inc.         Issued: 1,000 shares
           (California)                                                                           100% owned by Covanta Power
                                                                                                  Pacific, Inc.

97.        Pacific Recovery Corporation         Issued: 10 shares
           (California)                                                                           100% owned by Covanta Power
                                                                                                  Pacific, Inc.

98.        Pacific Wood Fuels Company           Issued: 10 shares
           (California)                                                                           100% owned by Covanta Power
                                                                                                  Pacific, Inc.

99.        Covanta Otay 3 Company (fka          Issued: 10 shares
           Pacific Wood Services                                                                  100% owned by Covanta Power
           Company)                                                                               Pacific, Inc.
           (California)

100.       Penstock Power Company               Issued: 10 shares
           (California)                                                                           100% owned by Covanta Power
                                                                                                  Pacific, Inc.

101.       Three Mountain Operations, Inc.      Issued: 100 shares
           (Delaware)                                                                             100% owned by Covanta
                                                                                                  Energy Americas, Inc.

102.       Three Mountain Power, LLC            Issued: 100 shares
           (Delaware)                                                                             100% owned by Covanta
                                                                                                  Energy Americas, Inc.

</Table>

<PAGE>
(B) Subsidiaries of American Ref-Fuel Holding Corp.

<Table>
<Caption>
                          NAME                                                                             DESCRIPTION OF
                                                                                                             ANTICIPATED
                    (JURISDICTION OF                                                                    OWNERSHIP AS OF THE
                      ORGANIZATION)                    CAPITAL STOCK OR EQUITY INTERESTS                   CLOSING DATE
          ----------------------------------- ------------------------------------------------- -------------------------------
<S>       <C>                                 <C>                                               <C>
1.        American Ref-Fuel Company of          General Partnership
          Hempstead (New York)                                                                    100% directly and/or
                                                                                                  indirectly owned by
                                                                                                  American Ref-Fuel Company
                                                                                                  LLC

2.        American Ref-Fuel Company of          General Partnership
          Essex County (New Jersey)                                                               100% directly and/or
                                                                                                  indirectly owned by
                                                                                                  American Ref-Fuel Company
                                                                                                  LLC

3.        American Ref-Fuel Company of          Limited Partnership
          Niagara, L.P. (Delaware)                                                                100% directly and/or
                                                                                                  indirectly owned by
                                                                                                  American Ref-Fuel Company
                                                                                                  LLC

4.        American Ref-Fuel Company of          General Partnership
          Southeastern Connecticut                                                                100% directly and/or
          (Connecticut)                                                                           indirectly owned by
                                                                                                  American Ref-Fuel Company
                                                                                                  LLC

5.        American Ref-Fuel Company of          Limited Partnership
          Delaware Valley, L.P. (Delaware)                                                        100% directly and/or
                                                                                                  indirectly owned by
                                                                                                  American Ref-Fuel Company
                                                                                                  LLC

6.        American Ref-Fuel Operations of       Limited Partnership
          SEMASS, L.P. (Delaware)                                                                 100% directly and/or
                                                                                                  indirectly owned by
                                                                                                  American Ref-Fuel Company
                                                                                                  LLC

7.        SEMASS Partnership                    Limited Partnership
          (Massachusetts)                                                                         90% directly and/or
                                                                                                  indirectly owned by
                                                                                                  American Ref-Fuel Company
                                                                                                  LLC

8.        American Ref-Fuel Company of          Limited Partnership
          SEMASS, L.P. (Delaware)                                                                 100% directly and/or
                                                                                                  indirectly owned by
                                                                                                  American Ref-Fuel Company
                                                                                                  LLC
</Table>

<PAGE>

<Table>
<Caption>
                          NAME                                                                             DESCRIPTION OF
                                                                                                             ANTICIPATED
                    (JURISDICTION OF                                                                    OWNERSHIP AS OF THE
                      ORGANIZATION)                    CAPITAL STOCK OR EQUITY INTERESTS                   CLOSING DATE
          ----------------------------------- ------------------------------------------------- -------------------------------
       <C>                                 <C>                                               <C>
9.        American Ref-Fuel Company of the      Limited Partnership
          Capital District, L.P.                                                                  100% directly and/or
          (Delaware)                                                                              indirectly owned by
                                                                                                  American Ref-Fuel Company
                                                                                                  LLC

10.       American Ref-Fuel Company             General Partnership
          (Delaware)                                                                              100% directly and/or
                                                                                                  indirectly owned by
                                                                                                  American Ref-Fuel Company
                                                                                                  LLC

11.       TransRiver Marketing Company,         Limited Partnership
          L.P.  (Delaware)                                                                        100% directly and/or
                                                                                                  indirectly owned by
                                                                                                  American Ref-Fuel Company
                                                                                                  LLC

12.       ARC Waste LLC                         Limited Liability Company
          (Delaware)                                                                              100% directly and/or
                                                                                                  indirectly owned by
                                                                                                  American Ref-Fuel Company
                                                                                                  LLC

13.       ARC Transfer Systems LLC              Limited Liability Company
          (Delaware)                                                                              100% directly and/or
                                                                                                  indirectly owned by
                                                                                                  American Ref-Fuel Company
                                                                                                  LLC

14.       ARC Hempstead LLC                     Limited Liability Company
          (Delaware)                                                                              100% directly and/or
                                                                                                  indirectly owned by
                                                                                                  American Ref-Fuel Company
                                                                                                  LLC

15.       ARC Hempstead II, Inc.                Issued:           100 Shares
          (Delaware)                                                                              100% directly and/or
                                                                                                  indirectly owned by
                                                                                                  American Ref-Fuel Company
                                                                                                  LLC

16.       ARC Essex LLC                         Limited Liability Company
          (Delaware)                                                                              100% directly and/or
                                                                                                  indirectly owned by
                                                                                                  American Ref-Fuel Company
                                                                                                  LLC
</Table>

<PAGE>

<Table>
<Caption>
                          NAME                                                                             DESCRIPTION OF
                                                                                                             ANTICIPATED
                    (JURISDICTION OF                                                                    OWNERSHIP AS OF THE
                      ORGANIZATION)                    CAPITAL STOCK OR EQUITY INTERESTS                   CLOSING DATE
          ----------------------------------- ------------------------------------------------- -------------------------------
       <C>                                 <C>                                               <C>
17.       ARC Essex II, Inc.                                  Issued: 100 Shares
          (Delaware)                                                                              100% directly and/or
                                                                                                  indirectly owned by
                                                                                                  American Ref-Fuel Company
                                                                                                  LLC

18.       ARC Niagara LLC                                 Limited Liability Company
          (Delaware)                                                                              100% directly and/or
                                                                                                  indirectly owned by
                                                                                                  American Ref-Fuel Company
                                                                                                  LLC

19.       ARC Niagara II, Inc. (Delaware)                     Issued: 100 Shares
                                                                                                  100% directly and/or
                                                                                                  indirectly owned by
                                                                                                  American Ref-Fuel Company
                                                                                                  LLC

20.       ARC SECONN LLC                                  Limited Liability Company
          (Delaware)                                                                              100% directly and/or
                                                                                                  indirectly owned by
                                                                                                  American Ref-Fuel Company
                                                                                                  LLC

21.       ARC of Connecticut (S.E.), Inc.                     Issued: 100 Shares
           (Delaware)                                                                             100% directly and/or
                                                                                                  indirectly owned by
                                                                                                  American Ref-Fuel Company
                                                                                                  LLC

22.       ARC of Southeastern Connecticut,                   Limited Partnership
          L.P. (Delaware)                                                                         100% directly and/or
                                                                                                  indirectly owned by
                                                                                                  American Ref-Fuel Company
                                                                                                  LLC

23.       ARC Delaware Valley LLC                         Limited Liability Company
          (Delaware)                                                                              100% directly and/or
                                                                                                  indirectly owned by
                                                                                                  American Ref-Fuel Company
                                                                                                  LLC

24.       ARC Delaware Valley II, Inc.                        Issued: 100 Shares
          (Delaware)                                                                              100% directly and/or
                                                                                                  indirectly owned by
                                                                                                  American Ref-Fuel Company
                                                                                                  LLC
</Table>

<PAGE>

<Table>
<Caption>
                          NAME                                                                             DESCRIPTION OF
                                                                                                             ANTICIPATED
                    (JURISDICTION OF                                                                    OWNERSHIP AS OF THE
                      ORGANIZATION)                    CAPITAL STOCK OR EQUITY INTERESTS                   CLOSING DATE
          ----------------------------------- ------------------------------------------------- -------------------------------
       <C>                                 <C>                                               <C>

25.       ARC Operations of SEMASS                        Limited Liability Company
          LLC (Delaware)                                                                          100% directly and/or
                                                                                                  indirectly owned by
                                                                                                  American Ref-Fuel Company
                                                                                                  LLC

26.       ARC SEMASS LLC                                  Limited Liability Company
          (Delaware)                                                                              100% directly and/or
                                                                                                  indirectly owned by
                                                                                                  American Ref-Fuel Company
                                                                                                  LLC

27.       ARC SEMASS II, Inc.                                 Issued: 100 Shares
          (Delaware)                                                                              100% directly and/or
                                                                                                  indirectly owned by
                                                                                                  American Ref-Fuel Company
                                                                                                  LLC

28.       ARC Operations of SEMASS II, Inc.                   Issued: 100 Shares
          (Delaware)                                                                              100% directly and/or
                                                                                                  indirectly owned by
                                                                                                  American Ref-Fuel Company
                                                                                                  LLC

29.       ARC Capital District LLC                        Limited Liability Company
          (Delaware)                                                                              100% directly and/or
                                                                                                  indirectly owned by
                                                                                                  American Ref-Fuel Company
                                                                                                  LLC

30.       ARC Capital District II LLC                     Limited Liability Company
          (Delaware)                                                                              100% directly and/or
                                                                                                  indirectly owned by
                                                                                                  American Ref-Fuel Company
                                                                                                  LLC

31.       ARC Ref-Fuel Management LLC                     Limited Liability Company
          (Delaware)                                                                              100% directly and/or
                                                                                                  indirectly owned by
                                                                                                  American Ref-Fuel Company
                                                                                                  LLC

32.       ARC Ref-Fuel Management II, Inc.                    Issued: 100 Shares
          (Delaware)                                                                              100% directly and/or
                                                                                                  indirectly owned by
                                                                                                  American Ref-Fuel Company
                                                                                                  LLC
</Table>

<PAGE>

<Table>
<Caption>
                          NAME                                                                             DESCRIPTION OF
                                                                                                             ANTICIPATED
                    (JURISDICTION OF                                                                    OWNERSHIP AS OF THE
                      ORGANIZATION)                    CAPITAL STOCK OR EQUITY INTERESTS                   CLOSING DATE
          ----------------------------------- ------------------------------------------------- -------------------------------
       <C>                                 <C>                                               <C>
33.       American Ref-Fuel Company LLC                   Limited Liability Company
          (Delaware)                                                                              100% directly or indirectly
                                                                                                  owned by American Ref-Fuel
                                                                                                  Holdings Corp.

34.       Ref-Fuel Holdings LLC                           Limited Liability Company
          (Delaware)                                                                              100% directly or indirectly
                                                                                                  owned by American Ref-Fuel
                                                                                                  Holdings Corp.

35.       MSW Energy Hudson LLC                           Limited Liability Company
          (Delaware)                                                                              100% directly or indirectly
                                                                                                  owned by American Ref-Fuel
                                                                                                  Holdings Corp.

36.       MSW Energy Holdings LLC                         Limited Liability Company
          (Delaware)                                                                              100% directly or indirectly
                                                                                                  owned by American Ref-Fuel
                                                                                                  Holdings Corp.

37.       MSW Energy Finance Co., Inc.                          Uncertificated
          (Delaware)                                                                              100% directly or indirectly
                                                                                                  owned by American Ref-Fuel
                                                                                                  Holdings Corp.

38.       ARC II Corp.                                       Issued: 1,000 Shares
          (Delaware)                                                                              100% directly or indirectly
                                                                                                  owned by American Ref-Fuel
                                                                                                  Holdings Corp.

39.       MSW Energy Holdings II LLC                      Limited Liability Company
          (Delaware)                                                                              100% directly or indirectly
                                                                                                  owned by American Ref-Fuel
                                                                                                  Holdings Corp.

40.       MSW Energy Finance Co. II, Inc.                       Uncertificated
          (Delaware)                                                                              100% directly or indirectly
                                                                                                  owned by American Ref-Fuel
                                                                                                  Holdings Corp.

41.       Ref-Fuel LLC                                    Limited Liability Company
          (Delaware)                                                                              100% directly or indirectly
                                                                                                  owned by American Ref-Fuel
                                                                                                  Holdings Corp.

42.       Ref-Fuel Corp.                                        Uncertificated
          (Delaware)                                                                              100% directly or indirectly
                                                                                                  owned by American Ref-Fuel
                                                                                                  Holdings Corp.
</Table>

<PAGE>

<Table>
<Caption>
                          NAME                                                                             DESCRIPTION OF
                                                                                                             ANTICIPATED
                    (JURISDICTION OF                                                                    OWNERSHIP AS OF THE
                      ORGANIZATION)                    CAPITAL STOCK OR EQUITY INTERESTS                   CLOSING DATE
          ----------------------------------- ------------------------------------------------- -------------------------------
       <C>                                 <C>                                               <C>

43.       American Ref-Fuel Holdings Corp.
          (Delaware)                                                                                 Prior to closing: See
                                                                                                            Annex A

                                                                                                     After closing: Covanta
                                                                                                       Energy Corporation

44.       MSW I Sub, Inc.                                     Issued: 100 Shares
                                                                                                  100% directly and/or
                                                                                                  indirectly owned by
                                                                                                  American Ref-Fuel Holdings
                                                                                                  Corp.

45.       UAH Management Corp.                                  Uncertificated
                                                                                                  100% directly and/or
                                                                                                  indirectly owned by
                                                                                                  American Ref-Fuel Holdings
                                                                                                  Corp.

46.       ARC TransRiver (Delaware) II, Inc.                  Issued: 100 Shares
                                                                                                  100% directly and/or
                                                                                                  indirectly owned by
                                                                                                  American Ref-Fuel Holdings
                                                                                                  Corp.

47.       ARC TransRiver LLC                              Limited Liability Company
          (Delaware)                                                                              100% directly and/or indirectly
                                                                                                  owned by American Ref-Fuel
                                                                                                  Holdings Corp.

48.       American Ref-Fuel Company of                    Limited Liability Company
          Camden LLC                                                                              100% directly and/or
          (Delaware)                                                                              indirectly owned by
                                                                                                  American Ref-Fuel Holdings
                                                                                                  Corp.

49.       UAH Groveville                                    Limited Liability Company
          Hydro Associates                                                                        100% directly and/or indirectly
                                                                                                  owned by American Ref-Fuel
                                                                                                  Holdings Corp.
</Table>

<PAGE>

(C) Certain Partnerships, Limited Liability Companies and Joint Ventures

<Table>
<Caption>
                        NAME                                                                             DESCRIPTION OF
                                                                                                           ANTICIPATED
                  (JURISDICTION OF                                                                     OWNERSHIP AS OF THE
                    ORGANIZATION)                      CAPITAL STOCK OR EQUITY INTERESTS                  CLOSING DATE
         ------------------------------------ ------------------------------------------------- -------------------------------
       <C>                                 <C>                                               <C>
1.         Covanta Haverhill Associates         Covanta Haverhill, Inc., General Partner - 88%
           (Massachusetts)                                                                        Covanta Haverhill, Inc.
                                                Haverhill Power, LLC, General Partner - 12%       88% General Partner
                                                                                                  Interest; Haverhill Power,
                                                                                                  LLC, 12% Limited Partner
                                                                                                  Interest

2.         Covanta Hennepin Energy Resource     Covanta Energy Resource Corp., General
           Co., Limited Partnership             Partner - 99%                                     Covanta Energy Resource
           (Delaware)                                                                             Corp. 99% General Partner
                                                Covanta OPWH, Inc, Limited Partner - 1%           Interest; Covanta OPWH 1%
                                                                                                  Limited Partner Interest

3.         Covanta Honolulu Resource            Covanta Projects of Hawaii, Inc., General
           Recovery Venture                     Partner - 50%                                     Covanta Projects of
           (Hawaii)                                                                               Hawaii, Inc. 50% GP
                                                Covanta Oahu Waste Energy Recovery, Inc.,         Interest; Covanta Oahu
                                                General Partner - 50%                             Waste Energy Recovery,
                                                                                                  Inc. 50% GP Interest

4.         Covanta Huntington Limited           Covanta Huntington Resource Recovery One          Covanta Huntington Resource
           Partnership                          Corp., Managing General Partner; Covanta          Recovery One Corp. and
           (Delaware)                           Huntington Resource Recovery Seven Corp.,         Covanta Huntington Resource
                                                General Partner; Mission Funding Zeta,            Recovery Seven Corp.
                                                Limited Partner; Pitney Bowes Credit              collectively, General
                                                Corporation, Limited Partner; Allstate            Partners; Mission Funding
                                                Insurance Company, Limited Partner                Zeta, Limited Partner;
                                                                                                  Pitney Bowes Credit Corporation,
                                                                                                  Limited Partner; Allstate
                                                                                                  Insurance Company, Limited
                                                                                                  Partner. Interests of each
                                                                                                  partner varies from time to time
                                                                                                  depending upon type of interest.
</Table>

<PAGE>

<Table>
<Caption>
                        NAME                                                                             DESCRIPTION OF
                                                                                                           ANTICIPATED
                  (JURISDICTION OF                                                                     OWNERSHIP AS OF THE
                    ORGANIZATION)                      CAPITAL STOCK OR EQUITY INTERESTS                  CLOSING DATE
         ------------------------------------ ------------------------------------------------- -------------------------------
       <C>                                 <C>                                               <C>
5.         Covanta Onondaga Limited             Covanta Onondaga, Inc., General Partner;          Covanta Onondaga, Inc.
           Partnership                          Covanta Onondaga Two Corp., General Partner;      Covanta Onondaga Two Corp.;
           (Delaware)                           Covanta Onondaga Three Corp., General             Covanta Onondaga Three
                                                Partner; Covanta Onondaga Four Corp., General     Corp.; Covanta Onondaga
                                                Partner; Covanta Onondaga Five Corp., General     Four Corp.; and Covanta
                                                Partner; Ford Motor Credit Company, Limited       Onondaga Five collectively
                                                Partner; Mariner Investment Strategies, Inc.,     own all General Partnership
                                                Limited Partner; IEA-COV. LLC, a Limited          interests; Ford Motor
                                                Partner                                           Credit Company is a limited
                                                                                                  partner; Mariner Investment
                                                                                                  Strategies, Inc. is a
                                                                                                  Limited Partner; IEA-COV,
                                                                                                  LLC is a limited partner.
                                                                                                  Limited partners get
                                                                                                  certain tax, income, and
                                                                                                  residual interests but
                                                                                                  Covanta subsidiaries own
                                                                                                  100% of GP interest.

6.         Covanta Operations of Union LLC      Covanta Projects, Inc. owns 99%                   Covanta Projects, Inc.
           (New Jersey)                         Covanta Waste to Energy, LLC owns 1%              99% Covanta Waste to
                                                                                                  Energy, LLC, 1% Interest.

7.         Covanta Projects of Wallingford,     Covanta OPW Associates, Inc., 2% General          Covanta OPW Associates,
           L.P.                                 Partner interest                                  Inc. 2% General Partner
           (Delaware)                           Covanta Wallingford Associates, Inc., 98%         Interest; Covanta
                                                Limited Partner interest                          Wallingford Associates,
                                                                                                  Inc. 98% Limited Partner
                                                                                                  Interest

8.         Covanta SBR Associates               Covanta Haverhill, Inc., 35% General Partner      Covanta Haverhill, Inc.
           (Massachusetts)                      Covanta Omega Lease, Inc., 65% General Partner    34.7% General Partner
                                                                                                  Interest; Covanta Omega
                                                                                                  Lease, Inc. 65.3% General
                                                                                                  Partner Interest

9.         Covanta Warren Energy Resource       Covanta Equity of Alexandira/Arlington, Inc.,     Covanta Equity of
           Co., Limited Partnership             99% General Partner                               Alexandira/Arlington, Inc.,
           (Delaware)                           Covanta Covanta Equity of Stanislaus, Inc.,       99% General Partner
                                                1% Limited Partner                                Covanta Covanta Equity of
                                                                                                  Stanislaus, Inc., 1%
                                                                                                  Limited Partner
</Table>

<PAGE>

<Table>
<Caption>
                        NAME                                                                             DESCRIPTION OF
                                                                                                           ANTICIPATED
                  (JURISDICTION OF                                                                     OWNERSHIP AS OF THE
                    ORGANIZATION)                      CAPITAL STOCK OR EQUITY INTERESTS                  CLOSING DATE
         ------------------------------------ ------------------------------------------------- -------------------------------
       <C>                                 <C>                                               <C>
10.        DSS Environmental, Inc.              Issued: 100 shares                                90% owned by Covanta Water
           (New York)                                                                             Systems, Inc. and 10% owned
                                                                                                  by individual shareholders.

11.
           Generating Resource Recovery         Pacific Recovery Corporation (a California        Pacific Recovery
           Partners L.P.                        Corporation), General Partner - 50%               Corporation 50% General
           (California)                                                                           Partner Interest; Covanta
                                                                                                  Power Pacific, Inc., 50% LP
                                                Covanta Power Pacific, Inc., Limited Partner      Interest
                                                - 50%

12.        Heber Loan Partners                  ERC Energy, Inc. - 50%                            ERC Energy, Inc. has a 50%
           (California)                         ERC Energy II, Inc. - 50%                         GP interest;
                                                                                                  ERC Energy II, Inc. has a
                                                                                                  50% GP interest.

13.
           Pacific Energy Operating Group LP    Pacific Recovery Corporation, General Partner     Pacific Recovery
           (California)                         - 50%                                             Corporation - 50% General
                                                                                                  Partner Interest; Covanta
                                                                                                  Power Pacific, Inc., - 50%
                                                Covanta Power Pacific, Inc., Limited Partner      Limited Partner
                                                - 50%

14.
           Ogden HCI Services                                                                     60% directly or indirectly
           (jurisdiction not determinable;                                                        owned by Covanta Energy
           entity believed to be dissolved)                                                       Corporation

                                                                                                  40% owned by third
                                                                                                  party(ies)
</Table>

(D) Subsidiaries of Covanta Power International Holdings Inc.

<Table>
<Caption>
                                                                                                        DESCRIPTION OF
                         NAME                                                                             ANTICIPATED
                   (JURISDICTION OF                                                                    OWNERSHIP AS OF THE
                     ORGANIZATION)                    CAPITAL STOCK OR EQUITY INTERESTS                   CLOSING DATE
         ------------------------------------ ------------------------------------------------- -------------------------------
      <C>                                  <C>                                               <C>
1.       Bal-Sam India Holdings Limited       Issued: 2 shares                                  100% owned by Covanta
         (Mauritius)                                                                            Energy India Investments
                                                                                                Ltd.
</Table>

<PAGE>

<Table>
<Caption>
                                                                                                        DESCRIPTION OF
                         NAME                                                                             ANTICIPATED
                   (JURISDICTION OF                                                                    OWNERSHIP AS OF THE
                     ORGANIZATION)                    CAPITAL STOCK OR EQUITY INTERESTS                   CLOSING DATE
         ------------------------------------ ------------------------------------------------- -------------------------------
      <C>                                  <C>                                               <C>
2.       Covanta Bangladesh Operating         Issued:  96 shares                                100% owned by Covanta Energy
         Limited                                                                                India Investments, Ltd.*
         (Bangladesh)                                                                           (*per Bangladeshi law each
                                                                                                Covanta director holds 1
                                                                                                share)

3.       Covanta Two Ltd.                     Issued: 2 shares                                  100% owned by Covanta Energy
         (Mauritius)                                                                            India Investments, Ltd.

4.       Covanta Cayman (Rojana) Ltd.         Issued: 3 shares issued at $1.00 par value        100% owned by Covanta Three
         (Cayman Islands)                                                                       Ltd.

5.       Covanta Cayman (Sahacogen) Ltd.      Issued: 3 shares issued at $1.00 par value        100% owned by Covanta Two Ltd.
         (Cayman Islands)

6.       Covanta Chinese Investments          Issued: 42,822,195 shares at U.S. $1.00 par       100% owned by Covanta Energy
         Ltd.                                 value                                             India Investments, Ltd.
         (Mauritius)

7.       Covanta Energy (Thailand) Ltd.       Issued:                                           100%* owned by Covanta Power
         (Thailand)                           9,800 ordinary shares (100 Baht ea.)              International Holdings,
                                              10,200 preferred shares (100 Baht ea.)            Inc.(*per Thai law 7 Covanta
                                              (Per Thai law 7 Covanta employees hold 1 share    employees hold 1 share each)
                                              each)

8.       Covanta Energy Asia Pacific Limited  Issued: 100 shares each at HK $10.00 par value    50% owned by Covanta Power
         (Hong Kong)                                                                            Development Inc. and 50%
                                                                                                owned by Covanta Power
                                                                                                International Holdings, Inc.

9.       Covanta Energy China (Alpha) Ltd.    Issued: 9,460,002 shares at $1.00 par value       100% owned by Covanta Chinese
         (Mauritius)                                                                            Investments Ltd.

10.      Covanta Energy China (Beta)          Issued: 12,000,002 shares issued at $1.00 par     100% owned by Covanta Chinese
         Ltd.                                 value                                             Investments Ltd.
         (Mauritius)

11.      Covanta Energy China (Delta)         Issued: 12,150,002 shares issued at $1.00 par     100% owned by Covanta Chinese
         Ltd.                                 value                                             Investments Ltd.
         (Mauritius)

12.      Covanta Energy China                 Issued: 7,350,002 shares issued at $1.00 par      100% owned by Covanta Chinese
         (Gamma) Ltd.                         value                                             Investments Ltd.
         (Mauritius)
</Table>

<PAGE>

<Table>
<Caption>
                                                                                                        DESCRIPTION OF
                         NAME                                                                             ANTICIPATED
                   (JURISDICTION OF                                                                    OWNERSHIP AS OF THE
                     ORGANIZATION)                    CAPITAL STOCK OR EQUITY INTERESTS                   CLOSING DATE
         ------------------------------------ ------------------------------------------------- -------------------------------
      <C>                                  <C>                                               <C>
13.      Covanta Energy India (Balaji)        Issued: 100,000 shares.                           100% owned by Covanta
         Ltd.                                                                                   Power International
         (Mauritius)                                                                            Holdings, Inc.

14.      Covanta Energy India (CBM) Limited   Issued: 2 shares issued at U.S. $1.00 par value   100% owned by Covanta
         (Mauritius)                                                                            Energy India Investments
                                                                                                Ltd.

15.      Covanta Energy India Pvt. Ltd.       Issued:                                           99% owned by Covanta Five
         (India)                              Covanta Five Ltd. - 9,900 shares;                 Ltd., 1% owned by Covanta One
                                              Covanta One Ltd. - 100 shares                     Ltd.

16.      Covanta Energy India                 Issued: 15 shares                                 100% owned by Covanta
         (Samalpatti) Limited                                                                   Power International
         (Mauritius)                                                                            Holdings, Inc.

17.      Covanta Energy India                 Issued: 2 shares                                  100% owned by Covanta
         Investments Ltd.                                                                       Power International
         (Mauritius)                                                                            Holdings, Inc.

18.      Covanta Energy Philippines           Issued: 52,605 shares at Php 100 par value        100%* owned by Covanta
         Holdings, Inc.                       (Per Philippine law each Covanta director holds   Power International
         (Philippines)                        1 share)                                          Holdings, Inc. (*per
                                                                                                Philippine law each Covanta
                                                                                                director holds 1 share)

19.      Covanta Five Ltd.                    Issued: 2 shares                                  100% owned by Covanta
         (Mauritius)                                                                            Energy India Investments
                                                                                                Ltd.

20.      Covanta Four Ltd.                    Issued: 2 shares                                  100% owned by Covanta
         (Mauritius)                                                                            Energy India Investments
                                                                                                Ltd.

21.      Covanta India Operating Pvt. Ltd.    Issued:  Covanta Four Ltd.: 13,410 shares; Mr.    90% owned by Covanta Four
         (India)                              S. Ramesh (Covanta India employee) holds 1,480    Ltd., remainder held by
                                              shares and his wife, Mrs. Usha Ramesh, holds 10   Covanta Indian employee S.
                                              shares                                            Ramesh and wife, Usha Ramesh,
                                                                                                in their personal capacities

22.      Covanta Madurai Operating Pvt.       Issued:  Covanta Five Ltd.: 10,426 shares;        99.8085% owned by Covanta
         Ltd. (India)                         Covanta One Ltd.: 20 shares                       Five Ltd.;
                                                                                                0.1915% owned by Covanta One
                                                                                                Ltd.
</Table>

<PAGE>

<Table>
<Caption>
                                                                                                        DESCRIPTION OF
                         NAME                                                                             ANTICIPATED
                   (JURISDICTION OF                                                                    OWNERSHIP AS OF THE
                     ORGANIZATION)                    CAPITAL STOCK OR EQUITY INTERESTS                   CLOSING DATE
         ------------------------------------ ------------------------------------------------- -------------------------------
      <C>                                  <C>                                               <C>

23.      Covanta One Ltd.                                                                       100% owned by Covanta Energy
         (Mauritius)                          Issued:  2 shares issued at $11.00 par value      India Investments Ltd.

24.      Covanta Philippines Operating, Inc.  Issued:  2 shares                                 100% owned by Covanta Power
         (Cayman Islands)                                                                       International Holdings, Inc.

25.      Covanta Power Development of         Issued:  100 shares                               100% owned by Covanta Power
         Bolivia, Inc.                                                                          International Holdings, Inc.
         (Delaware)

26.      Covanta Power Development, Inc.      Issued:  100 shares                               100% owned by Covanta Power
                                                                                                International Holdings, Inc.
         (Delaware)

27.      Covanta Samalpatti                   Issued: Covanta Five Ltd.: 10,420 shares;         99.9808% owned by Covanta One
         Operating Pvt. Ltd.                  Covanta One Ltd.: 2 shares                        Ltd; 0.0192% held by Covanta
         (India)                                                                                One Ltd.

28.      Covanta Three Limited                Issued: 2 shares                                  100% owned by Covanta Energy
         (Mauritius)                                                                            India Investments Ltd.

29.      Covanta Waste to Energy of Italy,    Issued:  100 shares                               100% owned by Covanta Power
         Inc. (Delaware)                                                                        International Holdings, Inc.

30.      Edison (Bataan) Cogeneration         Issued:  4,800,000 common stock                   100%* owned by Covanta
         Corporation                           (Per Philippine law each Covanta director        Power International
         (Philippines)                        holds 1 share)                                    Holdings, Inc. (*per
                                                                                                Philippine law each Covanta
                                                                                                director holds 1 share)

31.      El Gorguel Energia S.L.              Issued: 15,027                                    100% owned by Enereurope
         (Spain) (in liquidation)                                                               Holdings III B.V.

32.      Enereurope Holdings III B.V.         Issued: EUR 20,000 and NLG 44,074.20              100% owned by Covanta Power
         (Netherlands)                                                                          International Holdings, Inc.

</Table>

<PAGE>

<Table>
<Caption>
                                                                                                        DESCRIPTION OF
                         NAME                                                                             ANTICIPATED
                   (JURISDICTION OF                                                                    OWNERSHIP AS OF THE
                     ORGANIZATION)                    CAPITAL STOCK OR EQUITY INTERESTS                   CLOSING DATE
         ------------------------------------ ------------------------------------------------- -------------------------------
      <C>                                  <C>                                               <C>
33.      Goa Holdings, Ltd.                   Issued: 10,000 shares; 34,852 convertible         100% owned by Covanta Energy
         (Mauritius)                          debentures                                        India (Samalpatti) Ltd.
                                              (Per the terms of issuance, the
                                              convertible debentures
                                              automatically converted to shares
                                              upon the commercial operation date
                                              of the Samalpatti Project, but,
                                              the company has not yet effected
                                              the necessary recapitalization
                                              with the Mauritius authorities.)

34.      Hidro Operaciones Don Pedro                                                            100% owned by Covanta
         S.A.                                                                                   Power International
         (Costa Rica)                                                                           Holdings, Inc.

35.      Linan Ogden-Jinjiang                 Covanta Energy China (Alpha) Ltd. - 63.85%        63.85% owned by Covanta
         Cogeneration Co., Ltd.               interest                                          Energy China (Alpha) Ltd.;
         (People's Republic of China)         local private Chinese interests - 36.15%          36.15% is owned by local
                                              Authorized: Capital of $14,800,000                private Chinese interests.
                                              Issued: All issued

36.      Madurai Power Corporation Pvt. Ltd.  Issued: Covanta Energy India (Balaji) Ltd.--      Covanta Energy India (Balaji)
         (India)                              15,506,033 shares (76.643%);                      Ltd. (76.643%); Samayanallur
                                              Samayanallur Power Investments Pvt. Ltd.          Power Investments Pvt. Ltd.
                                              (Indian developer) -  4,725,482 shares (23.357%)  (Indian developer) (23.357%)

37.      Magellan Cogeneration, Inc.          Issued: 659,000 at Php 100 par value              100% owned by Covanta
         (Philippines)                        (Per Philippine law each Covanta director holds   Energy Philippine
                                              1 share)                                          Holdings, Inc. (*per
                                                                                                Philippine law each Covanta
                                                                                                director holds 1 share)

38.      Ogden Energy (Gulf) Limited          Issued: 2 shares issued at $1.00 par value        100% owned by Covanta
         (Mauritius)                                                                            Power International
                                                                                                Holdings, Inc.

39.      Ogden Energy India                   Issued: 2 shares                                  100% owned by Covanta
         (Bakreshwar) Ltd.                                                                      Power International
         (Mauritius)                                                                            Holdings, Inc.

40.      Ogden Energy of Bongaigaon Pvt.      Issued: twenty shares issued at Rs. 10/- to       100% held by nominee outside
         Ltd.                                 nominee outside attorneys subject to Covanta      attorneys subject to Covanta
         (in liquidation)                     direction                                         direction
         (India)

41.      Ogden Power Development              Issued:  75 A shares at $1.00 par value and 2     100% owned by OPI Quezon, Inc.
         Cayman, Inc.                         non-voting redeemable shares at $.01 par value
         (Cayman Islands)

</Table>

<PAGE>

<Table>
<Caption>
                                                                                                        DESCRIPTION OF
                         NAME                                                                             ANTICIPATED
                   (JURISDICTION OF                                                                    OWNERSHIP AS OF THE
                     ORGANIZATION)                    CAPITAL STOCK OR EQUITY INTERESTS                   CLOSING DATE
         ------------------------------------ ------------------------------------------------- -------------------------------
      <C>                                  <C>                                               <C>
42.      Ogden Taiwan Investments Limited     Issued:  2 shares issued at $1.00 par value       100% owned by Covanta Energy
         (Mauritius)                                                                            India Investments Ltd.

43.      OPDB, Ltd. (Cayman Islands)          Issued:  2 shares issued at $1.00 par value       100% owned by Covanta Power
                                                                                                Development of Bolivia, Inc.

44.      Covanta Operaciones LICA S.L.        Issued: 3,006                                     100% owned by
         (Spain) (in liquidation)                                                               Enereurope Holdings III
                                                                                                B.V.

45.      OPI Quezon, Inc.                     Issued: 100 shares                                100% owned by Covanta
         (Delaware)                                                                             Power International
                                                                                                Holdings, Inc.

46.      Power Operations and Maintenance     Issued: 12,000 issued at $1.00 par value          100% owned by Covanta Four
         Ltd.                                                                                   Ltd.
         (Bermuda)

47.      Taixing Ogden-Yanjiang               Covanta Energy China (Delta) Ltd. - 60% interest  60% owned by Covanta Energy
         Cogeneration Co., Ltd.               Covanta Energy China (Gamma) Ltd. - 36.3%         China (Delta) Ltd.; 36.3%
         (People's Republic of China)         interest                                          owned by Covanta Energy China
                                              Local Chinese government controlled entity  -     (Gamma) Ltd.; 3.7% owned by
                                              3.7% interest                                     local Chinese government
                                              Authorized: Registered capital of $20,250,000     controlled entity
                                              Issued: All issued

48.      Zibo Ogden-Bohui Cogeneration Co.,   Covanta Energy China (Beta) Ltd. - 60% interest   60% owned by Covanta Energy
         Ltd.                                 Local private Chinese interests - 40%             China (Beta) Ltd; 40% is
         (People's Republic of China)         Authorized: Registered Capital of $20,000,000     owned by local private
                                              Issued: All issued                                Chinese interests.

49.
</Table>

<PAGE>

                             ANNEX A TO SCHEDULE 4.2

    The stockholders of American Ref-Fuel Holdings Corp. and their respective
outstanding shares of American Ref-Fuel Holdings Corp. Common Stock owned
immediately prior to the Closing Date are listed below:

<Table>
<Caption>
                        HOLDER                                NO. OF SHARES
---------------------------------------------------------     -------------
<S>                                                           <C>
DLJ Merchant Banking III, L.P.                                       610.44
DLJ Merchant Banking Partners III, L.P.                           66,451.05
DLJ Offshore Partners III, C.V                                     3,274.39
DLJ Offshore Partners III-1, C.V                                   1,086.01
DLJ Offshore Partners III-2, C.V                                     773.64
DLJMB Partners III GmbH & Co. KG                                     513.23
Millenium Partners II, L.P.                                          684.80
MBP III Plan Investors, L.P.                                      25,672.82
UXT Holdings (Offshore) Ltd.                                      11,092.59
UXT AIV, L.P.                                                     48,233.30
AIG Highstar Capital II, L.P.                                     21,835.82
AIG Highstar Capital II Prism Fund, L.P.                          38,190.52
AIG Highstar Capital II Overseas Investors, L.P.                   1,207.70
AIG Highstar Capital II Ref-Fuel Co-Investment Fund, L.P.          3,064.45
AIG Highstar Capital, L.P.                                        41,296.24
         TOTAL                                                   263,987.00
</Table>

<PAGE>

                                  SCHEDULE 4.13

                               REAL ESTATE ASSETS

I.  FEE INTERESTS

    A.  OFFICE LOCATIONS

    Fairfield, New Jersey Corporate Headquarters

        o   40 Lane Road, Township of Fairfield, Essex County, New Jersey 07007,
            owned by Covanta Projects, Inc.

    B.  PROJECT LOCATIONS

    Marion County WTE Project, Oregon

        o   Ground Lease between Covanta Marion Land Corp. and Covanta Marion,
            Inc., dated November 1, 1986.

        o   Special Warranty Deed from Covanta Marion, Inc. to Covanta Marion
            Land Corp., dated as of December 11, 1986.

        o   Commercial Deeds of Trust and Security Agreements, dated as of
            September 1, 1984 and February 15, 1985.

    Mount Lassen Biomass Project, California

        o   59 acre parcel situated in County of Lassen, California, owned by
            Mt. Lassen Power

    Pacific Oroville Biomass Project, California

        o   43.29 acre parcel situated in the City of Oroville, County of Butte,
            California, owned by Pacific Oroville Power, Inc.

    C.  OTHER

        o   83 acres of undeveloped desert land situated between Sidewinder Road
            and Ogilby Road in the Imperial Valley, California, owned by Covanta
            Secure Services, Inc.
<PAGE>

II.      LEASEHOLD INTERESTS

    A. OFFICE LOCATIONS

        o   Lease Agreement, dated February 5, 1998, between Covanta Power
            Pacific, Inc., Patrician Associates, Inc. and RR&C Development
            Company for office space located at 13181 Crossroads Parkway North,
            Suite 180, City of Industry, California 91746.

        o   Lease Agreement, dated November 1, 2004, between Brian S. Baas and
            Wesley J. Sphar, and Covanta Power Pacific, Inc. for office space
            located at 2825 and 2829 Childress Drive, Anderson, CA 96007.

    B. PROJECT LOCATIONS

    Burney Mountain Power Biomass Project, California

        o   Ground Lease between Fruit Growers Supply Company and Ultrapower I,
            dated as of December 1, 1982, as amended November 9, 1983.

        o   Sublease between Burney Mountain Power and Three Mountain Power,
            LLC, dated January 1, 2005.

    Detroit WTE Project, Michigan

        o   Lease Agreement between Michigan Waste Energy, Inc. and Resource
            Recovery Business Trust 1991-A, as amended and supplemented, dated
            October 23, 1991.

        o   Sublease Agreement between the Greater Detroit Resource Recovery
            Authority and Michigan Waste Energy, Inc., dated September 10, 1986.

        o   Lease Agreement between Michigan Waste Energy Inc. and Resource
            Recovery Business Trust-B, dated October 23, 1991, as amended.

    Gude Biogas Project, Maryland

        o   Landfill Gas Lease and Operating Agreement For Conversion Systems
            Between Central Plants, Inc. and Montgomery County, Maryland, dated
            December 15, 1983.

        o   Assignment of Lease, dated June 20, 1984, between Central Plants,
            Inc. and Pacific Lighting Energy Systems, Inc.

        o   Lease Amendment No. 1 among Montgomery County, Maryland, Central
            Plants, Inc. and Pacific Lighting Energy Systems, dated October 30,
            1984.

<PAGE>

        o   Memorandum and Second Amendment of Lease between Pacific Lighting
            Energy Systems and Montgomery County, Maryland, dated October 24,
            1985.

        o   Amendment No. 3 between Montgomery County, Maryland and Pacific
            Energy, dated December 19, 1988.

        o   Sublease between Pacific Lighting Energy Systems and Pacific
            Lighting Bio-Energy Producing Partners I, dated November 15, 1985.

        o   Amendment to Sublease between Pacific Lighting Energy Systems and
            Pacific Lighting Bio-Energy Producing Partners, dated December 13,
            1985.

    Honolulu WTE Project, Hawaii

        o   Lease Agreement between State Street Bank and Trust Company and
            Covanta Honolulu Resource Recovery Venture (f/k/a Honolulu Resource
            Recovery Venture), dated July 7, 1993.

    Indianapolis WTE Project, Indiana

        o   Facility Site Lease between City of Indianapolis and Massburn, Inc.
            (Covanta Indianapolis, Inc.'s successor in interest by merger to
            Massburn, Inc.), dated as of December 1, 1985.

    Marion County WTE Project, Oregon

        o   Ground Lease between Covanta Marion Land Corp. and Covanta Marion,
            Inc., dated November 1, 1986.

    Montgomery County WTE Project, Maryland

        o   Facility Site Lease between Potomac Electric Power Company and the
            Northeast Maryland Waste Disposal Authority (assumed by Covanta
            Montgomery, Inc), dated as of October 5, 1989.

    Otay Biogas Project, California

        o   Operating Agreement and Subpermit for Conversion Systems, dated June
            27, 1984, between Cambrian Energy Systems, Inc. and Herzog
            Construction Corp.

        o   Assignment of Lease between Cambrian Energy Systems, Inc. and
            Central Plants, Inc., dated June 11, 1982.

<PAGE>

    Oxnard Biogas Project, California

        o   Assignment of Landfill Gas Lease among Ventura Regional Sanitation
            District and various individuals and entities, dated August 5, 1998.

        o   Third Amendment to Landfill Gas Lease and Operating Agreement for
            Conversion Systems between Pacific Recovery Corporation and Cambrian
            Energy Systems and the City of Oxnard, dated June 23, 1992.

        o   Landfill Gas Lease and Operating Agreement for Conversion Systems
            between Cambrian Energy Systems, Inc. and The City of Oxnard, dated
            November 25, 1981.

        o   Ratification of Landfill Gas Lease between City of Oxnard and Oxnard
            Landfill Associates, dated January 2, 1986.

        o   Memorandum of Lease between Cambrian Energy Systems, Inc. and The
            City of Oxnard, dated November 25, 1981.

        o   Assignment of Lease between Cambrian Energy Systems, Inc. and
            Central Plants, Inc., dated December 1, 1981.

        o   Memorandum of Assignment of Lease between Cambrian Energy Systems,
            Inc. and Central Plants, Inc., dated December 1, 1981.

        o   Memorandum of Assignment of Lease between Pacific Lighting Energy
            Systems and Oxnard Landfill Associates, dated January 25, 1985.

        o   Landfill Gas Lease, and Operating Agreement for Conversion Systems
            among Cambrian Energy Systems and Jack Martin Roth, Geraldine K.
            Roth, Gerald K. Roth, Harold W. Muckenthaler, Beverly A. Baier,
            Robert W. Baier, R. Jane Baier, Eleanor F Bailard, Jeanne B. Ware,
            Bank of California, N.A., as Executor of the Estate of Louis T.
            Kraemer, Deceased, and Stacy H. Dobrzensky and Bank of California,
            N.A., as Executors of the Estate of W. R. Bailard, Deceased, and
            Ventura Regional County Sanitation District, dated December 1, 1983.

        o   Memorandum of Lease among Cambrian Energy Systems, L.P., Jack Martin
            Roth, Geraldine K. Roth, Gerald K. Roth, Harold W. Muckenthaler,
            Beverly A. Baier, Robert W. Baier, R. Jane Baier, Eleanor F.
            Bailard, Jeanne B. Ware, Bank of California, N.A., as Executor of
            the Estate of Louis T. Kraemer, Deceased, and Stacy H. Dobrzensky
            and Bank of California, N.A., as Executors of the Estate of W. R.
            Bailard, Deceased, and Ventura Regional County Sanitation District,
            dated December 1, 1983.
<PAGE>

        o   Assignment of Lease between Cambrian Energy Systems and Pacific
            Lighting Energy Systems, dated March 14, 1984.

        o   Memorandum of Assignment of Lease between Cambrian Energy Systems
            and Pacific Lighting Energy Systems, dated March 14, 1984.

        o   Assignment, Assumption and Consent to Assignment between Pacific
            Lighting Energy Systems and Oxnard Landfill Associates, dated
            January 25, 1985.

        o   Memorandum of Assignment of Lease between Pacific Lighting Energy
            Systems and Oxnard Landfill Associates, dated January 25, 1985
            (refers to Landfill Gas Lease, dated November 25, 1981).

        o   Assignment, Assumption and Consent to Assignment between Pacific
            Lighting Energy Systems and Oxnard Landfill Associates, dated
            January 25, 1985 (Refers to Landfill Gas Lease, dated April 22,
            1983).

        o   Assignment of Lease between Central Plants, Inc. and Pacific
            Lighting Energy Systems, dated March 14, 1984.

        o   Amendment to Landfill Gas Lease and Operating Agreement for
            Conversion Systems between Central Plants, Inc. and City of Oxnard,
            dated November 23, 1983 (Amendment to Landfill Gas Lease, dated
            November 25, 1981).

        o   Amendment to Landfill Gas Lease and Operating Agreement for
            Conversion Systems between Pacific Lighting Energy Systems and City
            of Oxnard, dated June 26, 1984 (Amendment to Landfill Gas Lease,
            dated November 25, 1981).

        o   Landfill Gas Lease and Operating Agreement for Conversion Systems
            among Cambrian Energy Systems, Inc., Ventura Coastal Corporation,
            and Ventura Regional County Sanitation District, dated April 22,
            1983.

        o   Assignment of Lease between Cambrian Energy Systems and Central
            Plants, Inc., dated June 3, 1983.

        o   Memorandum of Assignment of Lease between Cambrian Energy Systems,
            Inc. and Central Plants, Inc., dated June 3, 1983.

        o   Memorandum of Lease among Cambrian Energy Systems, Ventura Coastal
            Corporation and Ventura Regional County Sanitation District, dated
            April 22, 1983 (Rerecorded March 13, 1985).

        o   Memorandum of Assignment of Lease between Central Plants, Inc. and
            Pacific Lighting Energy Systems, dated March 14, 1984 (Rerecorded
            December 14, 1984).
<PAGE>

        o   Memorandum of Assignment of Lease between Pacific Lighting Energy
            Systems and Oxnard Landfill Associates, dated January 25, 1985.

        o   First Amendment to Landfill Gas Lease and Operating Agreement for
            Conversion Systems between Oxnard Landfill Associates and Ventura
            Regional Sanitation District, dated April 18, 1991.

        o   Landfill Gas Lease and Operating Agreement for Conversion Systems
            among Cambrian Energy Systems, J.H.&R. Properties, C.H.F&S.
            Properties, J.&C. Properties, and Ventura Regional County Sanitation
            District, dated November 30, 1983.

        o   Memorandum of Lease among Cambrian Energy Systems, J.H.&R.
            Properties, C.H.F.&S. Properties, J.& C. Properties, and Ventura
            Regional Sanitation District, dated November 30, 1983.

        o   Memorandum of Lease among Cambrian Energy Systems, Jack Martin Roth,
            Geraldine K. Roth, Gerald K. Roth, Harold W. Muchethaler, Beverly A.
            Baier, Robert W. Baier, R. Jane Baier, Eleanor F. Bailard, Jeanne B.
            Ware, Bank of California, N.A., as Executor of Estate of Louis T.
            Kraemer, and Stacy H. Dobrzensky, dated December 1, 1983.

        o   Assignment of Lease between Cambrian Energy Systems and Pacific
            Lighting Energy Systems, dated December 21, 1983.

        o   Memorandum of Assignment of Lease between Cambrian Energy Systems
            and Pacific Lighting Energy Systems, dated December 21, 1983.

        o   Memorandum of Assignment of Lease between Cambrian Energy Systems
            and Pacific Lighting Energy Systems, dated March 14, 1984.

        o   Assignment of Lease between Cambrian Energy Systems and Pacific
            Lighting Energy Systems, dated May 22, 1984.

        o   Memorandum of Assignment of Lease between Cambrian Energy Systems
            and Pacific Lighting Energy Systems, dated May 22, 1984.

        o   Memorandum of Lease among Cambrian Energy Systems, L.P., Jack Martin
            Roth, Geraldine K. Roth, Gerald K. Roth, Harold W. Muckenthaler,
            Beverly A. Baier, Robert W. Baier, R. Jane Baier, Eleanor F.
            Bailard, Jeanne B. Ware, Bank of California, N.A., as Executor of
            the Estate of Louis T. Kraemer, Deceased, and Stacy H. Dobrzensky
            and Bank of California, N.A., as Executors of the Estate of W. R.
            Bailard, Deceased, and Ventura Regional County Sanitation District,
            dated December 1, 1983.
<PAGE>

        o   Assignment of Lease between Cambrian Energy Systems and Pacific
            Lighting Energy Systems, dated March 14, 1984.

        o   Memorandum of Assignment of Lease between Cambrian Energy Systems
            and Pacific Lighting Energy Systems, dated March 14, 1984.

        o   Assignment, Assumption and Consent to Assignment between Pacific
            Lighting Energy Systems and Oxnard Landfill Associates, dated
            January 25, 1985 (Refers to Landfill Gas Lease, dated April 22,
            1983).

        o   Assignment of Lease between Central Plants, Inc. and Pacific
            Lighting Energy Systems, dated March 14, 1984.

        o   Amendment to Landfill Gas Lease and Operating Agreement for
            Conversion Systems between Central Plants, Inc. and City of Oxnard,
            dated November 23, 1983 (Amendment to Landfill Gas Lease, dated
            November 25, 1981).

        o   Amendment to Landfill Gas Lease and Operating Agreement for
            Conversion Systems between Pacific Lighting Energy Systems and City
            of Oxnard dated June 26, 1984 (Amendment to Landfill Gas Lease,
            dated November 25, 1981).

        o   Memorandum of Assignment of Lease between Pacific Lighting Energy
            Systems and Oxnard Landfill Associates, dated January 25, 1985
            (Refers to Landfill Gas Lease dated November 25, 1981).

    Salinas/Crazy Horse Biogas Project, California

        o   Landfill Gas Lease and Operating Agreement for Conversion Systems
            among Cambrian Energy Systems and the City of Salinas and Salinas
            Disposal Service, Inc., dated July 3, 1984.

        o   Memorandum of Lease among Cambrian Energy Systems, City of Salinas
            and Salinas Disposal Service, Inc., dated July 3, 1984.

        o   Amendment No. 1 to Landfill Gas Lease between Salinas Valley Solid
            Waste Authority, as successor to the City of Salinas and Pacific
            Lighting Energy Systems (Pacific Energy) as successor to Cambrian
            Energy Systems, dated September 24, 1997.

    Santa Clara Biogas Project, California

        o   Lease and Operating Agreement for Landfill Gas Conversion Systems
            among the City of Santa Clara, Santa Clara Reclamation Corporation,
            Santa Clara Landfill Corporation All Purpose Landfill Company and
            Cambrian Energy Systems, dated June 27, 1984.
<PAGE>

        o   Memorandum of Lease among the City of Santa Clara, Santa Clara
            Reclamation Corporation, Santa Clara Landfill Corporation, All
            Purpose Landfill Company and Cambrian Energy Systems, dated June 27,
            1984.

        o   Memorandum of Assignment of Lease between Cambrian Energy Systems
            and Pacific Lighting Energy Systems, dated July 12, 1984.

        o   Lease and Operating Agreement for Landfill Conversion Systems -
            Amendment No. 1 to Original Agreement among the City of Santa Clara,
            Santa Clara Landfill Corporation, All Purpose Landfill Company, and
            Pacific Lighting Energy Systems, dated July, 23, 1985.

        o   First Amendment to Lease and Operating Agreement for Landfill
            Conversion Systems among the City of Santa Clara, Santa Clara
            Reclamation Corporation, Santa Clara Landfill Corporation, All
            Purpose Landfill Company, and Pacific Energy, dated March 8, 1988.

        o   Agreement between the City of Santa Clara and All Purpose Landfill
            Company, dated January 25, 1977.

        o   Agreement between the City of Santa Clara and All Purpose Landfill
            Company, dated September 21, 1982.

        o   Amendment No. 1 to Agreement between the City of Santa Clara and All
            Purpose Landfill Company, dated October 4, 1983.

        o   Amendment No. 2 to Agreement between the City of Santa Clara and All
            Purpose Landfill Company dated January 31, 1984.

    Stockton Biogas Project, California

        o   Landfill Gas Lease and Operating Agreement for Conversion Systems
            between Cambrian Energy Systems, Inc. and the City of Stockton,
            dated August 27, 1982.

        o   Memorandum of Lease between Cambrian Energy Systems, Inc and the
            City of Stockton, dated August 27, 1982.

        o   Assignment of Lease between Cambrian Energy Systems, Inc. and
            Central Plants, Inc., dated October 6, 1982.

        o   Assignment of Lease between Central Plants, Inc. and Pacific
            Lighting Energy Systems, dated March 14, 1984.

        o   Memorandum of Assignment of Lease between Central Plants Inc. and
            Pacific Lighting Systems, dated March 14, 1984.
<PAGE>

        o   First Amendment to Landfill Gas Lease and Operating Agreement for
            Conversion Systems between Pacific Gas and Electric Company and
            Pacific Lighting Energy Systems and the City of Stockton, dated May
            14, 1986.

        o   Amendment to City of Stockton-Pacific Energy-Austin Road Landfill
            Gas Lease and Operating Agreement, dated August 17, 1992.

    Three Mountain Power Project, California

        o   Sublease between Burney Mountain Power and Three Mountain Power,
            LLC, dated January 1, 2005.

<PAGE>

                                  SCHEDULE 4.16

                               MATERIAL CONTRACTS

A. CORPORATE

    1.  Corporate Services and Expense Reimbursement Agreement, dated March 10,
        2004, between Covanta Energy Corporation and Danielson Holding
        Corporation; and

    2.  Tax Sharing Agreement, dated March 10, 2004, between Danielson Holding
        Corporation and Covanta Energy Corporation and the other parties
        thereto, as amended.

B. PARENT GUARANTEES/SUPPORT AGREEMENTS

    1.  Covanta Guaranty, dated December 20, 1985, between Covanta Energy
        Corporation, Town of Babylon and the Town of Babylon Industrial
        Development Agency;

    2.  Covanta Guarantee, dated as of August 1, 1985, as amended, among Covanta
        Bristol, Inc. and the Bristol Contracting Communities.

    3.  Covanta Guarantee, dated December 21, 1992, between Covanta Energy
        Corporation and Greater Detroit Resource Recovery Authority.

    4.  Covanta Guaranty, dated February 1, 1988, between Covanta Energy
        Corporation and County of Fairfax; Fairfax County Solid Waste Authority;

    5.  Covanta Guaranty, dated August 1998, between Covanta Energy Corporation
        and Covanta Haverhill Associates (f/k/a Ogden Haverhill Associates);

    6.  Covanta Guaranty, dated January 9, 1985, between Covanta Energy
        Corporation and Hillsborough County, Florida, as amended;

    7.  Covanta Operating Guaranty, dated December 21, 1992, between Covanta
        Energy Corporation and City and County of Honolulu;

    8.  Covanta Liquidated Damages Guaranty, dated July 7, 1993, between Covanta
        Energy Corporation and City and County of Honolulu, Connecticut Bank and
        Trust and Hawaii Solid Waste Disposal Energy & Resource Recovery
        Facility Trust (assigned to OPI 12/21/92);

    9.  Amended and Restated Covanta Guaranty Agreement, dated June 29, 1989,
        between Covanta Energy Corporation and Town of Huntington;

    10. Covanta Guaranty, dated December 1, 1995, between Covanta Indianapolis,
        Inc. and the City of Indianapolis;

<PAGE>

    11. Covanta Guaranty, dated December 1, 1996, between Covanta Indianapolis,
        Inc. and the City of Indianapolis;

    12. Covanta Guaranty, dated October 1, 1987, between Covanta Energy
        Corporation and County of Kent; Department of Public Works;

    13. Covanta Guaranty, dated September 25, 1987, between Covanta Energy
        Corporation and Lancaster County Solid Waste Management Authority;

    14. Covanta Guaranty, dated January 16, 1990, between Covanta Energy
        Corporation and Lee County;

    15. Covanta Guaranty, dated December 21, 1992 and reaffirmed on July 1,
        1996, between Covanta Energy Corporation and Greater Detroit Resource
        Recovery Authority;

    16. Covanta Guaranty, dated December 21, 1992, between Covanta Energy
        Corporation and The Detroit Edison Co.;

    17. Covanta Guaranty, dated October 21, 1991, and amended July 1, 1996,
        among Covanta Energy Corporation, Ogden Projects, Inc., Michigan Waste
        Energy and Greater Detroit Resource Recovery Authority;

    18. Covanta Guaranty, dated November 16, 1990, between Covanta Energy
        Corporation and Northeast Maryland Waste Disposal Authority;

    19. Guarantee Agreement, dated October 10, 2003, from Covanta Energy
        Corporation to Covanta Onondaga Limited Partnership;

    20. Covanta Guaranty, dated April 15, 1989, between Covanta Energy
        Corporation and Pasco County;

    21. Covanta Guarantee, dated as of May 1, 1990, among Covanta Stanislaus,
        Inc., the City of Modesto and Stanislaus County, California, as amended;

    22. Covanta Guaranty, dated June 1, 1998, between Covanta Energy Corporation
        and Covanta Union, Inc.;

    23. Insurance Agreement, dated April 1, 2001, between American Ref-Fuel
        Company of Southeastern Connecticut, ARC and MBIA Insurance Company;

    24. Equity Contribution Agreement, dated as of April 30, 2001 between MSW
        Energy Holdings LLC, Ref-Fuel Corp., Ref-Fuel Holdings LLC and American
        Ref-Fuel Company LLC, as amended on December 12, 2003;

    25. Certain subsidiaries have general partner liability under law to
        subsidiaries that are general partnerships or limited partnerships;
<PAGE>

    26. Letter of Credit Reimbursement Agreement, between Ref-Fuel Corp. as
        Applicant and Bayerische Hypo-und Vereinsbank, New York Branch as
        Issuing Bank, dated as of April 30, 2004;

    27. Amended and Restated Letter of Credit Reimbursement Agreement, between
        MSW Energy Holdings LLC, as Applicant, and Bayerische Hypo-und
        Vereinsbank, as Issuing Bank, dated as of April 30, 2004;

    28. Second Amended and Restated Company Support Agreement, entered into as
        of April 30, 2001, by and between American Ref-Fuel Company of Hempstead
        and American Ref-Fuel Company LLC;

    29. Parent Company Guaranty, entered into as of June 1, 2001, by American
        Ref-Fuel Company LLC in favor of The Chase Manhattan Bank, as trustee;

    30. Amended and Restated Company Support Agreement, dated as of December 1,
        1997, by and among American Ref-Fuel Company of Essex County,
        Browning-Ferris Industries, Inc. and Duke Capital Corporation;

    31. Reimbursement Agreement, by and among ARC Essex, American Ref-Fuel
        Company LLC and Browning-Ferris Industries, dated as of April 30, 2001;

    32. Reimbursement Agreement, by and among ARC Essex, American Ref-Fuel
        Company LLC and Duke Capital Corporation, dated as of April 30, 2001;

    33. Parent Company Guaranty, entered into as of June 1, 2001, by American
        Ref-Fuel Company LLC, in favor of Manufacturers and Traders Trust
        Company;

    34. Parent Company Issuer Guaranty, entered into as of June 1, 2001, by
        American Ref-Fuel Company LLC in favor of the Niagara County Industrial
        Development Agency;

    35. Corporate Guaranty Agreement, entered into as of April 30, 2001, by
        American Ref-Fuel Company LLC, in favor of Occidental Chemical
        Corporation and Hooker Energy Corporation;

    36. Guaranty Agreement, entered into as of March 9, 2004 by American
        Ref-Fuel Company LLC in favor of Constellation Power Source, Inc.;

    37. Guaranty Agreement, entered into as of October 13, 2004 by American
        Ref-Fuel Company LLC in favor of Constellation New Energy, Inc.;

    38. Company Support Agreement, entered into as of April 30, 2001, by and
        between American Ref-Fuel Company of Southeastern Connecticut and
        American Ref-Fuel Company LLC;
<PAGE>

    39. Parent Undertaking, entered into as of April 30, 2001, by and between
        American Ref-Fuel Company of Southeastern Connecticut and American
        Ref-Fuel Company LLC;

    40. Corporate Guaranty Agreement, dated as of April 30, 2001, between
        American Ref-Fuel Company LLC and State Street Bank and Trust Company,
        as Trustee, in connection with Corporate Credit Bonds/Tax Exempt
        Interest (American REF-Fuel Company of Southeastern Connecticut Project
        - 1992 Series A);

    41. Corporate Guaranty Agreement, dated as of October 1, 2001, between
        American Ref-Fuel Company LLC and State Street Bank and Trust Company,
        as trustee in connection with the Corporate Credit Bonds (American
        Ref-fuel Company LLC - I Series A);

    42. Corporate Credit Guaranty, dated as of October 1, 2001, between ARC and
        State Street Bank and Trust Company, as Trustee (American Ref-fuel
        Company LLC - II Series A);

    43. Company Support Agreement, entered into as of November 1, 2001, by and
        between American Ref-Fuel Operations of SEMASS, L.P. and ARC;

    44. Contingent Capital Loan Agreement, entered into as of November 1, 2001,
        by and between American Ref-Fuel Operations of SEMASS, L.P. and ARC;

    45. Corporate Guaranty Agreement I, dated as of April 30, 2001, made by
        American Ref-Fuel Company LLC to and for the benefit of State Street
        Bank and Trust Company (as successor to Fleet National Bank), as Owner
        Trustee;

    46. Corporate Guaranty Agreement II, dated as of April 30, 2001, made by
        American Ref-Fuel Company LLC to and for the benefit of State Street
        Bank and Trust Company (as successor to Fleet National Bank), as Owner
        Trustee;

    47. Corporate Guaranty Agreement III, dated as of April 1, 2001, made by
        American Ref-Fuel Company LLC to and for the benefit of General Electric
        Capital Corporation;

    48. Corporate Guaranty Agreement IV, dated as of April 1, 2001, made by
        American Ref-Fuel Company LLC to and for the benefit of General Electric
        Capital Corporation;

    49. Amended and Restated Corporate Guarantee Agreement I, entered into as of
        August 28, 2001, by American Ref-Fuel Company LLC, in favor of and for
        the benefit of Viacom, Inc.;

    50. Amended and Restated Corporate Guarantee Agreement II, entered into as
        of August 28, 2001, by American Ref-Fuel Company LLC, in favor of and
        for the benefit of Viacom, Inc.;

    51. Indemnity Letter, dated April 16, 1997, from American Ref-Fuel Company
        of Delaware County, L.P. and Browning-Ferris Industries, Inc. to the
        Delaware County Industrial Development Authority;
<PAGE>

    52. Guarantee Agreement, dated as of August 28, 2001, from American Ref-Fuel
        Company LLC to and for the benefit of the Delaware County Solid Waste
        Authority;

    53. Letters of credit on behalf of Subsidiaries of ARC under the May 1, 2003
        $75,000,000 Amended and Restated Credit Agreement between American
        Ref-Fuel Company LLC and Citicorp North America, Inc., as Administrative
        Agent;

    54. Operator Guaranty, dated December 10, 1996, by Covanta Projects, Inc. in
        favor of Quezon Power (Philippines), Limited Co. (assigned to project
        lenders);

    55. Guaranty (O&M), dated April 2, 1999, by Covanta Energy Group, Inc., as
        amended October 31, 2004, in favor of NEPC Consortium Power Ltd.
        (assigned to Overseas Private Investment Corporation);

    56. Guarantee, Dated April 25, 2000, by Covanta Energy Corporation in favor
        of Madurai Power Corporation Pvt. Ltd. (assigned to project lenders);

    57. Share Retention and Financial Support Agreement, dated April 25, 2000
        among Covanta Energy Corporation, Covanta Energy India (Balaji) Ltd.,
        Samayanallur Power Investments Pvt. Ltd., ICICI Limited and Madurai
        Power Corporation Pvt. Ltd. (assigned to project lenders).

    58. Operation and Maintenance Guarantee, dated December 16, 1999, by Covanta
        Energy Group, Inc. in favor of Samalpatti Power Company Pvt. Ltd.
        (assigned to project lenders).

C. ENERGY CONTRACTS

    1.  Amended and Restated Energy Purchase Agreement, dated October 23, 1991,
        between Detroit Edison Company and Michigan Waste Energy, Inc, as
        amended;

    2.  Energy Purchase Agreement, dated July 11, 1986, between Consolidated
        Edison Company of New York, Inc. and American REF-FUEL Company of
        Hempstead;

    3.  Parallel Generation & Energy Purchase Agreement, as amended, dated
        October 10, 1986, between Long Island Lighting Company and American
        REF-FUEL Company of Hempstead;

    4.  Agreement for Purchase of Electric Power, as amended, dated July 1,
        1985, between Public Service Electric and Gas Company and American
        REF-FUEL Company of Essex County;

    5.  Confirmation Letter (2003), dated December 16, 2002, between American
        Ref-Fuel Company of Essex County and PSEG Energy Resources & Trade LLC;
<PAGE>

    6.  Confirmation Letter (2003 through 2007), dated December 16, 2002,
        between American Ref-Fuel Company of Essex County and PSEG Energy
        Resources & Trade LLC;

    7.  Power Purchase & Sale Agreement, dated October 18, 2004, between
        American Ref-Fuel Company of Essex County and Conectiv Energy Supply,
        Inc.;

    8.  Electrical Energy Purchase Agreement, as amended, dated December 2,
        1988, between Connecticut Resources Recovery Authority, Southeastern
        Connecticut Regional Resources Recovery Authority, American Ref-Fuel
        Company of Southeastern Connecticut and The Connecticut Light and Power
        Company;

    9.  Power Purchase Agreement, as amended, dated June 29, 1993, between
        American Ref-Fuel Company of Niagara, L.P. and Niagara Mohawk Power
        Corporation;

    10. Power Sales Agreement, as amended, dated June 13, 2003, between American
        Ref-Fuel Company of Niagara, L.P. and Constellation Power Source, Inc.;

    11. Power Sales Agreement, dated October 13, 2004, between American Ref-Fuel
        Company of Niagara, L.P. and Constellation New Energy, Inc.;

    12. Power Sales Agreement, dated October 31, 1985, between Commonwealth
        Electric Company and SEMASS Partnership;

    13. Power Sales Agreement for SEMASS Expansion, as amended, dated January
        15, 1988, between Commonwealth Electric Company and SEMASS Partnership;

    14. Agreement for Purchase of Electric Power, as amended, dated November 18,
        1988, between Atlantic City Electric Company and ARC Delaware as
        assignee of Delaware Resource Management, Inc.;

    15. Power Purchase Agreement, dated May 21, 1998, between Tamil Nadu
        Electricity Board and Madurai Power Corporation Pvt. Ltd., as amended;

    16. Steam Sales Agreement, as amended, dated May 5, 1993, between American
        Ref-Fuel Company of Niagara, L.P. and Occidental Chemical Company;

    17. Steam Service Agreement, as amended, dated November 30, 1995, between
        American Ref-Fuel Company of Niagara, L.P. and Praxair, Inc.;

    18. Steam Service Agreement, dated December 1, 1998, between American
        Ref-Fuel Company of Niagara, L.P. and The Goodyear Tire & Rubber
        Company; and

    19. Steam Service Agreement, dated April 28, 1999, between American Ref-Fuel
        Company of Niagara, L.P. and Niacet Corporation;
<PAGE>

    20. Steam Sales Agreement, dated December 12, 2002, between American
        Ref-Fuel Company of Niagara, L.P. and Norampac Industries, Inc.; and

    21. Interconnection Agreement, dated June 1, 2000, between American Ref-Fuel
        Company of Delaware Valley, L.P. and Philadelphia Electric Company;

D. SERVICE/WASTE/OPERATING CONTRACTS

    1.  Amended and Restated Service Agreement between, dated August 1, 1995,
        Covanta Babylon, Inc. and the Town of Babylon, as amended;

    2.  Amended and Restated Service Agreement, dated August 1, 1985, between
        Covanta Bristol, Inc. and the Bristol Resource Recovery Facility
        Operating Committee, as amended;

    3.  Second Amended and Restated Agreement for Operation and Maintenance of
        Solid Waste Disposal Resource Recovery and Energy Generating Facility,
        dated December 15, 1985, as amended and restated as of July 1, 1996,
        between Greater Detroit Resource Recovery Authority and Michigan Waste
        Energy, Inc.;

    4.  Service Agreement, dated August 28, 1985, among County of Fairfax,
        Virginia, Fairfax County Solid Waste Authority and Covanta Fairfax,
        Inc., as amended and supplemented;

    5.  Amended and Restated Service Agreement between, dated August 1, 1998,
        Covanta Haverhill Associates and Covanta Haverhill, Inc.;

    6.  Operations and Management Agreement, dated November 7, 1984, between
        Hillsborough County and Covanta Hillsborough, Inc, as amended;

    7.  Contract for Waste Processing and Disposal Services, dated July 3, 1985,
        between the City and County of Honolulu and Covanta Honolulu Resource
        Recovery Venture (f/k/a Honolulu Resource Recovery Venture), as amended
        and supplemented;

    8.  Amended and Restated Solid Waste Disposal Service Agreement, dated June
        29, 1989, between the Town of Huntington and Covanta Huntington, Limited
        Partnership, as amended;

    9.  Agreement, dated June 1, 1988, between the Solid Waste Disposal
        Authority of the City of Huntsville and Covanta Huntsville, Inc., as
        amended;

    10. Amended and Restated Service Agreement, dated September 23, 1985,
        between the Board of Public Works on behalf of the City of Indianapolis
        and Covanta Indianapolis, Inc., as amended;

    11. Amended and Restated Construction and Service Agreement, dated October
        1, 1987, between Covanta Kent Inc. and County of Kent;
<PAGE>

    12. Service Agreement, dated September 25, 1987, between Lancaster County
        Solid Waste Management Authority and Covanta Lancaster Inc.;

    13. Service Agreement, dated August 29, 1990, as amended, between Covanta
        Lee, Inc. and Lee County, Florida;

    14. Agreement for Electric Generation Facility Operation, Maintenance and
        Maintenance Services 2000, dated December 22, 2001, between Covanta
        Mid-Conn, Inc. (f/k/a Resource Recovery Systems of Connecticut, Inc.)
        and Connecticut Resources Recovery Authority;

    15. Amended and Restated Agreement for Operation and Maintenance of Power
        Block Facility, dated December 22, 2001, between Resource Recovery
        Systems of Connecticut and Connecticut Resources Recovery Authority;

    16. Service Agreement, dated November 16, 1990, between Northeast Maryland
        Waste Disposal Authority and Covanta Montgomery, Inc., as amended;

    17. Second Amended and Restated Solid Waste Disposal Service Agreement,
        dated October 10, 2003, between Covanta Onondaga Limited Partnership &
        Onondaga County Resource Recovery Association;

    18. Amended and Restated Completion, Operations and Maintenance Agreement,
        dated October 10, 2003, between Covanta Onondaga Limited Partnership and
        Covanta Onondaga Operations, Inc.;

    19. Operating and Maintenance Agreement, dated October 10, 2003, by and
        between Covanta Onondaga Limited Partnership and Covanta Onondaga
        Operations, Inc.;

    20. Amended and Restated Service Agreement, dated March 28, 1989, between
        Covanta Pasco, Inc. and Pasco County, as amended;

    21. Amended and Restated Service Agreement for the Supply and Acceptance of
        Solid Waste, dated June 1, 1986, between Covanta Stanislaus, Inc. and
        the City of Modesto and the County of Stanislaus, as amended;

    22. Amended and Restated Waste Disposal Contract, dated February 15, 1998,
        between Union County Utilities Authority and Covanta Union, Inc., as
        amended and restated June 15, 1998;

    23. Operations and Maintenance Agreement, dated June 1, 1998, between
        Covanta Union, Inc. and Covanta Operations of Union LLC, Inc.;

    24. Amended and Restated Solid Waste Disposal Agreement, dated as of May 1,
        1990, between BFI Waste Systems of North America, Inc. and Covanta
        Haverhill Associates, as amended; and

<PAGE>

    25. BFI Solid Waste Disposal Agreement, dated April 15, 1986, between
        Haverhill Power, Inc., Refuse Fuels Associates, and Browning-Ferris
        Industries, Inc.

    26. Service Agreement, as amended, dated December 1, 1985, between American
        REF-FUEL Company of Hempstead, the Town of Hempstead and the Town Board
        of Hempstead on behalf of the Town of Hempstead Refuse Disposal
        District;

    27. Amended and Restated Installment Sale Agreement dated as of June 1,
        2001, between the Niagara County Industrial Development Agency, Niagara
        County, New York and American Ref-Fuel Company of Niagara, L.P.;

    28. Solid Waste Disposal Agreement, as amended, dated December 31, 1987,
        between American Ref-Fuel Company of Niagara, L.P. (Occidental Chemical
        Corporation) and Town of Tonawanda;

    29. Solid Waste Disposal Agreement, as amended, dated October 15, 1991,
        between American Ref-Fuel Company of Niagara, L.P. (Occidental Chemical
        Corporation) and Town of Amherst Garbage and Refuse District No. 1;

    30. Amended and Restated Service Agreement, dated February 28, 1986, between
        American REF-FUEL Company of Essex County and the Port Authority of New
        York and New Jersey;

    31. Service Agreement, as amended, dated December 1, 1987, between
        Connecticut Resources Recovery Authority and American Ref-Fuel Company
        of Southeastern Connecticut;

    32. Master Waste Delivery Agreement, dated October 1, 1995, between
        TransRiver Marketing Company, L.P. and American Ref-Fuel Company of
        Niagara, L.P.;

    33. Limited Landfill Services Agreement, dated March 1, 1990, between EAC
        Operations, Inc. and Carver Marion Wareham Regional Refuse Disposal
        District;

    34. Amended and Restated Operating Services Agreement , dated November 1,
        2001, between American Ref-Fuel Operations of SEMASS, L.P. and SEMASS
        Partnership;

    35. Processed Bottom Ash Use Agreement, as amended, dated May 12, 2000,
        between SEMASS Partnership and Rhode Island Resource Recovery
        Corporation;

    36. Amended and Restated Management Services Agreement, dated November 1,
        2001, between SEMASS Partnership and American Ref-Fuel Operations of
        SEMASS, L.P.;

    37. Waste Management Agreement, as amended, dated May 25, 1982, between
        SEMASS Partnership and Carver, Marion, Wareham Regional Refuse Disposal
        District;
<PAGE>

    38. Service Agreement, as amended, dated September 1, 1987, between SEMASS
        Partnership and Martha's Vineyard Refuse Disposal and Resource Recovery
        District;

    39. Amended and Restated Waste Services Agreement, dated November 1, 2001,
        between SEMASS Partnership and American Ref-Fuel Operations of SEMASS,
        L.P.;

    40. Amended and Restated Waste Services Agreement, dated November 1, 2001,
        between SEMASS Partnership and American Ref-Fuel Operations of SEMASS,
        L.P.;

    41. Amended and Restated Waste Services Subcontract Agreement, dated
        November 1, 2001, between American Ref-Fuel Operations of SEMASS, L.P.
        and TransRiver Marketing Company, L.P.;

    42. SEMASS Residue Ash Disposal Services Agreement, dated January 1, 2003,
        between SEMASS Partnership and Waste Management of Massachusetts, Inc.;

    43. Disposal Agreement, as amended, dated July 1, 2002, between SEMASS
        Partnership and City of Boston;

    44. Disposal Agreement, dated October 4, 2004, between SEMASS Partnership
        and BFI-City of South Yarmouth;

    45. Disposal Agreement, dated March 30, 2000, between SEMASS Partnership and
        BFI-Somerset;

    46. Disposal Agreement, dated July 1, 2001, between SEMASS Partnership and
        BFI-Breckton;

    47. Community Host Agreement, as amended, dated January 30, 1989, between
        Westinghouse Electric Corporation, American Ref-Fuel Company of Delaware
        County, L.P., County of Delaware and City of Chester;

    48. Restated Service Agreement, as amended, dated December 1, 1988, between
        Delaware County Solid Waste Authority, Delaware Resource Management,
        Inc., Westinghouse Electric Corporation and American Ref-Fuel Company of
        Delaware County, L.P.;

    49. Agreement for Solid Waste Disposal, as amended, dated July 1, 1998,
        between American Ref-Fuel Company of Delaware Valley, L.P. and BFI Waste
        Systems of North America, Inc.;

    50. Disposal Services Agreement, as amended, dated January 2, 2002, between
        TransRiver Marketing Company, L.P. and Waste Management of
        Massachusetts, Inc.;

    51. Department of Sanitation City of New York Supply and Service Agreement,
        dated August 16, 2004, between TransRiver Marketing Company, L.P. and
        City of New York Department of Sanitation;

<PAGE>

    52. Service Agreement, as amended, dated November 27, 2001, between
        TransRiver Marketing Company, L.P. and Republic Services of
        Pennsylvania, L.L.C.;

    53. Disposal Agreement, as amended, dated May 1, 2002, between TransRiver
        Marketing Company, L.P. and Republic Services of New York, Inc.;

    54. Disposal Services Agreement 4/1/04 to 3/31/05, as amended, dated
        September 24, 2003, between TransRiver Marketing Company, L.P. and Waste
        Management of Pa.;

    55. Disposal Services Agreement, dated January 1, 2005, between TransRiver
        Marketing Company, L.P. and Waste Management of Massachusetts, Inc.;

    56. Plant Operation and Maintenance Agreement, dated December 1, 1995, as
        amended, between Quezon Power (Philippines), Limited Co. and Covanta
        Philippines Operating, Inc.

    57. Plant Operation and Maintenance Agreement, dated April 2, 1999, as
        amended, between NEPC Consortium Power Limited and Covanta Bangladesh
        Operations, Ltd.

    58. Operation and Maintenance Agreement, dated April 25, 2000, between
        Covanta Madurai Operating Pvt. Ltd. And Madurai Power Corporation Pvt.
        Ltd.

    59. Operation and Maintenance Agreement, dated December 3, 1999, between
        Samalpatti Power Company Pvt. Ltd. And Covanta Samalpatti Operating Pvt.
        Ltd.

E. FINANCING AND REAL ESTATE AGREEMENTS

    1.  Conditional Sale and Security Agreement, dated as of July 1, 1998, as
        amended,among Covanta Alexandria/Arlington, Inc., Alexandria Sanitation
        Authority and Arlington County Solid Waste Authority;

    2.  Operating Lease Agreement. Dated as of November 1, 1998, among Covanta
        Alexandria/Arlington, Inc., Alexandria Sanitation Authority and
        Arlington County Solid Waste Authority;

    3.  Loan Agreement dated as of December 1, 1993, between Covanta Bristol,
        Inc. and Bristol Resource Recovery Faciltiy Operating Committee.Facility
        Site Sublease Agreement, dated December 1, 1985, as amended and restated
        August 1, 1995, between Town of Babylon Industrial Development Agency
        and Covanta Babylon, Inc.;

    4.  Facility Lease Agreement, dated December 1, 1985, as amended and
        restated August 1, 1995, between Town of Babylon Industrial Development
        Agency and Covanta Babylon, Inc.;
<PAGE>

    5.  Participation Agreement, dated September 1, 1991, among Michigan Waste
        Energy, Inc., Greater Detroit Resource Recovery Authority, Resource
        Recovery Business Trust-A, PMCC Leasing Corp., Wilmington Trust Company,
        and William J. Wade;

    6.  Participation Agreement, dated September 1, 1991, among Michigan Waste
        Energy, Inc., Greater Detroit Resource Recovery Authority, Resource
        Recovery Business Trust-B, Aircraft Services Corp., Wilmington Trust
        Company, and William J. Wade;

    7.  Lease Agreement, dated October 23, 1991, between Michigan Waste Energy
        Inc. and Resource Recovery Business Trust-A, as amended;

    8.  Lease Agreement, dated October 23, 1991, between Michigan Waste Energy
        Inc. and Resource Recovery Business Trust-B, as amended;

    9.  Conditional Sale and Security Agreement, dated February 1, 1988, between
        Fairfax County Solid Waste Authority and Covanta Fairfax, Inc., as
        amended March 1, 1995;

    10. Amended and Restated Lease Agreement, dated December 1, 1986, between
        SBR Associates and Refuse Fuels Associates, as amended;

    11. New Facility Site Lease, Indenture of Lease, dated December 1, 1986,
        u/d/t dated January 11, 1980, between Covanta Haverhill Associates and
        Dale F. Rogers and B. Richard Rogers, Trustees of the D&R Realty Trust;

    12. Lease Agreement dated as of November 1, 1989, as amended, between
        Connecticut Bank & Trust Company and Honolulu Resource Recovery Venture;

    13. Participation and Assignment Agreement, dated as of November 1, 1989,
        as amended, among Honolulu Resource Recovery Venture, Ford Motor Credit
        Corporation, Connecticut Bank & Trust Company, and the City and County
        of Honolulu;

    14. Facility Lease Agreement, dated January 15, 1997, between Covanta
        Huntington Limited Partnership and the Suffolk County Industrial
        Development Agency;

    15. First Amended and Restated Agreement of Limited Partnership, dated
        October 7, 1991, by and among Ogden Martin Systems of Huntington
        Resource Recovery One Corp., Pitney Bowes Credit Corporation, Ogden
        Martin Systems of Huntington Resource Recovery Six Corp., and Ogden
        Martin Systems of Huntington Resource Recovery Seven Corp.;

    16. Financing Agreement, dated as of December 1, 1985, between the City of
        Indianapolis and Massburn, Inc.;

    17. Loan Agreement, dated as of November 1, 1988, as supplemented, between
        Covanta Lake, Inc. and NRG/Recovery Group, Inc.;
<PAGE>

    18. Amended and Restated Lease Agreement, dated October 10, 2003, between
        Onondaga County Resource Recovery Association and Covanta Onondaga
        Limited Partnership;

    19. Second Amended and Restated Agreement of Limited Partnership of Covanta
        Onondaga Limited Partnership, dated October 10, 2003, by and among
        Covanta Onondaga, Inc., Covanta Onondaga Two Corp., Covanta Onondaga
        Three Corp., Covanta Onondaga Four Corp., Covanta Onondaga Five Corp.,
        Ford Motor Credit Company, Mariner Investment Strategies, Inc., and
        IEA-COV, LLC;

    20. Lease Agreement dated as of January 1, 2000 between Stanislaus Waste to
        Energy Financing Authority and Covanta Stanislaus, Inc.;

    21. Sublease Agreement dated as of January 1, 2000 between Stanislaus Waste
        Energy Financing Authority and Covanta Stanislaus, Inc.;

    22. Facility Lease Agreement, dated June 15, 1998, by and between the Union
        County Utilities Authority and Covanta Union, Inc;

    23. $275 million aggregate principal amount 6.26% Senior Notes due 2015 of
        American Ref-Fuel Company LLC, issued May 1, 2003;

    24. Indenture and First Supplemental Indenture, dated May 1, 2003, between
        American Ref-Fuel Company LLC and Wachovia Bank, National Association,
        as Trustee and Securities Intermediary;

    25. $200 million aggregate principal amount Series A and Series B 8 1/2%
        Senior Secured Notes due 2010 of MSW Energy Holdings LLC, issued June
        25, 2003;

    26. Indenture, by and among MSW Energy Holdings LLC, MSW Energy Finance Co.,
        Inc., and the Guarantor Parties named therein, and Wells Fargo Bank
        Minnesota, National Bank, as Trustee, dated as of June 25, 2003;

    27. $225 million aggregate principal amount Series A and Series B 7 3/8%
        Senior Secured Notes due 2010 of MSW Energy Holdings II LLC, issued
        November 24, 2003;

    28. Indenture, by and among MSW Energy Holdings II LLC, MSW Energy Finance
        II Co., Inc., and the Guarantor Parties named therein, and Wells Fargo
        Bank Minnesota, National Bank, as Trustee, dated as of November 24,
        2003.

    29. Quitclaim Deed, dated September 5, 2001, between Waste Systems
        International Lynn Transfer Station, Inc. to Transriver Marketing
        Company, L.P.;

    30. Lease, dated March 19, 2002, between 485 Properties, LLC and ARC;

    31. Lease Agreement, as amended, dated December 1, 1985, between Town of
        Hempstead Industrial Development Agency and American REF-FUEL Company of
        Hempstead;
<PAGE>

    32. Site Lease Agreement, dated November 1, 1986, between Town of Hempstead
        Industrial Development Agency and American REF-FUEL Company of
        Hempstead;

    33. Amended and Restated Company Sublease Agreement, dated June 1, 2001,
        between Town of Hempstead Industrial Development Agency and American
        REF-FUEL Company of Hempstead;

    34. Agency Sublease, dated March 1, 1997, between Town of Hempstead
        Industrial Development Agency and American REF-FUEL Company of
        Hempstead;

    35. Lessee Guaranty and Security Agreement, dated September 1, 1986, between
        American REF-FUEL Company of Hempstead, Bankers Trust Company and The
        Chase Manhattan Bank;

    36. Escrow and Security Agreement, dated February 28, 1986, between American
        REF-FUEL Company of Essex County, the Port Authority of New York and New
        Jersey and Midlantic National Bank;

    37. Lease and Agreement, as amended, dated February 28, 1986, between
        American REF-FUEL Company of Essex County and the Port Authority of New
        York and New Jersey;

    38. Lease Agreement, as amended, dated December 1, 1988, between Connecticut
        Resources Recovery Authority and American Ref-Fuel Company of
        Southeastern Connecticut;

    39. Site Lease, dated December 1, 1988, between Southeastern Connecticut
        Regional Resources Recovery Authority and American Ref-Fuel Company of
        Southeastern Connecticut;

    40. Loan Agreement (Duke Capital Series A), as amended, dated December 1,
        1998, between Connecticut Resources Recovery Authority and American
        Ref-Fuel Company of Southeastern Connecticut;

    41. Loan Agreement (BFI Series A), as amended, dated December 1, 1998,
        between Connecticut Resources Recovery Authority and American Ref-Fuel
        Company of Southeastern Connecticut;

    42. Loan Agreement, dated January 15, 1992, between Connecticut Resources
        Recovery Authority and American Ref-Fuel Company of Southeastern
        Connecticut;

    43. Lease Guaranty and Security Agreement, as amended, dated December 1,
        1988, between American Ref-Fuel Company of Southeastern Connecticut to
        The Connecticut National Bank;

    44. Payment-In-Lieu-Of-Tax Agreement, as amended, dated August 1, 1993,
        between American Ref-Fuel Company of Niagara, L.P. and Niagara County
        Industrial Development Agency;
<PAGE>

    45. Deed, dated May 5, 1993, by Hooker Energy Corporation granting to
        American Ref-Fuel Company of Niagara, L.P.;

    46. A-1 Boilerhouse Lease, dated May 5, 1993, between American Ref-Fuel
        Company of Niagara, L.P. and Occidental Chemical Corporation;

    47. Mortgage and Security Agreement, dated June 1, 2001, between American
        Ref-Fuel Company of Niagara, L.P., Niagara County Industrial Development
        Agency and Manufacturers and Traders Trust Company;

    48. Quitclaim Deed re: Lot 40-1, Rochester, MA Site, dated August 5, 1987,
        between William Byrne and SEMASS;

    49. Quitclaim Deed re: Lot 40-2, dated August 5, 1987, between SEMASS and
        Commonwealth Electric;

    50. Quitclaim Deed re: 131 and 141 Cranberry Highway, dated December 27,
        1984, between William Byrne to Bank of New England as Trustee for
        SEMASS;

    51. Amended and Restated Loan, Security and Trust Agreement, dated November
        1, 2001, between Massachusetts Development Finance Agency, SEMASS
        Partnership and State Street Bank and Trust Company;

    52. Settlement Agreement, dated October 19, 1995, between Carver, Marion,
        Wareham Regional Refuse Disposal District and SEMASS Partnership (Pls.)
        and Board of Health for the Town of Carver and Town of Carver (Defs.)
        and EAC Operations, Inc. (Third Party Def.);

    53. Settlement Agreement, as amended, dated March 30, 1990, between Wankinco
        River, Inc., The Carver, Marion, Wareham Regional Refuse Disposal
        District, SEMASS Partnership and EAC Operations, Inc.;

    54. Subordinated Payment Agreement, dated November 1, 2001, between American
        Ref-Fuel Operations of SEMASS, L.P. and SEMASS Partnership;

    55. Lease, as amended, dated April 15, 1983, between A.D. Makepeace Company
        and Carver, Marion, Wareham Regional Refuse Disposal District, Wankinco
        River, Inc.;

    56. Ground Lease, as amended, dated June 30, 1986, between Town of
        Braintree, Mass. And SEMASS Partnership;

    57. Quitclaim Deed, dated November 1, 1985, between Bank of New England to
        SEMASS Partnership Trust Agreement;

    58. Mortgage Deed and Security Agreement, as amended, dated August 1, 1991,
        between State Street Bank and Trust Company and SEMASS Partnership;
<PAGE>

    59. Leasehold Mortgage Deed and Security Agreement, as amended, dated August
        1, 1991, between State Street Bank and Trust Company and SEMASS
        Partnership;

    60. Trust Agreement, dated August 1, 1991, between SEMASS Partnership,
        Wankinco River, Inc. and Fleet National Bank;

    61. Declaration of Easements, Restrictions and Covenants, as amended, dated
        November 5, 1985, between SEMASS Partnership and Commonwealth Electric
        Company;

    62. Participation Agreement, dated April 1, 1997, between American Ref-Fuel
        Company of Delaware County, L.P., TIFD III-L Inc., Delaware Resource
        Management, Inc., Fleet National Bank, First Union National Bank,
        Browning-Ferris Industries, Inc. and Delaware Resource Lessee Trust;

    63. Tax Indemnification Agreement, dated April 1, 1997, between American
        Ref-Fuel Company of Delaware County, L.P. and TIFD III-L Inc.;

    64. ISDA Master Agreement, dated April 16, 1997, between American Ref-Fuel
        Company of Delaware County, L.P. and General Electric Capital
        Corporation;

    65. Amended and Restated Lease Security Agreement and Assignment, dated
        April 1, 1997, between American Ref-Fuel Company of Delaware County,
        L.P. and Fleet National Bank;

    66. Real Estate Purchase and Sale Agreement, as amended, dated March 19,
        1997, between American Ref-Fuel Company of Delaware County, L.P. and
        Chester Solid Waste Associates;

    67. Amended and Restated Lease Agreement, dated April 1, 1997, between
        American Ref-Fuel Company of Delaware County, L.P., Fleet National Bank
        and Delaware Resource Management, Inc.;

    68. Assignment of Lease and Easement, dated April 11, 1997, between American
        Ref-Fuel Company of Delaware County, L.P. and Chester Solid Waste
        Associates;

    69. Grant of Easement, dated April 16, 1997, between American Ref-Fuel
        Company of Delaware County, L.P. to Fleet National Bank;

    70. Special Warranty Deed, dated April 16, 1997, between American Ref-Fuel
        Company of Delaware County, L.P. and Chester Solid Waste Associates;

    71. Special Warranty Deed, dated April 16, 1997, between American Ref-Fuel
        Company of Delaware County, L.P. and Chester Solid Waste Associates;

    72. Grant of Easement, dated April 16, 1997, between American Ref-Fuel
        Company of Delaware County, L.P. and Chester Solid Waste Associates;
<PAGE>

    73. Grant of Easement, dated April 16, 1997, between American Ref-Fuel
        Company of Delaware County, L.P. and Chester Solid Waste Associates;

    74. Mutual Release and Settlement Agreement, dated August 28, 2001, between
        American Ref-Fuel Company of Delaware County, L.P., American Ref-Fuel
        Company, LLC, Delaware County, Delaware County Solid Waste Authority and
        Viacom, Inc.;

    75. Site Sublease, dated July 1, 1991, between The Connecticut National Bank
        and Delaware Resource Management, Inc.;

    76. Facility Ground Lease, as amended, dated December 1, 1988, between
        Chester Solid Waste Associates and Delaware Resource Management, Inc.;

    77. Common Agreement, dated April 25, 2000, between Madurai PowerCorporation
        Pvt. Ltd. And ICICI Limited (together with related novation, mortgage,
        pledge and security agreements);

    78. Working Capital Loan Consortium Agreement, dated August 29, 2002, among
        Madurai Power Corporation Pvt. Ltd., ICICI Limited, State Bank of India
        and Central Bank of India;

    79. Land Lease Agreement, dated January 20, 1999, between Tamil Nadu
        Electricity Board and Madurai Power Corporation Pvt. Ltd.;

F. PARTNERSHIP AND JOINT VENTURE AGREEMENTS

    1.  Third Amended and Restated Development and Shareholders Agreement, dated
        October 18, 2004, among Ogden Power Development-Cayman, Inc., PMR
        Limited Co., PMR Power, Inc. and Quezon Generating Company Ltd.

    2.  Shareholders Agreement, dated April 25, 2000, among Covanta Energy India
        (Balaji), Madurai Power Corporation Pvt. Ltd., Samayanallur Power
        Investments Pvt. Ltd. And Wartsila BPC Investment LLC.

    3.  Shareholders Agreement, dated February 26, 1999, as amended, among
        Shapoorji Pallonji Infrastructure Capital Company Ltd., SIV Industries
        Ltd., Fenmor Energy Ltd., Wartsila India Power Investment, LLC, Covanta
        Energy India (Samalpatti) Ltd., Goa Holdings Ltd. And Samalpatti Power
        Company Pvt. Ltd.

<PAGE>

                                  SCHEDULE 5.15

                             CASH MANAGEMENT SYSTEMS

(A)      Company  and Certain of its Subsidiaries

                  1. In the ordinary course of business the Company and certain
of its Subsidiaries (other than the ARC Subsidiaries (as defined below) as
described in Part (B) of this Schedule 5.15) (collectively, the "Covanta Group")
use a centralized cash management system (the "Cash Management System") similar
to those utilized by other major corporate enterprises. The Cash Management
System is designed to collect, transfer, and disburse efficiently funds
generated through the Company's operations and to record accurately such
collections, transfers, and disbursements as they are made. The principal
components of the Cash Management System are described in detail below, from the
project level up to the parent level.

                  2. Almost all bank accounts are held with JPMorgan Chase Bank,
N.A. ("Bank One") in Chicago, Illinois. The Covanta Group members routinely
deposit, withdraw and otherwise transfer funds to, from and between their bank
accounts by various methods including check, wire transfer, automated clearing
house transfer and electronic funds transfer. In addition, the Covanta Group
members generate thousands of accounts payable and payroll checks per month from
their bank accounts.

         WASTE-TO-ENERGY PROJECTS

                  3. Among the Covanta Group entities, the Company has
constructed, operates and, in certain cases, owns or leases 25 waste-to-energy
("WTE") projects. For each WTE project, a Company subsidiary operates and
manages the facility (the "WTE Operating Subsidiary"). In almost every case, the
WTE Operating Subsidiary enters into a contract with a

<PAGE>

client municipality or municipal authority, under which the WTE Operating
Subsidiary receives fees for the operation and maintenance ("O&M") of the
facility. These fees are typically referred to as the service or operating fee.
In addition, the WTE Operating Subsidiary typically receives a share of the
revenues from sales of energy generated by the WTE facility, and may receive
pass though costs. The portion of the project cash due to the WTE Operating
Subsidiary, including, where applicable, pass through costs, share of energy
revenues, surplus funds and other amounts payable to the Company, is herein
referred to as the "Operating Fee."

                  4. The construction of each of the 25 WTE facilities was
funded by the issuance of municipal or private activity bonds (the "WTE Bonds").
In each case, a portion of the WTE Bonds (or successor issues) remains
outstanding. Each WTE Bond issue has a WTE Bond trustee. Of the 25 WTE
facilities operated by the Company, eight are owned by a municipality or
municipal authority. For these eight facilities operated by Borrowers, the WTE
Bonds are direct general obligation or revenue bonds for which the municipality
or municipal authority is the issuer and is directly responsible for debt
service. Covanta Group entities are the owners or lessees of the remaining 17
WTE facilities.

                  5. In almost every case, the WTE Bond trustee collects all
revenues due to the WTE project, including the Operating Fee and all revenues
from the sale of energy generated by the WTE project.(1) The trustee (or a third
party entity, such as a bank or escrow agent, to which the trustee has
transferred the cash) generally distributes these revenues, including those due
to the WTE Operating Subsidiary, on a monthly basis, pursuant to the terms of
the relevant

----------
(1) In the Fairfax and Alexandria WTE projects, the WTE Operating Subsidiary
collects the energy revenues from the power purchaser, as well as other revenues
from the community and from haulers delivering waste, and sends the net debt
service fee to the trustee on a monthly basis. In the Haverhill and Warren WTE
projects, a lockbox custodian collects cash and pays it over to the trustee (in
fact, the same entity as the lockbox custodian).

<PAGE>

trust indenture. The trust indenture typically specifies that the revenues must
first be applied to pay for O&M.

                  6. In general, each WTE Operating Subsidiary maintains two
accounts (both with Bank One) covering, respectively, receipts/deposits and
disbursements, and one petty cash account with Bank of America, N.A. ("Bank of
America"). Each WTE Operating Subsidiary maintains its three accounts at a zero
balance. All receipts for a specific WTE facility are deposited to that
facility's receipts account. At certain WTE facilities, receipts for
Supplemental Waste Disposal are deposited to that facility's receipts account.
As soon as the WTE Operating Subsidiary receives funds into its receipts
account, it transfers them up to the main operating subsidiary for all the WTE
projects, Covanta Waste-to-Energy, LLC (the "WTE Subgroup") and then to the
Covanta Energy Corporation main concentration account. The Borrowers anticipate
that the petty cash accounts will all be transferred to Bank One within the next
few months.

                  7. The WTE Subgroup maintains a concentration account, also
with Bank One (the "WTE Subgroup Concentration Account"), which receives cash
from the WTE Operating Subsidiaries and is swept daily to the Company. The WTE
Subgroup Concentration Account has a zero balance.

                  8. Company holds a main concentration or operating account,
again with Bank One (the "Operating Account"), into and from which flows all
cash related to the WTE Subgroup and, ultimately, the WTE Operating
Subsidiaries.

                  9. Company also maintains an overnight investment account (the
"Overnight Investment Account").

<PAGE>

                  10. Cash remaining in the Operating Account and Overnight
Investment Account are automatically invested each night by Bank One in Bank
One's commercial paper and in other first-tier securities. The following morning
the cash is re-deposited in the Operating Account and the Overnight Investment
Account. Upon notice from the Administrative Agent, at any time during the
occurrence and continuance of an Event of Default, the Company shall limit such
overnight investments to onshore accounts.

                  11. Each WTE Operating Subsidiary is responsible for funding
certain of the day-to-day operations of its facility, including payment of all
vendors and suppliers. Other day-to-day operating expenses, including payroll
and corporate overhead such as legal, finance, human resources and accounting,
are paid by the Company or other Covanta Group affiliates. Because (i) the WTE
Operating Subsidiary receives payments from the trustee only on a monthly basis,
(ii) certain expenses are paid by other upstream affiliates, and (iii) due to
the consolidated nature of the Cash Management System, the WTE Operating
Subsidiary's own accounts are maintained at a zero balance, when a WTE Operating
Subsidiary requires cash, it makes a request to the WTE Subgroup, which in turn
requests cash from the Company. The Company transfers the necessary cash from
the Operating Account into the WTE Subgroup Concentration Account, which sends
the cash down to the WTE Operating Subsidiary's disbursement account. The
Company may also agree to pay the amount due to the creditor directly, and
charge the WTE Operating Subsidiary through an inter-company account. Such
transfers and payments are made daily, and the Company weekly sends $5-10
million down to the WTE Operating Subsidiaries. This amount may change from time
to time as a result of the operating cash needs of the WTE Operating
Subsidiaries.

<PAGE>

         DOMESTIC INDEPENDENT POWER PRODUCTION PROJECTS

                  12. The Company has six independent power production ("IPP")
projects that are within the Covanta Energy Americas, Inc. ("CEA") group of
companies (the "CEA Subgroup"). In general, each IPP operating Subsidiary
maintains two accounts (all with Bank One) covering, respectively,
receipts/deposits and disbursements with the exception of one facility which
maintains an additional petty cash account with Bank of America. Each IPP
operating Subsidiary maintains its two accounts at a zero balance. Based on
distributions from each IPP project, as soon as the IPP Operating Subsidiary
receives funds into its receipts account, it transfers them up to the main
operating subsidiary for all the IPP projects, CEA. It is anticipated that the
petty cash account will be transferred to Bank One within the next few months.

                  13. In addition, five IPP operating partnerships maintain
accounts with Bank One. Management and Operating fees, as well as distributions,
are paid by each such partnership to its operators and owners, respectively,
that are within the CEA Subgroup. The CEA Subgroup account is swept daily to the
Covanta Energy Corporation main concentration account.

         WATER PROJECTS

                  14. A similar Cash Management System to that described for WTE
is in place for the Company's water project operated by Covanta Bessemer, Inc.
(the "Water Operating Subsidiary"). The Water Operating Subsidiary receives O&M
fees from the trustee of the project. The Water Operating Subsidiary transfers
cash from its accounts into a concentration account, held by Covanta Water
Systems, Inc (the "Water Subgroup Concentration Account").

<PAGE>

Cash from the Water Subgroup Concentration Account is transferred daily to the
Covanta Energy Corporation main concentration account. Both the Water Operating
Subsidiary's accounts and the Water Subgroup Concentration Account are
maintained at a zero balance. Transfers of cash from the Company to the Water
Operating Subsidiary occur in the same way as described above for the WTEs.

         PAYROLL

                  15. Various entities and bank accounts handle payroll within
the Cash Management System. The Company transfers cash to these accounts from
the Operating Account. Unless otherwise indicated below, all wages are paid
weekly.

                  16. One account held by Covanta Projects, Inc. ("CPI") with
Bank One (Account 675523435), is used to pay employees of: (i) CPI (i.e., plant
workers at all WTE facilities, other than those specifically mentioned below,
and certain supervisory personnel); (ii) Covanta Water Treatment Services, Inc.
(i.e., all plant workers at water/wastewater facilities); and (iii) Covanta
Energy Services of New Jersey, Inc. (i.e., plant workers at the Union and Warren
WTE facilities).

                  17. Another account, also with Bank One, held by CPI (Account
663000248) is used to pay employees of: (i) CPI (i.e., certain employees at the
Company's offices in Fairfield (New Jersey), as well as expatriate employees in
Asia and certain other supervisory employees); (ii) Covanta Union, Inc. (i.e.,
the business manager at the Union facility); (iii) Covanta Power Plant
Operations, (i.e., all domestic IPP plant workers ); and (iv) Covanta Water
Systems, Inc. (i.e., water/wastewater employees in Fairfield and certain
management-level employees). These wages are paid bi-weekly.

<PAGE>

         CPIH CASH MANAGEMENT SYSTEM

                  18. The CPIH Cash Management System is designed to collect,
transfer, and disburse efficiently funds generated through the CPIH's operations
and to record accurately such collections, transfers, and disbursements as they
are made. The principal components of the CPIH Cash Management System are
described in detail below.

                  19. The CPIH concentration account is held with Bank One. The
CPIH concentration account will serve to collect project distributions, make
required disbursements (including political risk insurance premiums and working
capital for international projects) and reimburse Covanta Energy Corporation]
for certain expenditures. These certain expenditures include payroll for
expatriate employees in Asia, professional fees and any other expenses that are
obligations of CPIH.

         INTERNATIONAL SUBSIDIARIES

                  20. The majority of international Subsidiaries affiliated with
CPIH fund and operate themselves with few, if any, cash inputs from CPIH.
Routinely, cash will be distributed up to CPIH on a quarterly, semi-annual or
annual basis through the channels of Subsidiary ownership. A limited amount of
cash is retained in off-shore accounts from time to time in order to fund
certain CPIH working capital and overhead expenditures outside the U.S.

         INTERNATIONAL PAYROLL

                  21. Various entities and bank accounts handle payroll within
the Cash Management System. Expatriate employees in Asia who were hired in Asia
are paid out of a Hong Kong bank account utilizing a local payroll service.
Funds for the Hong Kong account are either received from various Asian
operations (e.g. China or India) or are transferred from CPIH from time to time.
The remainder of the payroll for international Subsidiaries is self-funding

<PAGE>

utilizing revenues generated from various contractual arrangements.

          BANKRUPTCY RESERVE ACCOUNT

                  22. The Company has established an investment account at
JPMorgan Securities, Inc. in which it maintain Cash and Cash Equivalents in
respect of Class 4 Claims (the "Class 4 Claims Account"). Amounts in this Class
4 Claims Account are reserved for the satisfaction of claims pursuant to the
Plan of Reorganization.]

(B) American Ref-Fuel Holdings Corp. and its Subsidiaries

                  1. In the ordinary course of business American Ref-Fuel
Company LLC ("ARC LLC") and its subsidiaries (the indirect subsidiaries of
American Ref-Fuel Holdings Corp.) use a centralized cash management system (the
"ARC Cash Management System") similar to those utilized by other major corporate
enterprises. The ARC Cash Management System is designed to efficiently collect,
transfer, and disburse unrestricted funds generated through the operations of
ARC LLC and subsidiaries and to record accurately such collections, transfers,
and disbursements as they are made. The principal components of the ARC Cash
Management System, which manages the cash from the subsidiary level up to the
ARC LLC level are described in detail below. Distributions from ARC LLC to its
indirect parent American Ref-Fuel Holdings Corp. are also described.

                  2. ARC LLC was formed to develop, own and operate six
waste-to-energy ("WTE") projects which are each owned through an ARC LLC
subsidiary (the "WTE Operating Subsidiary"). Typically, the WTE Operating
Subsidiary has entered into one or more long-term contracts with client
municipalities or municipal authorities, under which the WTE Operating
Subsidiary receives fees for the disposal of waste by the facility. These fees
are typically

<PAGE>

referred to as the service or tip fees. These fees could also include the
receipt of pass through costs which are contractually borne by the client in the
case of uncontrollable circumstances such as changes in law. In addition, the
WTE Operating Subsidiary typically receives all or a share of the revenues from
sale of energy generated by the WTE facility.

                  3. The WTE Operating Subsidiaries own or lease all of the ARC
LLC WTE facilities. The construction of each facility was funded by the issuance
of municipal or private activity bonds (the "WTE Bonds"). In each case, a
portion of the WTE Bonds (or successor issues) remains outstanding. Each WTE
Bond issue has a WTE Bond trustee and four of the six WTE Operating Subsidiaries
have restricted bank accounts. In these cases, the revenues due to the WTE
project, including the service fee, pass through costs and the revenues from the
sale of energy are deposited into a restricted bank account held by the trustee.
The trustee generally distributes these revenues to the WTE Operating
Subsidiary's unrestricted bank account (as described below) on a monthly basis
to fund operating expenses. Typically the relevant trust indentures specify that
the revenues must first be applied to pay for operations and maintenance
expenses. Distributions to ARC LLC are released from the WTE Operating
Subsidiary upon the satisfaction of certain covenants set forth in the documents
relating to the WTE Bonds.

                  4. Almost all unrestricted bank accounts currently are held
with Wachovia Bank, N.A. ("Wachovia") in Summit, New Jersey . (ARC may chose to
move these accounts to Bank One or another bank in the future.) ARC LLC and its
subsidiaries routinely deposit, withdraw and otherwise transfer funds to, from
and between their bank accounts by various methods including check, wire
transfer, automated clearing house transfer and electronic funds transfer. In
addition to the WTE Operating Subsidiaries related accounts, ARC LLC has a

<PAGE>

marketing company subsidiary and a management company subsidiary that maintain
bank accounts at Wachovia. Typically, thousands of accounts payable checks are
generated per month from these bank accounts. In general, each subsidiary
maintains an account with Wachovia covering receipts/deposits and disbursements
and one petty cash account with a local bank (with a balance of no more than
$5,000).
                  5. Each subsidiary is responsible for funding certain of the
day-to-day operations including payment to all vendors and suppliers. Other
day-to-day operating expenses, including payroll and corporate overhead such as
legal, finance, human resources and accounting, are paid by other ARC LLC
subsidiaries and subsequently reimbursed as allocated from the other
subsidiaries. Due to the consolidated nature of the ARC Cash Management System,
the subsidiary accounts at Wachovia are maintained at a zero balance. When the
subsidiary's disbursements exceed its deposits on a given day, ARC LLC transfers
the necessary cash from the its operating account to the subsidiary's account.
Likewise when the subsidiary has deposits that generate excess cash not needed
to cover disbursements, it is transferred to the ARC LLC operating account.
These transfers are automatically enacted by Wachovia on a daily basis.

                  6. Wages are paid on a weekly basis. Payroll is funded from
the ARC LLC unrestricted account at Wachovia to the payroll service provider on
a weekly basis and reimbursed by the various ARC LLC subsidiaries on a monthly
basis and accounted for as an intercompany loan until the reimbursement is
received.

                  7. ARC LLC also maintains an investment account with Wachovia.
Cash remaining in its operating and investment account is manually invested each
night by the

<PAGE>

Corporate Cash Manager in money market instruments, commercial paper and in
other first-tier securities based on projected operating needs.

                  8. Distributions from ARC LLC to its parent Ref-Fuel Holdings
LLC are restricted by the documents relating to its debt which allow for
quarterly distributions subject to the satisfaction of certain covenants.
Distributions from Ref-Fuel Holdings are not restricted and are immediately
wired to its parents MSW I and MSW II. Distributions from MSW I and MSW II to
their indirect parent American Ref-Fuel Holdings Corp. are restricted by the
documents relating to their debt which allow for quarterly or monthly
distributions subject to the satisfaction of certain covenants. Once funds are
released to American Ref-Fuel Holdings Corp., they are unrestricted. American
Ref-Fuel Holdings Corp. pays its own operating expenses from its accounts at
Wachovia and JPMorgan Chase and is free to distribute the remainder to its
shareholders.

<PAGE>

                                  SCHEDULE 5.18
                              POST CLOSING MATTERS

1. No later than 45 days following the Closing Date, Covanta Waste to Energy,
LLC shall deliver to the Collateral Agent (i) a share certificate or
certificates representing 65% of its ownership interests in Covanta Waste to
Energy Asia Investments (provided that such division of ownership interests is
permissible under applicable law) and (ii) a completed supplement to the Pledge
and Security Agreement with respect thereto.

2. Immediately following the Closing Date, the Company shall commence reasonable
commercial efforts with respect to Generating Resources Recovery Partners, L.P.
and Pacific Energy Operating Group, L.P. (the "Subject Partnerships") to obtain
the necessary consents of the partners in such entities to permit each Subject
Partnership to become a Guarantor hereunder and a Grantor under the Pledge and
Security Agreement by executing and delivering to the Administrative Agent and
the Collateral Agent a Counterpart Agreement and otherwise taking all such
actions and execute and deliver, or cause to be executed and delivered, all such
documents, instruments, agreements that would have been required to have been
delivered pursuant to Sections 3.1(b), 3.1(h) (to the extent applicable), 3.1(i)
and 3.1(m) if the Subject Partnerships were Subsidiary Guarantors on the Closing
Date. The Company shall, or shall cause the Subject Partnerships to, consummate
such actions promptly upon receiving such consents.

3. Within 30 days of the Closing Date, Collateral Agent shall receive from
Company or the applicable Guarantor Subsidiary, (i) an ALTA survey of the
Closing Date Mortgaged Property located in Oroville, California (the "Oroville
Property"), certified to Collateral Agent with a form of certification
reasonably satisfactory to Collateral Agent and dated not more than thirty days
prior to the date of such delivery; and (ii) with respect to the Oroville
Property, a revised Title Policy deleting the "general survey exception" and
otherwise in form and substance reasonably acceptable to Collateral Agent.

4. No later than ten Business Days after the Closing Date, the Company shall
deliver to the Collateral Agent signature pages to the Intercompany Master Note
executed by each of the Foreign Subsidiaries of Company.

5. No later than ten Business Days after the Closing Date, the Company shall
deliver to the Administrative Agent executed and effective releases in form and
substance reasonably satisfactory to the Administrative Agent of foreign law
pledges of the equity interests in Ogden Power Development-Cayman, Inc. and
Covanta Philippines Operating, Inc.

6. No later than ten Business Days after the Closing Date, the Company shall
deliver to the Administrative Agent executed and effective releases in form and
substance reasonably satisfactory to the Administrative Agent of foreign law
pledges of the equity interests in Covanta Energy India Investments Ltd, Covanta
Energy India (Balaji) Limited and Covanta Energy India (Samalpatti) Ltd.

<PAGE>

7. No later than fifteen Business Days after the Closing Date, the Company shall
deliver to the Administrative Agent executed and effective releases in form and
substance reasonably satisfactory to the Administrative Agent of foreign law
pledges of the equity interests in Edison (Bataan) Cogeneration Corporation and
Covanta Energy Philippine Holdings, Inc.

8. With respect to Covanta Philippines Operating, Inc., Covanta Energy India
Investments Ltd., Covanta Energy India (Balaji) Limited and Covanta Energy India
(Samalpatti) Ltd., within 10 Business Days the Company or the applicable
Subsidiary shall take such actions, including, without limitation, causing such
issuer to register the pledge of its equity interests on its books and records
or making such filings or recordings, in each case as may be reasonably
necessary or advisable, under the laws of such issuer's jurisdiction to insure
the validity, perfection and priority of the security interest of the Collateral
Agent.

<PAGE>

                                  SCHEDULE 6.1

                              CERTAIN INDEBTEDNESS

<Table>
<Caption>
         Project                         Description                          Agreement, as amended to date
-------------------------- ---------------------------------------- --------------------------------------------------
<S>                        <C>                                      <C>
Alexandria                 Performance Guaranties                   Covanta Guaranty, dated October 1, 1985, between
                                                                    Covanta Energy Corporation and the City of
                                                                    Alexandria; Alexandria Sanitation Authority;
                                                                    Arlington County and Arlington Solid Waste
                                                                    Authority, as amended

Babylon                    Performance Guaranties                   Covanta Guaranty, dated December 20, 1985,
                                                                    between Covanta Energy Corporation, Town of
                                                                    Babylon and the Town of Babylon Industrial
                                                                    Development Agency(1)

Bristol                    Performance Guaranties                   Covanta Guaranty, dated August 1, 1985, between
                                                                    Covanta Energy Corporation and City of Bristol;
                                                                    Town of Berlin; Town of Burlington; City of New
                                                                    Britain; Town of Plainville; Town of Plymouth;
                                                                    Town of Southington; Town of Washington

Mid-Conn                   Performance Guaranties                   Covanta Guaranty, dated October 1, 1996, between
                                                                    Covanta Energy Corporation and Town of Branford,
                                                                    CT; Town of Hartland, CT; and Town of Seymour, CT

Fairfax                    Performance Guaranties                   Covanta Guaranty, dated February 1, 1988,
                                                                    between Covanta Energy Corporation and County of
                                                                    Fairfax; Fairfax County Solid Waste Authority

Haverhill                  Performance Guaranties                   Covanta Guaranty, dated December 23, 1986,
                                                                    between Covanta Energy Corporation and New
                                                                    England Power Co., as amended

Haverhill                  Performance Guaranties                   Covanta Guaranty, dated August 1998, between
                                                                    Covanta Energy Corporation and Covanta Haverhill
                                                                    Associates (f/k/a Ogden Haverhill Associates)

Hennepin                   Performance Guaranties                   Covanta Guaranty, dated July 8, 2003, between
                                                                    Covanta Energy Corporation and County of Hennepin

Hillsborough               Performance Guaranties                   Covanta Guaranty, dated January 9, 1985, between
                                                                    Covanta Energy Corporation and Hillsborough
                                                                    County, Florida
</Table>

----------
(1) This entity is a Bankrupt Subsidiary. No decision has been made yet to
assume or reject the contracts listed for this Subsidiary. The Bankrupt
Subsidiary reserves its right under Section 365 of the Bankruptcy Code to assume
or reject each of the contracts listed.

<PAGE>

<Table>
<Caption>
         Project                         Description                          Agreement, as amended to date
-------------------------- ---------------------------------------- --------------------------------------------------
<S>                        <C>                                      <C>
Honolulu                   Performance Guaranties                   Covanta Operating Guaranty, dated December 21,
                                                                    1992, between Covanta Energy Corporation and
                                                                    City and County of Honolulu

Honolulu                   Performance Guaranties                   Covanta Liquidated Damages Guaranty, dated July
                                                                    7, 1993, between Covanta Energy Corporation and
                                                                    City and County of Honolulu; Connecticut Bank
                                                                    and Trust, Hawaii Solid Waste Disposal, Energy &
                                                                    Resource Recovery Facility Trust (assigned to
                                                                    OPI 12/21/92)

Huntington                 Performance Guaranties                   Amended and Restated Covanta Guaranty, dated
                                                                    June 29, 1989, between Covanta Energy
                                                                    Corporation and Town of Huntington

Huntsville                 Performance Guaranties                   Covanta Guaranty, dated June 1, 1988, between
                                                                    Covanta Energy Corporation and Solid Waste
                                                                    Disposal Authority of the City of Huntsville

Indianapolis               Performance Guaranties                   Covanta Guaranty, dated December 1, 1985,
                                                                    between Covanta Energy Corporation and City of
                                                                    Indianapolis

Kent                       Performance Guaranties                   Covanta Guaranty, dated October 1, 1987, between
                                                                    Covanta Energy Corporation and County of Kent;
                                                                    Department of Public Works

Lancaster                  Performance Guaranties                   Covanta Guaranty, dated September 25, 1987,
                                                                    between Covanta Energy Corporation and Lancaster
                                                                    County Solid Waste Management Authority

Lee                        Performance Guaranties                   Covanta Guaranty, dated January 16, 1990,
                                                                    between Covanta Energy Corporation and Lee
                                                                    County, as amended

Marion                     Performance Guaranties                   Guaranty Agreement, dated December 11, 1986, of
                                                                    Ogden Corporation re: Obligations of Ogden
                                                                    Martin Systems of Marion, Inc. and Ogden Marion
                                                                    Land Corp. to Columbia Williamette Leasing, Inc.

Marion                     Performance Guaranties                   Covanta Guaranty, dated September 10, 1984,
                                                                    between Covanta Energy Corporation and Portland
                                                                    General Electric Co.

Marion                     Performance Guaranties                   Covanta Guaranty, dated September 10, 1984,
                                                                    between Covanta Energy Corporation and Marion
                                                                    County Oregon

Detroit                    Performance Guaranties                   Covanta Guaranty, dated December 21, 1992, and
                                                                    reaffirmed on July 1, 1996, between Covanta
                                                                    Energy Corporation and Greater Detroit Resource
                                                                    Authority
</Table>

<PAGE>

<Table>
<Caption>
         Project                         Description                          Agreement, as amended to date
-------------------------- ---------------------------------------- --------------------------------------------------
<S>                        <C>                                      <C>
Detroit                    Performance Guaranties                   Covanta Guaranty, dated December 21, 1992,
                                                                    between Covanta Energy Corporation and The
                                                                    Detroit Edison Co.

Detroit                    Performance Guaranties                   Covanta Guaranty, dated October 21, 1991, and
                                                                    amended July 1, 1996, between Covanta Energy
                                                                    Corporation and Ogden Projects, Inc., Michigan
                                                                    Waste to Energy, and Greater Detroit Resource
                                                                    Authority

Honolulu                   Performance Guaranties                   Assignment and Assumption Agreement, dated
                                                                    December 21, 1992, between Combustion
                                                                    Engineering, Inc., and Covanta Projects, Inc.

Montgomery                 Performance Guaranties                   Covanta Guaranty, dated November 16, 1990,
                                                                    between Covanta Energy Corporation and Northeast
                                                                    Maryland Waste Disposal Authority

Onondaga                   Performance Guaranties                   Amended and Restated Covanta Guaranty, dated
                                                                    November 15, 1992, between Covanta Energy
                                                                    Corporation and Onondaga County Resource
                                                                    Recovery Agency

Onondaga                   Performance Guaranties                   Guarantee Agreement, dated October 10, 2003,
                                                                    between Covanta Energy Corporation and Covanta
                                                                    Onondaga Limited Partnership

Pasco                      Performance Guaranties                   Covanta Guaranty, dated April 15, 1989, between
                                                                    Covanta Energy Corporation and Pasco County

Stanislaus                 Performance Guaranties                   Covanta Guaranty, dated May 1, 1990, between
                                                                    Covanta Energy Corporation and City of Modesto
                                                                    and County of Stanislaus

Union                      Performance Guaranties                   Covanta Guaranty, dated June 1, 1998, between
                                                                    Covanta Energy Corporation and Covanta Union,
                                                                    Inc.

Wallingford                Performance Guaranties                   Covanta Guaranty, dated February 1, 1990,
                                                                    between Covanta Energy Corporation and
                                                                    Connecticut Resources Recovery Authority
                                                                    (Wallingford)

Bessemer                   Performance Guaranties                   Guaranty, dated June 1, 1998, between Ogden
                                                                    Projects Inc. and Government Utilities Service
                                                                    Corporation

Koma-Kulshan               Performance Guaranties                   Guaranty, dated December 15, 1989, between
                                                                    Covanta Power Pacific Inc. and Puget Sound Power
                                                                    & Light Company
</Table>

<PAGE>

<Table>
<Caption>
         Project                         Description                          Agreement, as amended to date
-------------------------- ---------------------------------------- --------------------------------------------------
<S>                        <C>                                      <C>
Southeast Connecticut      Company Support Agreement                Company Support Agreement, entered into as of
                                                                    April 30, 2001, by and between American Ref-Fuel
                                                                    Company of Southeastern Connecticut and American
                                                                    Ref-Fuel Company LLC

Southeast Connecticut      Company Support Agreement                Parent Undertaking, entered into as of April 30,
                                                                    2001, by and between American Ref-Fuel Company of
                                                                    Southeastern Connecticut and American Ref-Fuel
                                                                    Company LLC

Southeast Connecticut      Performance Guaranties                   Corporate Credit Guaranty, dated as of October 1,
                                                                    2001, between American Ref-Fuel Company LLC
                                                                    and State Street Bank and Trust Company, as
                                                                    trustee (American Ref-Fuel Company LLC - II
                                                                    Series A)

Southeast Connecticut      Performance Guaranties                   Corporate Guaranty Agreement, dated as of April
                                                                    30, 2001, between American Ref-Fuel Company LLC
                                                                    and State Street Bank and Trust Company, as
                                                                    trustee, in connection with Corporate Credit
                                                                    Bonds/Tax Exempt Interest (American Ref-Fuel
                                                                    Company of Southeastern Connecticut Project -
                                                                    1992 Series A)

Southeast Connecticut      Performance Guaranties                   Corporate Guaranty Agreement, dated as of
                                                                    October 1, 2001, between American Ref-Fuel
                                                                    Company LLC and State Street Bank and Trust
                                                                    Company, as trustee in connection with the
                                                                    Corporate Credit Bonds (American Ref-Fuel
                                                                    Company LLC - I Series A)

MSW Energy Holdings        Equity Contribution Agreement            Equity Contribution Agreement dated as of
LLC/American Ref-Fuel                                               April 30, 2001, among Duke Capital Corporation,
Corp./Ref-Fuel Holdings                                             American Ref-Fuel Holdings Corp., Ref-Fuel
                                                                    Holdings LLC and American Ref-Fuel Company LLC,
                                                                    as amended

MSW Energy Holdings LLC    $200,000,000 Senior Secured Notes due    Indenture dated as of June 25, 2003 relating to
                           2010 (8.5%)                              $200,000,000 8.5% Senior Secured Notes due 2010,
                                                                    as supplemented

MSW Energy Holdings II     $225,000,000 Senior Secured Notes due    Indenture dated as of November 24, 2003,
LLC                        2010 (7.38%)                             relating to $225,000,000 7.38% Senior Secured
                                                                    Notes due 2010 as supplemented

Babylon                    Interest Rate Swap                       Interest Rate Swap Agreement, dated August 1,
                                                                    1985, between Covanta Babylon, Inc. and AIG
                                                                    Financial Product Corporation(2)

Bessemer                   OPI's Guarantee of Service Agreement     Guarantee, dated June 1, 1998, by Covanta
                           ("S.A.") obligations, capped at $3       Projects, Inc. for the benefit of The
                           million                                  Governmental Utility Services Corporation of the
                                                                    City of Bessemer
</Table>

----------
(2) Covanta Babylon has no obligation to pay AIG unless Town of Babylon pays
Covanta Babylon (i.e., The cost of the Swap is a pass through to the client.)

<PAGE>

<Table>
<Caption>
         Project                         Description                          Agreement, as amended to date
-------------------------- ---------------------------------------- --------------------------------------------------
<S>                        <C>                                      <C>
Bristol                    Guarantee of performance obligations     Electricity Guarantee, dated as of August 1,
                           under Power Purchase Agreement ("PPA").  1985, by Covanta Energy Corporation to and for
                                                                    the benefit of The Connecticut Light and Power
                                                                    Company

CEC                        Program Agreement guarantees CEC's       Program Agreement, dated October 20, 2003,
                           obligations to reimburse amounts paid    between ACE American Insurance Company and
                           by ACE for losses and expenses under     Covanta Energy Corporation, Inc.
                           the retention for Workers'
                           Compensation, General Liability
                           Automobile Liability for the policy
                           period. This is a post petition
                           insurance policy.

Haripur                    Performance L/C's securing obligations   L/C issued per Application for Standby Letter of
                           under Power Purchase Agreement ("PPA")   Credit, dated June 23, 2004, between Covanta
                                                                    Energy Corporation and Citibank

Haripur                    Guarantee of operations and              Guarantee dated April 2, 1999 from Covanta
                           maintenance ("O&M") obligations          Energy Group, Inc. as amended October 31, 2004
                                                                    to NEPC Consortium Power Ltd

Huntington                 Guarantee of Partnership obligations,    Covanta Corporation Guarantee Agreement,  dated
                           including tax indemnity and              January 30, 1992, by Covanta Energy Corporation
                           termination put price.                   to Allstate Insurance Co. and Ogden Martin
                                                                    Systems of Huntington Resource Recovery Nine
                                                                    Corporation

                                                                    First Amended & Restated Ogden Corporation
                                                                    Guarantee Agreement:  dated January 30, 1992,
                                                                    for Mission Zeta and Pitney Bowes Credit
                                                                    Corporation

[Koma Kulshan              Guarantee of PPA Obligations             Guarantee, dated December 15, 1989, by Covanta
                                                                    Power Pacific, Inc. (f/k/a Pacific Energy) for
                                                                    the benefit of Puget Sound Power & Light Company]

Madurai                    Parent support undertakings with         Share Retention and Financial Support Agreement
                           respect to standby Equity Commitment,    dated April 25, 2000 among Covanta Energy
                           Interest Rate Differential and equity    Corporation, Covanta Energy (Balaji) Ltd.,
                           retention                                Samayanallur Power Investments Pvt. Ltd., ICICI
                                                                    Limited, and Madurai Power Corporation Pvt. Ltd.

Madurai                    Guarantee of O&M obligations             O&M Guarantee dated April 25, 2000 by Covanta
                                                                    Energy Corporation for benefit of Madurai Power
                                                                    Corporation Pvt. Ltd.

Madurai                    Contingent share premium                 Shareholders Agreement dated April 25, 2000
                                                                    among Covanta Energy India (Balaji) Ltd.,
</Table>

<PAGE>

<Table>
<Caption>
         Project                         Description                          Agreement, as amended to date
-------------------------- ---------------------------------------- --------------------------------------------------
<S>                        <C>                                      <C>
                                                                    Madurai Power Corporation Pvt. Ltd.,
                                                                    Samayanallur Power Investments Pvt. Ltd. and
                                                                    Wartsilla BPC Investment LLC

Union                      Guarantee of Operating Lease             Subordinated Rent Guarantee Agreement:  dated
                           Obligations                              June 1, 1998, by Covanta Energy Corporation for
                                                                    the benefit of the Union County Utilities
                                                                    Authority and Summit Bank, as Trustee

DHC and CEC                Indemnity Agreement                      Indemnity Agreement with ACE that supports the
                                                                    surety program with ACE

CEC                        Program Agreement guarantees CEC's       Program Agreement dated October 20, 2004 between
                           obligations to reimburse amounts paid    ACE American Insurance Company and Covanta
                           by ACE for losses and expenses under     Energy Corporation
                           the retention for WC, GL and Auto
                           liability for the policy period

American Ref-Fuel          Indemnity Agreement                      Indemnity Agreement, dated as of April 30, 2001
Company LLC                                                         with certain affiliates of American Insurance
                                                                    Group that supports the surety program with AIG

American Ref-Fuel          Indemnity Agreement                      Indemnity Agreement, dated as of April 26, 2004
Company LLC                                                         with Travelers Casualty and Surety Company of
                                                                    America that supports the surety program with
                                                                    Travelers

Hempstead                  Project debt                             Lease Agreement dated as of December 1, 1985,
                                                                    between the Town of Hempstead Industrial
                                                                    Development Agency, as Lessor, and American
                                                                    Ref-Fuel Company of Hempstead, as Lessee; Lessee
                                                                    Guarantee and Security Agreement dated as of
                                                                    September 1, 1986, between American Ref-Fuel
                                                                    Company of Hempstead and Bankers Trust Company,
                                                                    as Trustee

Hempstead.                 Company Support Agreement                Second Amended and Restated Company Support
                                                                    Agreement, entered into as of April 30, 2001, by
                                                                    and between American Ref-Fuel Company of
                                                                    Hempstead and American Ref-Fuel Company LLC

Essex                      Project debt                             Conditional Sale Agreement dated as of February 28,
                                                                    1986, between American Ref-Fuel Company of
                                                                    Essex County, as Purchaser, and The Port
                                                                    Authority of New York and New Jersey, as Seller,
                                                                    as amended

Essex                      Company Support Agreement                Amended and Restated Company Support Agreement,
                                                                    dated as of December 1, 1997, by and among
                                                                    American Ref-Fuel Company of Essex County,
                                                                    Browning-Ferris Industries, Inc. and Duke
                                                                    Capital Corporation
</Table>

<PAGE>

<Table>
<Caption>
         Project                         Description                          Agreement, as amended to date
-------------------------- ---------------------------------------- --------------------------------------------------
<S>                        <C>                                      <C>
Essex.                     Reimbursement Agreement                  Reimbursement Agreement, by and among, ARC
                                                                    Essex, American Ref-Fuel Company LLC and Allied
                                                                    Waste Industries, Inc., dated as of April 30,
                                                                    2001

Essex
                           Reimbursement Agreement                  Reimbursement Agreement, by and among, ARC Essex,
                                                                    American Ref-Fuel Company LLC and Duke Capital Corporation,
                                                                    dated as of April 30, 2001.

SECONN                     Project debt                             Lease Agreement dated as of September 1, 1988,
                                                                    between the Connecticut Resources Recovery
                                                                    Authority and American Ref-Fuel Company of
                                                                    Southeastern Connecticut, as amended; Lessee
                                                                    Guarantee and Security Agreement dated as of
                                                                    December 1, 1988, between American Ref-Fuel
                                                                    Company of Southeastern Connecticut and the
                                                                    Trustee, as amended

Niagara                    Project debt                             Amended and Restated Installment Sale Agreement
                                                                    dated as of June 1, 2001, between the Niagara
                                                                    County Industrial Development Agency, Niagara
                                                                    County, New York and American Ref-Fuel Company
                                                                    of Niagara, L.P.; Memorandum of Amended and
                                                                    Restated Installment Sale Agreement dated as of
                                                                    June 1, 2001, between the Niagara County
                                                                    Industrial Development Agency and American
                                                                    Ref-Fuel Company of Niagara, L.P.

Niagara                    Performance Guaranties                   Guaranty Agreement, entered into as of March 9,
                                                                    2004 by American Ref-Fuel Company LLC in favor
                                                                    of Constellation Power Source, Inc.

Niagara                    Performance Guaranties                   Guaranty Agreement, entered into as of October 13,
                                                                    2004 by American Ref-Fuel Company LLC in favor of
                                                                    Constellation New Energy, Inc.

Niagara                    Performance Guaranties                   Corporate Guaranty Agreement, entered into as of
                                                                    April 30, 2001, by American Ref-Fuel Company
                                                                    LLC, in favor of Occidental Chemical Corporation
                                                                    and Hooker Energy Corporation

SEMASS                     Project debt                             Amended and Restated Loan and Security Trust
                                                                    Agreement dated as of November 1, 2001, among
                                                                    the Massachusetts Development Finance Agency,
                                                                    SEMASS Partnership and State Street Bank and
                                                                    Trust Company, as Trustee

SEMASS                     Company Support Agreement                Company Support Agreement, entered into as of
                                                                    November 1, 2001, by and between American
                                                                    Ref-Fuel Operations of SEMASS, L.P. and American
                                                                    Ref-Fuel Company LLC
</Table>

<PAGE>

<Table>
<Caption>
         Project                         Description                          Agreement, as amended to date
-------------------------- ---------------------------------------- --------------------------------------------------
<S>                        <C>                                      <C>
SEMASS                     Company Support Agreement                Contingent Capital Loan Agreement, entered into
                                                                    as of November 1, 2001, by and between American
                                                                    Ref-Fuel Operations of SEMASS, L.P. and American
                                                                    Ref-Fuel Company LLC

Delaware Valley            Project debt                             Amended and Restated Lease Agreement dated as of
                                                                    April 1, 1997, between Fleet National Bank, as
                                                                    Owner Trustee and Lessor, and Delaware Resource
                                                                    Management, Inc., and American Ref-Fuel Company
                                                                    of Delaware Valley, L.P.,  (f/k/a American
                                                                    Ref-Fuel Company of Delaware County, L.P.) as
                                                                    Lessee; and Participation Agreement dated as of
                                                                    April 1, 1997, among TIFD III-L Inc., as Owner
                                                                    Participant, Delaware Resource Management Inc.,
                                                                    as Original Lessee, American Ref-Fuel Company of
                                                                    Delaware County, L.P., as Lessee, Fleet National
                                                                    Bank, as Owner Trustee, First Union National
                                                                    Bank, as Indenture Trustee, Browning-Ferris
                                                                    Industries, Inc., and Delaware Resource Lessee
                                                                    Trust

Delaware Valley            Performance Guaranties                   Corporate Guaranty Agreement I dated as of
                                                                    April 30, 2001, made by American Ref-Fuel Company LLC
                                                                    to and for the benefit of State Street Bank and
                                                                    Trust Company (as successor to Fleet National
                                                                    Bank), as Owner Trustee

Delaware Valley            Performance Guaranties                   Corporate Guarantee Agreement II dated as of
                                                                    April 30, 2001, made by American Ref-Fuel
                                                                    Company LLC to and for the benefit of State
                                                                    Street Bank and Trust Company (as successor to
                                                                    Fleet National Bank), as Owner Trustee

Delaware Valley            Performance Guaranties                   Corporate Guaranty Agreement III dated as of
                                                                    April 1, 2001, made by American Ref-Fuel Company LLC to
                                                                    and for the benefit of General Electric Capital
                                                                    Corporation

Delaware Valley            Performance Guaranties                   Corporate Guaranty Agreement IV dated as of
                                                                    April 1, 2001, made by American Ref-Fuel Company LLC to
                                                                    and for the benefit of General Electric Capital
                                                                    Corporation

Delaware Valley            Performance Guaranties                   Amended and Restated Corporate Guarantee
                                                                    Agreement I entered into as of August 28, 2001, by
                                                                    American Ref-Fuel Company LLC, in favor of and for the
                                                                    benefit of Viacom, Inc.

Delaware Valley            Performance Guaranties                   Amended and Restated Corporate Guarantee
                                                                    Agreement I entered into as of August 28, 2001, by
                                                                    American Ref-Fuel Company LLC, in favor of and for the
                                                                    benefit of Viacom, Inc.
</Table>

<PAGE>

<Table>
<Caption>
         Project                         Description                          Agreement, as amended to date
-------------------------- ---------------------------------------- --------------------------------------------------
<S>                        <C>                                      <C>
Delaware Valley            Performance Guaranties                   Guarantee Agreement dated as of August 28, 2001,
                                                                    from American Ref-Fuel Company LLC to and for the
                                                                    benefit of the Delaware County Solid Waste
                                                                    Authority

American Ref-Fuel          $275,000,000 Senior Notes due 2015       Indenture dated as of May 1, 2003, as
Company LLC                (6.26%)                                  supplemented

Hempstead                  $42,670,000 Corporate Credit Bonds       Amended and Restated Company Sublease Agreement,
                                                                    dated as of June 1, 2001, between the Agency and
                                                                    the Company

Hempstead                  Performance Guaranties                   Parent Company Guaranty, entered into as of
                                                                    June 1, 2001, by American Ref-Fuel Company LLC in
                                                                    favor of The Chase Manhattan Bank, as trustee

Niagara                    165,010,000 Corporate Credit Bonds       Amended and Restated Company Sublease Agreement,
                                                                    dated as of June 1, 2001, between the Agency and
                                                                    the Company

Niagara                    Performance Guaranties                   Parent Company Issuer Guaranty, entered into as
                                                                    of June 1, 2001, by American Ref-Fuel Company
                                                                    LLC, in favor of Niagara County Industrial
                                                                    Development Agency

Niagara                    Performance Guaranties                   Parent Company Guaranty, entered into as of
                                                                    June 1, 2001, by American Ref-Fuel Company LLC, in
                                                                    favor of Manufacturers and Traders Trust Company

SECONN                     $30,000,000 Corporate Credit Bonds       Loan Agreement dated as of January 15, 1992,
                                                                    between the Authority and American Ref-Fuel
                                                                    Company of Southeastern Connecticut relating to
                                                                    the Bonds

SECONN                     $13,500,000 Corporate Credit Bonds       Loan Agreement dated as of December 1, 1998,
                                                                    between the Authority and American Ref-Fuel
                                                                    Company of Southeastern Connecticut, with regard
                                                                    to the BFI Series A Bonds, as amended; and Loan
                                                                    Agreement dated as of December 1, 1998, between
                                                                    the Authority and American Ref-Fuel Company of
                                                                    Southeastern Connecticut, with regard to the
                                                                    Duke Capital Series A Bonds, as amended

Delaware Valley            Letter of Credit                         Letter of Credit issued for the benefit of the
                                                                    Pennsylvania Department of Environmental
                                                                    Protection in a face amount of $1,457,017 with a
                                                                    maturity date of May 1, 2006.

Delaware Valley            Indemnity Agreement                      Indemnity Letter, dated as of April 16, 1997,
                                                                    from American Ref-Fuel Company of Delaware
                                                                    Valley, L.P. to Delaware County Industrial
                                                                    Development Authority
</Table>

<PAGE>

<Table>
<Caption>
         Project                         Description                          Agreement, as amended to date
-------------------------- ---------------------------------------- --------------------------------------------------
<S>                        <C>                                      <C>
Alexandria 975 TPD         Project debt                             Amended and Restated Conditional Sale and
Mass Burn WTE Facility.                                             Security Agreement, dated July 1, 1998
                                                                    between Alexandria Sanitation Authority,
                                                                    Arlington Solid Waste and Covanta
                                                                    Alexandria/Arlington Inc.

Alexandria WTE Facility    Project debt                             Operating Lease Agreement, dated November 1,
Clean Air Act Retrofit.                                             1998, between City of Alexandria, Virginia
Operating Lease (Not on                                             Sanitation Authority and Arlington County Solid
Balance Sheet)                                                      Waste Authority, and Covanta
                                                                    Alexandria/Arlington, Inc.

Babylon 750 TPD Mass       Project debt                             Facility Lease Agreement, dated December 1,
Burn WTE Facility.                                                  1985, as amended and restated, dated
                                                                    August 1, 1995, between Covanta Babylon, Inc.
                                                                    and the Town of Babylon Industrial Development
                                                                    Agency; and Interest Rate Swap Agreement, dated
                                                                    as of August 1, 1995 between Covanta Babylon,
                                                                    Inc. and AIG Financial Products Corp.

Bristol 650 TPD Mass       Project debt                             Loan Agreement, dated April 15, 2005, between
Burn WTE Facility.                                                  Covanta Bristol, Inc. and the Bristol Resource
                                                                    Recovery Facility Operating Committee, as
                                                                    amended.

Fairfax 3000 TPD Mass      Project debt                             Conditional Sale and Security Agreement, dated
Burn WTE Facility.                                                  February 1, 1988 between Covanta Fairfax, Inc.
                                                                    and Fairfax County Solid Waste Authority

Haverhill 1650 TPD Mass    Project debt                             Amended and Restated Loan Agreement, dated August
Burn WTE Facility.                                                  1, 1998, between Covanta Haverhill Associates and
                                                                    Massachusetts Industrial Finance Agency; OHA
                                                                    Series 1998 B Loan Agreement, dated as of
                                                                    December 1, 1998 between Covanta Haverhill Associates
                                                                    and Massachusetts Development Finance Agency; OHA
                                                                    Series 1999 A Loan Agreement, dated as of December 1,
                                                                    1999 between Covanta Haverhill Associates and
                                                                    Massachusetts Development Finance Agency; and
                                                                    Amended and Restated Loan Agreement, dated as of
                                                                    August 1, 1998, between SBR Associates (a Covanta
                                                                    Energy corporation ("CEC") subsidiary) and
                                                                    Massachusetts Industrial Finance Agency
</Table>

<PAGE>

<Table>
<Caption>
         Project                         Description                          Agreement, as amended to date
-------------------------- ---------------------------------------- --------------------------------------------------
<S>                        <C>                                      <C>
Huntington 750 TPD Mass    Project debt                             Lease Agreement, dated January 15, 1997, between
Burn WTE Facility.                                                  Ogden Martin Systems of Huntington Limited
                                                                    Partnership and Suffolk County Industrial
                                                                    Development Agency

Indianapolis 2362 TPD      Project debt                             Financing Agreement, dated September 1, 1985,
Mass Burn WTE Facility.                                             between Covanta Indianapolis, Inc. and the City
                                                                    of Indianapolis

Lake 528 TPD Mass Burn     Project debt                             Loan Agreement, dated November 1, 1988 between,
WTE Facility.                                                       Covanta Lake Inc. and Lake County, Florida, as
                                                                    first supplemented by the First Supplemental Loan
                                                                    Agreement dated 10-1-93 and the Second
                                                                    Supplemental Loan Agreement dated 12-14-04

Marion 550 TPD Mass Burn   Project debt                             Loan Agreements, dated October 1, 1995 and
WTE Facility.                                                       May 1, 1996, between Covanta Marion, Inc. and
                                                                    Marion County, Oregon

Onondaga 990 TPD Mass      Project debt                             Amended and Restated Lease Agreement, dated
Burn WTE Facility.                                                  October 10, 2003, between Covanta Onondaga
                                                                    Limited Partnership and Onondaga County Resource
                                                                    Recovery Agency, as amended; Amended & Restated
                                                                    Limited Partnership Agreement, dated November 15,
                                                                    1994, between Covanta Onondaga, Inc., Ford
                                                                    Motor Credit Co., Bushton Co., and DCC Project
                                                                    Finance Nine, Inc. (Partnership deal treated
                                                                    partially as debt for accounting purposes, but
                                                                    transaction is essentially a Contingent
                                                                    Liability.  See Schedule 7.4 (iv))

Stanislaus 800 TPD Mass    Project debt                             Lease Agreement, dated January 1, 2000, between
Burn WTE Facility.                                                  Covanta Stanislaus, Inc. and Stanislaus
                                                                    Waste-to-Energy Financing Agency

Union 1440 TPD Mass Burn   Project debt                             Facility Lease Agreement, dated June 15, 1998,
WTE Facility                                                        between the Union County Utilities Authority and
                                                                    Ogden Martin Systems of Union, Inc.
</Table>

<PAGE>

<Table>
<Caption>
         Project                         Description                          Agreement, as amended to date
-------------------------- ---------------------------------------- --------------------------------------------------
<S>                        <C>                                      <C>
Wallingford 420 TPD Mass   Project debt                             Amended and Restated Lease Agreement, dated
Burn WTE Facility.                                                  February 1, 1990 between Ogden Projects of
                                                                    Wallingford LP and Connecticut Resources
                                                                    Recovery Authority

Warren 400 TPD Mass        Project debt                             Agreement of Sale, dated July 1, 1986, between
Burn WTE Facility.(3)                                               Warren Energy Resource Co. and Pollution Control
                                                                    Financing Authority

Yanjiang                   Project debt                             RMB working capital loan commitment, dated
                                                                    June 3, 2005, between Taixing Ogden Yanjiang
                                                                    Cogeneration Company, Ltd. And Bank of China,
                                                                    Taixing Industrial Park Sub-branch

Madurai                    Project debt                             Common Agreement, dated April 25, 2000, as
                                                                    amended, between Madurai Power Corporation Pvt.
                                                                    Ltd. (f/k/a Balaji Power Corporation Pvt.
                                                                    Ltd)and ICICI Limited

Madurai                    Project debt                             Working Capital Loan Consortium Agreement, dated
                                                                    August 29, 2002, among Madurai Power Corporation
                                                                    Pvt. Ltd. and, ICICI Bank Ltd., State Bank of
                                                                    India, and Central Bank of India

Madurai                    Project debt                             Intercreditor Agreement, dated April 25, 2000,
                                                                    between ICICI Limited and Guarantees, dated
                                                                    April 25, 2000, from Ogden

Magellan(4)                Project debt                             Omnibus Agreement, dated April 11, 2000,
                                                                    among Magellan Cogeneration, Inc., Solidbank
                                                                    Corporation, United Coconut Planters Bank, SB
                                                                    Capital Investment Corporation, Security Bank
                                                                    Corporation, Banco de OroUniversal Bank and Bank
                                                                    of Commerce

Magellan(4)                Trade Creditor Debt                      To be issued by the court in connection with
                                                                    corporate rehabilitation proceedings

Quezon                     Guarantee of O&M Obligations             Operator Guarantee dated December 10, 1996 by
                                                                    Covanta Projects Inc. for the benefit of Quezon
                                                                    Power (Philippines), Limited Co.

Samalpatti                 Parent Undertaking to Retain Interest    Letter Agreement dated December 16, 1999 between
                                                                    Infrastructure Finance Company Ltd. and Covanta
                                                                    Energy Group, Inc.

Samalpatti                 Guarantee of O&M Obligations             O&M Guarantee dated December 16, 1999 by Covanta
                                                                    Energy Group, Inc. for the benefit of Samalpatti
                                                                    Power Company Pvt. Ltd.
</Table>

------
         (3) This entity is a Bankrupt Subsidiary/Affected Entity. No decision
has been made yet to assume or reject the contracts listed for this Subsidiary.
The Bankrupt Subsidiary reserves its right under Section 365 of the Bankruptcy
Code to assume or reject each of the contracts listed.

         (4) Magellan Cogeneration, Inc. ("MCI") is an Affected Entity. Although
MCI is not presently subject to the Credit Agreement covenants, the final
resolution of corporate rehabilitation proceedings may result in MCI becoming a
Subsidiary of Covanta.

<PAGE>

<Table>
<Caption>
         Project                         Description                          Agreement, as amended to date
-------------------------- ---------------------------------------- --------------------------------------------------
<S>                        <C>                                      <C>
Samalpatti                 Contingent Share Premium                 Agreement dated December 4,1999 among Covanta
                                                                    Energy India (Samalpatti) Ltd., Goa Holdings
                                                                    Ltd. and Fenmor Energy Ltd.

Trezzo                     Contingent Subordinated Loan/Equity      Capitalization Agreement dated July 23, 2004
                           Commitment                               among Covanta Waste to Energy of Italy, Inc.,
                                                                    Actelios S.p.A. and Prima S.r.l.

Trezzo                     Guarantee of Service and Maintenance     Ogden Guarantee dated February 9, 2001 between
                           Obligations                              Prima S.r.l. and Covanta Energy Group, Inc.

ARC SEMASS                 Letter of Credit                         Letter of Credit issued for the benefit of
                                                                    Rockland Trust Company as Trustee, Massachusetts
                                                                    Department of Environmental Protection in a face
                                                                    amount of $1,718,500

ARC SEMASS                 Letter of Credit                         Letter of Credit issued for the benefit of
                                                                    Rockland Trust Company as Trustee, Massachusetts
                                                                    Department of Environmental Protection in a face
                                                                    amount of $1,463,942

ARC SEMASS                 Letter of Credit                         Letter of Credit issued for the benefit of
                                                                    Rockland Trust Company as Trustee, Massachusetts
                                                                    Department of Environmental Protection in a face
                                                                    amount of $881,765

ARC SEMASS                 Letter of Credit                         Letter of Credit issued for the benefit of
                                                                    Rockland Trust Company as Trustee, Massachusetts
                                                                    Department of Environmental Protection in a face
                                                                    amount of $757,122

ARC SEMASS                 Letter of Credit                         Letter of Credit issued for the benefit of
                                                                    Rockland Trust Company as Trustee, Massachusetts
                                                                    Department of Environmental Protection in a face
                                                                    amount of $1,733,424
</Table>

<PAGE>

                                                                SURETY BONDS

<Table>
<Caption>
                                                         ENERGY BONDS
  GROUP  BOND NUMBER       PROJECT               PRINCIPAL             SURETY COMPANY          BOND TYPE              BOND AMOUNT
<S>      <C>         <C>                   <C>                         <C>                <C>                         <C>
WTE      8161-67-43  Alexandria/Arlington  OMS Alexandria/Arlington     Chubb             Closure Bond                   $130,000
         8161-67-83  Fairfax               OMS Fairfax                  Chubb             Closure Bond                   $654,200
         8136-31-01  Haverhill             OMS Haverhill                Chubb             Closure Bond                 $8,555,000
         8136-30-23  Indianapolis          OMS Indianapolis             Chubb             Closure Bond                   $218,159
                                           Covanta Lee & Covanta
         45009664    Lee & Hillsborough    Hillsborough                 Greenwich         Performance/Payment Bond        $50,000
         8182-89-41  Three Mountain Power  Three Mountain Power LLC     Chubb/AIG         Subdivision Bond                $60,800
WATER    8182-92-97  Wilmington            DSS Environmental, Inc.      Chubb             Performance/Payment Bond       $802,981
         8187-70-76  Watch Tower           DSS Environmental, Inc.      Chubb             Performance/Payment Bond     $1,439,900
         8182-92-05  Delhi                 DSS Environmental, Inc.      Chubb             Performance/Payment Bond     $2,883,000
         8182-92-98  Stamford              DSS Environmental, Inc.      Vigilant (Chubb)  Performance/Payment Bond     $3,400,000
ARC      104209108   Niagara               City of Tonawanda            Travelers         Performance/Payment Bond        245,586
         104209105   Niagara               Town of Tonawanda            Travelers         Performance Bond              1,070,051
         104209104   Niagara               Village of Kenmore           Travelers         Performance Bond                306,629
         104209110   Niagara               Town of Cheektowaga          Travelers         Performance Bond              1,434,592
                                           Niagara Solid Waste
         104209103   Niagara               Management Consortium        Travelers         Performance Bond                878,517
         104209102   Niagara               Town of Amherst              Travelers         Performance Bond              1,332,992
         104209111   Niagara               Town of Alden                Travelers         Performance Bond                114,943
         104209106   Niagara               Village of Alden             Travelers         Performance Bond                 43,485
         104209112   Niagara               Village of Williamsville     Travelers         Performance Bond                 99,162
         104209107   Niagara               Village of Blasdell          Travelers         Performance Bond                 49,581
         ESD7315555  TransRiver            City of New York             AIG               Performance Bond            15,6111,400
         ESD7312049  TransRiver            City of New York             AIG               Performance Bond              1,810,514
         104349042   TransRiver            City of Philadelphia         Travelers         Performance Bond              2,093,000
                                           Delaware County Solid
         104349040   Delaware Valley       Waste Authority              Travelers         Performance Bond              7,500,000
                                                                                          TOTAL                        52,684,393
</Table>

<PAGE>

                                  SCHEDULE 6.2

                                  CERTAIN LIENS

Pledge by Covanta Waste to Energy of Italy, Inc. (CWTEI) to Banca Nazionale del
Lavoro S.p.A., as agent, in connection with the Trezzo project financing and
pursuant to the Contratto di Capitalizzazion dated July 23, 2004, of (i) a CWTEI
bank account securing its obligation to contribute equity or make subordinated
loans of up to 130k Euros if the project waste permit is not increased to 500
tonnes/day by 06-30-06 and up to 990k Euros in the event of an adverse outcome
in ongoing arbitration with the EPC contractor; and (ii) CWTEI's (a) equity
interest in Prima s.r.l. (the project company) and (b) right to be repaid by
Prima s.r.l. for any amounts owed to CWTEI by Prima s.r.l., in the event of an
acceleration of the underlying non-recourse project financing.

Liens and pledges with respect to indebtedness, leases and other material
project documents concerning Projects and electrical generation plants and
cogeneration plants of Affiliates to which Foreign Subsidiaries are a party

Liens in existence on the date of this Agreement on or with respect to assets of
any Subsidiary of Company, to the extent such Liens secure an obligation of such
Subsidiary of Company (or an Affiliate in which such Subsidiary is an equity
owner) to Persons other than the Company and its Excluded Subsidiaries and their
respective Affiliates, so long as (a) such obligation is associated with a
Project (or a project of an Affiliate in which such Subsidiary is an equity
owner), (b) such Lien is limited to (1) assets associated with such Project (or
project of an Affiliate in which such Subsidiary is an equity owner) (which in
any event shall not include assets held by any Borrower other than a Borrower
whose sole business is the ownership and/or operation of such Project and
substantially all of whose assets are associated with such Project), and/or (2)
equity interests in such Subsidiary, but in the case of clause (2) only if such
Subsidiary's sole business is the ownership and/or operation of such Project (or
project of an Affiliate in which such Subsidiary is an equity owner) and
substantially all of such Subsidiary's assets are associated with such Project
(or project of an Affiliate in which such Subsidiary is an equity owner) and (c)
such obligation is otherwise permitted under this Agreement.(1)

Liens on Intellectual Property set forth on Schedule 4.7 to the Pledge and
Security Agreement.

Liens in existence on the date of this Agreement evidenced by financing
statements listed on Annex A hereto.

----------
(1) Emergence entities may have certain outstanding obligations with respect to
Bankrupt Subsidiaries; however, we cannot make representations that agreements
will be assumed prior to the emergence of those entities.

                 [Annex A with UCC search results is appended.]
<PAGE>

                                  SCHEDULE 6.7

                               CERTAIN INVESTMENTS

<Table>
<Caption>
                  PROJECT/ENTITY
                                                            NATURE OF INVESTMENT                        AMOUNT
-------------------------------------------------------------------------------------------------------------------------
<S>                                                <C>                                         <C>
Trezzo                                             Additional equity or subordinated loans     Up to 1.12 million Euros

Italian and/or United Kingdom waste-to-energy      Additional equity                           Up to $7 million
project additional investments

Madurai                                            Contingent share premium                    Up to $360,000

Samalpatti                                         Contingent share premium                    Up to $130,000

MSW I                                              Purchase of a .2% interest in Duke           $1,307,000
                                                   later this year (September/October)
</Table>

<PAGE>

                                 SCHEDULE 6.9-A

                         CERTAIN PERMITTED ASSET SALES

<Table>
<Caption>
                   PROJECT OR SUBSIDIARY                                       NATURE OF ASSET SALE
------------------------------------------------------------ ---------------------------------------------------------
<S>                                                          <C>
Three Mountain Power Project                                 Disposition of development rights including permits and
                                                             any project assets

Bessemer                                                     Disposition of operating agreement

Burney Mountain Power Project                                Disposition of project assets or ownership of project entity

Mountain Lassen Power Project                                Disposition of project assets or ownership of project entity

Huantai Power Project (China)                                Disposition of ownership of project entity

Linan Power Project (China)                                  Disposition of ownership of project entity

Yanjiang Power Project (China)                               Disposition of ownership of project entity and/or sale
                                                             of land use rights for excess property

DSS Environmental                                            Sale of assets or stock

Pacific Energy Resources, Inc.                               Disposition of project assets or ownership of project entity

Santa Clara Biogas Project                                   Disposition of project assets or ownership of project entity

Oxnard Biogas Project                                        Disposition of project assets or ownership of project entity

Gude Biogas Project                                          Disposition of project assets or ownership of project entity

Bataan Power Project (Philippines)                           Disposition of project assets or ownership of project entity

Island Power Project (Philippines)                           Disposition of equity ownership and advances

Magellan Power Project (Philippines)                         Disposition of ownership of project entity

General                                                      Inventory Spare Parts & Equipment
</Table>

<PAGE>

                                 SCHEDULE 6.9-B

                        FOREIGN SUBSIDIARY RESTRUCTURING

The parties acknowledge that, after the Closing Date, the Company ("Covanta")
intends to restructure the ownership of most of its non-US operations in a
manner designed to achieve certain business and treasury objectives. This
restructuring will involve the following features:

1.       Ownership Modifications. Covanta intends to consolidate the ownership
         of some or all of its non-US subsidiaries under Covanta Energy India
         Investments Ltd. ("CEIIL" - an existing first-tier subsidiary/holding
         company of Covanta Power International Holdings, Inc. ("CPIH")
         organized in Mauritius); another existing first-tier non-US holding
         company held by CPIH; or a newly organized first-tier non-US holding
         company held by the Covanta group ("Holdco"). Further, Covanta intends
         to hold 100% of Holdco's outstanding stock through a new first-tier
         foreign subsidiary ("Newco") organized outside of the United States
         (e.g., Mauritius or the Cayman Islands). Covanta intends to
         characterize Newco as a partnership for US tax purposes, the equity of
         Newco being held by CPIH and another (existing or new) US Covanta group
         member ("US Subsidiary"). Finally, as Newco will be fulfilling a
         treasury and holding company function on behalf of the CPIH group,
         Covanta intends to restructure the ownership of its various non-US
         subsidiary note receivable interests (e.g., the CEIIL notes held by
         CPIH) with Newco. The result being that the existing obligor (e.g.,
         CEIIL) would be indebted to Newco, and Newco would be indebted to CPIH
         ("US to non-US lending").

2.       Approved Steps. The Company would like to ensure that it can, without
         seeking a waiver under the Agreement, effect the following: (1)
         transfer ownership of existing non-US entities under Holdco, US
         Subsidiary and/or any first-tier non-US subsidiary (including the
         ability to contribute down to lower tier subsidiaries); (2) create
         Newco and, if necessary, US Subsidiary, and transfer from CPIH and
         other Covanta group members, as appropriate, the ownership of Holdco
         and other first-tier non-US subsidiaries to Newco; (3) modify the US to
         non-US lending in the manner noted in Schedule 6.9-B.1 above; (4) if
         necessary, liquidate (for US tax and/or legal purposes) US subsidiaries
         of CPIH (e.g., OPI Quezon Inc.); and (5) release any existing pledges
         of first-tier foreign subsidiary stock to effect the foregoing.

<PAGE>

                                  SCHEDULE 6.12

                      CERTAIN TRANSACTIONS WITH AFFILIATES

o        Corporate Services and Expense Reimbursement Agreement between
         Danielson Holding Corporation and Covanta Energy Corporation dated
         March 10, 2004;

o        Master Waste Delivery Agreements dated as of October 1, 1995, between
         TransRiver and certain of the Ref-Fuel project partnerships, other
         written and oral brokerage arrangements between TransRiver and the
         remaining Ref-Fuel project partnerships and similar brokerage
         arrangements for metals sales among all such parties;

o        Management Services Agreement, dated November 1, 2003, between Covanta
         Energy Asia Pacific Ltd. and Covanta Energy India Investments Ltd.;

o        Management Services Agreement, dated January 1, 2002, between Covanta
         Energy (Thailand) Ltd. and Covanta Philippines Operating, Inc.;

o        Consultancy and Management Services Agreement, dated March 19, 2000,
         between Covanta Energy Philippines Holdings, Inc. (f/k/a Ogden Energy
         Philippine Holdings, Inc.) and Covanta Philippines Operating,
         Inc.(f/k/a Ogden Philippines Operating, Inc.);

o        Asset Management Services Agreement, dated January 1, 2002, between
         Covanta Energy (Thailand) Ltd. and Edison (Bataan) Cogeneration Corp.;

o        Management Services Agreement, dated July 1, 2002, between Covanta
         Energy (Thailand) Ltd. and Covanta One Ltd.;

o        Consultancy and Management Services Agreement, dated August 23, 2001
         between Covanta Energy India Pvt. Ltd. and Covanta Samalpatti Operating
         Pvt. Ltd. (f/k/a Ogden Madhya Pradesh Operating Pvt. Ltd.);

o        Plant Operation and Maintenance Agreement, dated December 1, 1995, as
         amended, between Quezon Power (Philippines), Limited Co. (as
         successor-in-interest to Quezon Power, Inc.) and Covanta Philippines
         Operating, Inc.;

o        Plant Operation and Maintenance Agreement, dated April 2, 1999, by and
         between NEPC Consortium Power Limited and Covanta Bangladesh
         Operations, Ltd, as amended;

o        Technical Services Agreement, dated July 1, 1999, by and between NEPC
         Consortium Power Ltd. and Covanta One Ltd.;

o        Operation and Maintenance Agreement, dated April 25, 2000, between
         Ogden Balaji O&M Services Private Ltd & Madurai Power Corporation Pvt.
         Ltd. (f/k/a Balaji Power Corporation Pvt. Ltd.);

<PAGE>

o        Operation and Maintenance Agreement, dated December 3, 1999, between
         Samalpatti Power Company Private Ltd. and Covanta Samalpatti Operating
         Pvt. Ltd. (f/k/a Ogden Madhya Pradesh Operating Pvt. Ltd.); and

o        Amended and Restated Operating Services Agreement, dated November 1,
         2001 by and between SEMASS Partnership and American Ref-Fuel Operations
         of SEMASS, L.P.

o        Tax Sharing Agreement, dated March 10, 2004, between Danielson Holding
         Corporation and Covanta Energy Corporation and the other parties
         thereto, as amended.

o        Tax Sharing/Allocation Agreement between Covanta Energy Corporation and
         Covanta Tampa Construction.

o        Tax Sharing/Allocation Agreement between Covanta Energy Corporation and
         Covanta Lake II, Inc.

o        Tax Sharing/Allocation Agreement between Covanta Energy Corporation and
         Covanta Warren Energy Resources Co., LP, Covanta Equity of Stanislaus,
         Inc. and Covanta Equity of Alexandria/Arlington, Inc.<PAGE>

                                                                    EXHIBIT 10.2

                                   SECOND LIEN

                          CREDIT AND GUARANTY AGREEMENT

                            DATED AS OF JUNE 24, 2005

                                      AMONG

                           COVANTA ENERGY CORPORATION,

                         DANIELSON HOLDING CORPORATION,
                                 AS A GUARANTOR,

               CERTAIN SUBSIDIARIES OF COVANTA ENERGY CORPORATION,
                                 AS GUARANTORS,

                                VARIOUS LENDERS,

                                 CREDIT SUISSE,
                             CAYMAN ISLANDS BRANCH,
                  AS JOINT LEAD ARRANGER, CO-SYNDICATION AGENT,
            ADMINISTRATIVE AGENT, COLLATERAL AGENT AND PAYING AGENT,

                                       AND

                       GOLDMAN SACHS CREDIT PARTNERS L.P.,
                AS JOINT LEAD ARRANGER AND CO-SYNDICATION AGENT,

            --------------------------------------------------------

                   $400,000,000 SENIOR SECURED CREDIT FACILITY

            --------------------------------------------------------

                                                                  EXECUTION COPY
<PAGE>

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                                            PAGE
                                                                                                            ----
<S>                                                                                                         <C>
SECTION 1. DEFINITIONS AND INTERPRETATION...............................................................      2

1.1. Definitions........................................................................................      2
1.2. Accounting Terms...................................................................................     32
1.3. Interpretation, etc................................................................................     32

SECTION 2. LOANS........................................................................................     33

2.1. Loans..............................................................................................     33
2.2. [Intentionally left blank.]........................................................................     33
2.3. [Intentionally left blank.]........................................................................     33
2.4. [Intentionally left blank.]........................................................................     33
2.5. Pro Rata Shares; Availability of Funds.............................................................     33
2.6. Use of Proceeds....................................................................................     34
2.7. Evidence of Debt; Register; Lenders' Books and Records; Notes......................................     34
2.8. Interest on Loans..................................................................................     35
2.9. Conversion/Continuation............................................................................     36
2.10. Default Interest..................................................................................     37
2.11. Fees..............................................................................................     37
2.12. Repayment.........................................................................................     37
2.13. Voluntary Prepayments.............................................................................     37
2.14. Mandatory Prepayments.............................................................................     38
2.15. Application of Prepayments........................................................................     41
2.16. General Provisions Regarding Payments.............................................................     41
2.17. Ratable Sharing...................................................................................     42
2.18. Making or Maintaining Eurodollar Rate Loans.......................................................     43
2.19. Increased Costs; Capital Adequacy.................................................................     45
2.20. Taxes; Withholding, etc...........................................................................     46
2.21. Obligation to Mitigate............................................................................     48
2.22  [Intentionally left blank.].......................................................................     49
2.22. [Intentionally left blank.].......................................................................     49
2.23. Removal or Replacement of a Lender................................................................     49

SECTION 3. CONDITIONS PRECEDENT.........................................................................     50

3.1. Closing Date.......................................................................................     50

SECTION 4. REPRESENTATIONS AND WARRANTIES...............................................................     55

4.1. Organization; Requisite Power and Authority; Qualification.........................................     56
4.2. Capital Stock and Ownership........................................................................     56
4.3. Due Authorization..................................................................................     56
</TABLE>

                                       i

                                                                  EXECUTION COPY
<PAGE>

<TABLE>
<S>                                                                                                          <C>
4.4. No Conflict........................................................................................     56
4.5. Governmental Consents..............................................................................     57
4.6. Binding Obligation.................................................................................     57
4.7. Historical Financial Statements....................................................................     57
4.8. Projections........................................................................................     57
4.9. No Material Adverse Change.........................................................................     57
4.10. No Restricted Junior Payments.....................................................................     57
4.11. Adverse Proceedings, etc..........................................................................     58
4.12. Payment of Taxes..................................................................................     58
4.13. Properties........................................................................................     58
4.14. Environmental Matters.............................................................................     58
4.15. No Defaults.......................................................................................     59
4.16. Material Contracts................................................................................     59
4.17. Governmental Regulation...........................................................................     59
4.18. Margin Stock......................................................................................     59
4.19. Employee Matters..................................................................................     60
4.20. Employee Benefit Plans............................................................................     60
4.21. Certain Fees......................................................................................     61
4.22. Solvency..........................................................................................     61
4.23. Related Agreements................................................................................     61
4.24. Disclosure........................................................................................     61
4.25. Patriot Act.......................................................................................     62
4.26. Financing Statements..............................................................................     62

SECTION 5. AFFIRMATIVE COVENANTS........................................................................     62

5.1. Financial Statements and Other Reports.............................................................     62
5.2. Existence..........................................................................................     65
5.3. Payment of Taxes and Claims........................................................................     65
5.4. Maintenance of Properties..........................................................................     66
5.5. Insurance..........................................................................................     66
5.6. Inspections........................................................................................     67
5.7. Lenders Meetings...................................................................................     67
5.8. Compliance with Laws...............................................................................     67
5.9. Environmental......................................................................................     67
5.10. Subsidiaries......................................................................................     70
5.11. Additional Material Real Estate Assets............................................................     70
5.12. Interest Rate Protection..........................................................................     71
5.13. Further Assurances................................................................................     71
5.14. Miscellaneous Business Covenants..................................................................     71
5.15. Cash Management Systems...........................................................................     71
5.16. Insurance Regulatory Account......................................................................     72
5.17. Plan of Reorganization Account....................................................................     72
5.18. Post Closing Matters..............................................................................     72
</TABLE>

                                       ii

                                                                  EXECUTION COPY
<PAGE>

<TABLE>
<S>                                                                                                         <C>
SECTION 6. NEGATIVE COVENANTS...........................................................................     73

6.1. Indebtedness.......................................................................................     73
6.2. Liens..............................................................................................     79
6.3. [Intentionally left blank].........................................................................     82
6.4. No Further Negative Pledges........................................................................     82
6.5. Restricted Junior Payments.........................................................................     83
6.6. Restrictions on Subsidiary Distributions...........................................................     84
6.7. Investments........................................................................................     85
6.8. Financial Covenant.................................................................................     87
6.9. Fundamental Changes; Disposition of Assets; Acquisitions...........................................     89
6.10. Disposal of Subsidiary Interests..................................................................     90
6.11. Prohibition on Sales and Lease-Backs..............................................................     91
6.12. Transactions with Shareholders and Affiliates.....................................................     91
6.13. Conduct of Business...............................................................................     91
6.14. Amendments or Waivers of Certain Related Agreements...............................................     91
6.15. Amendments or Waivers with respect to MSW Notes, MSW Refinancing
      Notes, ARC Notes, ARC Refinancing Notes, New MSW Notes and New
      ARC Notes.........................................................................................     92
6.16. Amendments or Waivers of the First Lien Credit Agreement and Second Lien Notes
      Indenture.........................................................................................     92
6.17. Fiscal Year.......................................................................................     93

SECTION 7. GUARANTY.....................................................................................     93

7.1. Guaranty of the Obligations........................................................................     93
7.2. Contribution by Guarantors.........................................................................     93
7.3. Payment by Guarantors..............................................................................     94
7.4. Liability of Guarantors Absolute...................................................................     94
7.5. Waivers by Guarantors..............................................................................     96
7.6. Guarantors' Rights of Subrogation, Contribution, etc...............................................     96
7.7. Subordination of Other Obligations.................................................................     97
7.8. Continuing Guaranty................................................................................     97
7.9. Authority of Guarantors or Company.................................................................     97
7.10. Financial Condition of Company....................................................................     97
7.11. Bankruptcy, etc...................................................................................     98
7.12. Discharge of Guaranty Upon Sale of Guarantor......................................................     98

SECTION 8. EVENTS OF DEFAULT............................................................................     99

8.1. Events of Default..................................................................................     99

SECTION 9. AGENTS.......................................................................................    102

9.1. Appointment of Agents..............................................................................    102
9.2. Powers and Duties..................................................................................    102
9.3. General Immunity...................................................................................    103
</TABLE>

                                      iii

                                                                  EXECUTION COPY
<PAGE>

<TABLE>
<S>                                                                                                         <C>
9.4. Agents Entitled to Act as Lender...................................................................    104
9.5. Lenders' Representations, Warranties and Acknowledgment............................................    104
9.6. Right to Indemnity.................................................................................    105
9.7. Successor Administrative Agent.....................................................................    105
9.8. Collateral Documents and Guaranty..................................................................    106
9.9. Appointment and Authority of Paying Agent..........................................................    107
9.10. Exculpatory Provisions Relating to Paying Agent...................................................    107
9.11. Reliance by Paying Agent..........................................................................    107
9.12. Delegation of Duties by Paying Agent..............................................................    108
9.13. Resignation of Paying Agent.......................................................................    108

SECTION 10. MISCELLANEOUS...............................................................................    109

10.1. Notices...........................................................................................    109
10.2. Expenses..........................................................................................    109
10.3. Indemnity.........................................................................................    110
10.4. Set-Off...........................................................................................    110
10.5. Amendments and Waivers............................................................................    111
10.6. Successors and Assigns; Participations............................................................    112
10.7. Independence of Covenants.........................................................................    115
10.8. Survival of Representations, Warranties and Agreements............................................    115
10.9. No Waiver; Remedies Cumulative....................................................................    115
10.10. Marshalling; Payments Set Aside..................................................................    115
10.11. Severability.....................................................................................    116
10.12. Obligations Several; Independent Nature of Lenders' Rights.......................................    116
10.13. Headings.........................................................................................    116
10.14. APPLICABLE LAW...................................................................................    116
10.15. CONSENT TO JURISDICTION..........................................................................    116
10.16. WAIVER OF JURY TRIAL.............................................................................    117
10.17. Confidentiality..................................................................................    117
10.18. Usury Savings Clause.............................................................................    118
10.19. Counterparts.....................................................................................    119
10.20. Effectiveness....................................................................................    119
10.21. Patriot Act......................................................................................    119
10.22. Electronic Execution of Assignments..............................................................    119
</TABLE>

                                       iv

                                                                  EXECUTION COPY
<PAGE>

APPENDICES:     A          Commitments
                B          Notice Addresses

SCHEDULES:      1.1(a)     Certain Adjustments to Financial Covenant Definitions
                1.1(b)     Closing Date Excluded Subsidiaries
                1.1(c)     Closing Date Foreign Subsidiaries
                1.1(d)     Transition Costs
                3.1(d)     Certain Closing Date Indebtedness Events
                3.1(h)     Closing Date Mortgaged Properties
                4.1        Jurisdictions of Organization
                4.2        Capital Stock and Ownership
                4.13       Real Estate Assets
                4.16       Material Contracts
                5.15       Cash Management Systems
                5.18       Post Closing Matters
                6.1        Certain Indebtedness
                6.2        Certain Liens
                6.7        Certain Investments
                6.9-A      Certain Permitted Asset Sales
                6.9-B      Foreign Subsidiary Restructuring
                6.12       Certain Affiliate Transactions

EXHIBITS:       A-1        Funding Notice
                A-2        Conversion/Continuation Notice
                B          Note
                C          Compliance Certificate
                D-1        Opinion of Skadden, Arps, Slate, Meagher & Flom LLP
                D-2        Opinion of LeBoeuf, Lamb, Greene & MacRae LLP
                D-3        Opinion of Mr. Timothy Simpson
                E          Assignment Agreement
                F          Certificate Re Non-bank Status
                G-1        Closing Date Certificate
                G-2        Solvency Certificate
                H          Counterpart Agreement
                I-1        Pledge and Security Agreement
                I-2        Holdings Pledge Agreement
                J          Mortgage
                K          Intercreditor Agreement

                                     v

                                                                  EXECUTION COPY
<PAGE>

                   SECOND LIEN CREDIT AND GUARANTY AGREEMENT

            This SECOND LIEN CREDIT AND GUARANTY AGREEMENT, dated as of June 24,
2005 is entered into by and among COVANTA ENERGY CORPORATION, a Delaware
corporation ("COMPANY"), DANIELSON HOLDING CORPORATION, a Delaware corporation
("HOLDINGS"), CERTAIN SUBSIDIARIES OF COMPANY, as Guarantors, the Lenders party
hereto from time to time, GOLDMAN SACHS CREDIT PARTNERS L.P. ("GSCP") and CREDIT
SUISSE, CAYMAN ISLANDS BRANCH ("CREDIT SUISSE" together with GSCP, as Joint Lead
Arrangers in such capacities, the "JOINT LEAD ARRANGERS"), as Joint Book Runners
(in such capacities, "JOINT BOOK RUNNERS"), and as Co-Syndication Agents (in
such capacities, "CO-SYNDICATION AGENTS"), and CREDIT SUISSE, as Administrative
Agent (together with its permitted successors in such capacity, "ADMINISTRATIVE
AGENT"), as Paying Agent (together with its permitted successors in such
capacity, "PAYING AGENT") and as Collateral Agent (together with its permitted
successors in such capacity, "COLLATERAL AGENT").

                                    RECITALS:

            WHEREAS, capitalized terms used in these Recitals shall have the
respective meanings set forth for such terms in Section 1.1 hereof.

            WHEREAS, Lenders have agreed to extend term loans to Company in an
aggregate amount not to exceed $400,000,000. The proceeds of the Loans will be
used, together with the proceeds of certain loans under the First Lien Credit
Agreement borrowed concurrently herewith, to fund, in part, the acquisition (the
"ACQUISITION") of American Ref-Fuel Holdings Corp. (together with its
Subsidiaries, the "ACQUIRED BUSINESS"), to refinance approximately $310,000,000
of the Existing Indebtedness of Company and its Subsidiaries (the
"REFINANCING"), and to pay the related fees, commissions, premiums and expenses.

            WHEREAS, Company has agreed to secure all of its Obligations by
granting to Collateral Agent, for the benefit of Secured Parties, a Second
Priority Lien on substantially all of its assets, including to the extent
permitted by existing Contractual Obligations and regulatory limitations binding
on Company or any of its Subsidiaries, a pledge of all of the Capital Stock of
each of its Domestic Subsidiaries directly owned by it and 65% of all the
Capital Stock of each of its Foreign Subsidiaries directly owned by it (except
to the extent provided in Section 3.1(i)(iv) and the Pledge and Security
Agreement); and

            WHEREAS, Guarantors, have agreed to guarantee the obligations of
Company hereunder and to the extent permitted by existing Contractual
Obligations and regulatory limitations, binding on Company or any of its
Subsidiaries, to secure their respective Obligations by granting to Collateral
Agent, for the benefit of Secured Parties, a Second Priority Lien on
substantially all of their respective assets, including (to the extent so
permitted) a pledge of all of the Capital Stock of each of their respective
Domestic Subsidiaries directly owned by them (including in the case of Holdings,
Company) and 65% of all the Capital Stock of each of their respective Foreign
Subsidiaries directly owned by them (except to the extent expressly provided in
Section 3.1(i)(iv) and the Pledge and Security Agreement) and all intercompany
debt.

                                       1

                                                                  EXECUTION COPY
<PAGE>

            NOW, THEREFORE, in consideration of the premises and the agreements,
provisions and covenants herein contained, the parties hereto agree as follows:

SECTION 1. DEFINITIONS AND INTERPRETATION

      1.1. Definitions. The following terms used herein, including in the
preamble, recitals, exhibits and schedules hereto, shall have the following
meanings:

            "ACQUIRED BUSINESS" as defined in the Recitals.

            "ACQUISITION" as defined in the Recitals.

            "ACT" as defined in Section 4.25.

            "ADJUSTED COMPANY OPERATING CASH FLOW" means, for any Fiscal Quarter
and without duplication, (a) Company Cash Flow for such Fiscal Quarter, minus,
to the extent that each is reflected in such Company Cash Flow, (b), the sum of
(i) cash proceeds from Asset Sales, capital contributions or issuances of
Capital Stock (or any other payments from Holdings) or the incurrence of
Indebtedness or any proceeds otherwise attributable to extraordinary gains or
other non-recurring items, plus (ii) Net Insurance/Condemnation Proceeds, plus
(iii) returns of invested capital upon liquidation, sale or other similar
extraordinary return of an Investment, minus (c) any Cash or Cash Equivalents
that are subject to a Lien (other than a Lien created under the Collateral
Documents or the collateral documents relating to the Second Lien Notes
Indenture or the First Lien Credit Agreement), plus (d) payments (or
intercompany loans) made by Company to or on behalf of its Subsidiaries for
Investments incurred in connection with intercompany loans permitted under
Sections 6.1(d), (e) (other than subsections (i)(A), (i)(B) and (i)(D) thereof)
and (t) or Investments incurred pursuant to Sections 6.7(g) and (n)(ii), plus
(e) (but only to the extent that since the Closing Date the aggregate of all
amounts added to pursuant to this clause (e) does not exceed by more than
$75,000,000 the aggregate of all amounts deducted pursuant to clause (f) of this
definition) to the extent permitted hereunder any out of pocket expenses, costs
and other similar payments made by Company or its Subsidiaries to third parties
in connection with the construction of any Expansion owned by a Subsidiary of
Company, minus (f) any cash received in connection with the construction of any
Expansion owned by a Subsidiary of Company, plus (g) payments made by Company or
any of its Subsidiaries for MSW Put-Related Costs, plus (h) any payment of
Company Cash Interest Expense, plus (i) any payment of principal of Company
Total Debt.

            "ADJUSTED EURODOLLAR RATE" means, for any Interest Rate
Determination Date with respect to an Interest Period for a Eurodollar Rate
Loan, the rate per annum obtained by dividing (i) (a) the rate per annum
(rounded to the nearest 1/100 of 1%) equal to the offered rate of the British
Bankers Association Interest Settlement Rate for deposits (for delivery on the
first day of such period) with a term equivalent to such period in Dollars,
determined as of approximately 11:00 a.m. (London, England time) on such
Interest Rate Determination Date, or (b) in the event the rate referenced in the
preceding clause (a) does not appear on such page or service or if such page or
service shall cease to be available, the rate per annum (rounded to the nearest
1/100 of 1%) equal to the rate determined by Administrative Agent to be the
offered rate on such other page or other service which displays an average
British Bankers Association

                                       2

                                                                  EXECUTION COPY
<PAGE>

Interest Settlement Rate for deposits (for delivery on the first day of such
period) with a term equivalent to such period in Dollars, determined as of
approximately 11:00 a.m. (London, England time) on such Interest Rate
Determination Date, or (c) in the event the rates referenced in the preceding
clauses (a) and (b) are not available, the rate per annum (rounded to the
nearest 1/100 of 1%) equal to the offered quotation rate to first class banks in
the London interbank market by Credit Suisse for deposits (for delivery on the
first day of the relevant period) in Dollars of amounts in same day funds
comparable to the principal amount of the applicable Loan for which the Adjusted
Eurodollar Rate is then being determined with maturities comparable to such
period as of approximately 11:00 a.m. (London, England time) on such Interest
Rate Determination Date, by (ii) an amount equal to (a) one minus (b) the
Applicable Reserve Requirement.

            "ADMINISTRATIVE AGENT" as defined in the preamble hereto.

            "ADVERSE PROCEEDING" means any action, suit, proceeding (whether
administrative, judicial or otherwise), governmental investigation or
arbitration at law or in equity, or before or by any Governmental Authority,
domestic or foreign (including any Environmental Claims), whether pending or, to
the knowledge of Company or any of its Subsidiaries, threatened against or
affecting Company or any of its Subsidiaries or any property of Company or any
of its Subsidiaries.

            "AFFECTED ENTITIES" shall mean the collective reference to Covanta
Warren Energy Resource Corp. L.P., Covanta Warren Holdings I, Inc., Covanta
Warren Holdings II, Inc. (collectively the "COVANTA WARREN ENTITIES") and
Magellan Cogeneration Inc. in each case only for so long as such Person
continues to be the subject of a proceeding under applicable bankruptcy or
insolvency law.

            "AFFECTED LENDER" as defined in Section 2.18(b).

            "AFFECTED LOANS" as defined in Section 2.18(b).

            "AFFILIATE" means, as applied to any Person, any other Person
directly or indirectly controlling, controlled by, or under common control with,
that Person. For the purposes of this definition, "control" (including, with
correlative meanings, the terms "controlling", "controlled by" and "under common
control with"), as applied to any Person, means the possession, directly or
indirectly, of the power (i) to vote 5% or more of the Securities having
ordinary voting power for the election of directors of such Person or (ii) to
direct or cause the direction of the management and policies of that Person,
whether through the ownership of voting securities or by contract or otherwise.

            "AGENT" means each of the Co-Syndication Agents, Administrative
Agent, Collateral Agent and Paying Agent.

            "AGGREGATE AMOUNTS DUE" as defined in Section 2.17.

            "AGGREGATE PAYMENTS" as defined in Section 7.2.

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            "AGREEMENT" means this Second Lien Credit and Guaranty Agreement,
dated as of June 24, 2005, as it may be amended, supplemented or otherwise
modified from time to time.

            "APPLICABLE RESERVE REQUIREMENT" means, at any time, for any
Eurodollar Rate Loan, the maximum rate, expressed as a decimal, at which
reserves (including, without limitation, any basic marginal, special,
supplemental, emergency or other reserves) are required to be maintained with
respect thereto against "Eurocurrency liabilities" (as such term is defined in
Regulation D) under regulations issued from time to time by the Board of
Governors of the Federal Reserve System or other applicable banking regulator.
Without limiting the effect of the foregoing, the Applicable Reserve Requirement
shall reflect any other reserves required to be maintained by such member banks
with respect to (i) any category of liabilities which includes deposits by
reference to which the applicable Adjusted Eurodollar Rate is to be determined,
or (ii) any category of extensions of credit or other assets which include
Eurodollar Rate Loans. A Eurodollar Rate Loan shall be deemed to constitute
Eurocurrency liabilities and as such shall be deemed subject to reserve
requirements without benefits of credit for proration, exceptions or offsets
that may be available from time to time to the applicable Lender. The rate of
interest on Eurodollar Rate Loans shall be adjusted automatically on and as of
the effective date of any change in the Applicable Reserve Requirement.

            "ARC INDENTURE" means that certain Indenture, dated as of May 1,
2003, between American Ref-Fuel Company LLC and Wachovia Bank, National
Association as supplemented by the First Supplemental Indenture, dated as of May
1, 2003 between American Ref-Fuel Company LLC and Wachovia Bank, National
Association.

            "ARC LLC" means American Ref-Fuel Company LLC, a Delaware limited
liability company.

            "ARC NOTES" means the "Notes" as defined in the ARC Indenture.

            "ARC REFINANCING INDENTURE" means a trust indenture in form and
substance reasonably satisfactory to Administrative Agent pursuant to which any
ARC Refinancing Notes may be issued in accordance with the terms of this
Agreement, as such indenture may be further amended, restated, supplemented,
modified, extended, renewed or replaced from time to time in accordance with
Section 6.15 of this Agreement.

            "ARC REFINANCING NOTES" as defined in Section 6.1(n).

            "ASSET SALE" means a sale, lease or sub-lease (as lessor or
sublessor), sale and leaseback, assignment, conveyance, transfer or other
disposition to, or any exchange of property with, any Person (other than Company
or any Guarantor Subsidiary), in one transaction or a series of transactions, of
all or any part of Company's or any of its Subsidiaries' businesses, assets or
properties of any kind, whether real, personal, or mixed and whether tangible or
intangible (other than Cash), whether now owned or hereafter acquired,
including, without limitation, the Capital Stock of any of Company's
Subsidiaries, other than (i) inventory (or other assets) sold or leased in the
ordinary course of business, (excluding any such sales by operations or
divisions discontinued), and (ii) Excluded Asset Sales.

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]
            "ASSIGNMENT AGREEMENT" means an Assignment and Assumption Agreement
substantially in the form of Exhibit E, with such amendments or modifications as
may be approved by Administrative Agent and Company.

            "ASSIGNMENT EFFECTIVE DATE" as defined in Section 10.6(b).

            "AUTHORIZED OFFICER" means, as applied to any Person, any individual
holding the position of chief executive officer, general counsel, chief
financial officer, chief accounting officer or treasurer.

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

            "BASE RATE" means, for any day, a rate per annum equal to the
greater of (expressed, as a decimal, rounded upwards, if necessary, to the next
higher 1/100 of 1%) (i) the Prime Rate in effect on such day and (ii) the
Federal Funds Effective Rate in effect on such day plus -1/2 of 1%. Any change
in the Base Rate due to a change in the Prime Rate or the Federal Funds
Effective Rate shall be effective on the effective day of such change in the
Prime Rate or the Federal Funds Effective Rate, respectively.

            "BASE RATE LOAN" means a Loan bearing interest at a rate determined
by reference to the Base Rate.

            "BENEFICIARY" means each Agent and Lender.

            "BUSINESS DAY" means (i) any day excluding Saturday, Sunday and any
day which is a legal holiday under the laws of the State of New York or is a day
on which banking institutions located in such state are authorized or required
by law or other governmental action to close and (ii) with respect to all
notices, determinations, fundings and payments in connection with the Adjusted
Eurodollar Rate or any Eurodollar Rate Loans, the term "BUSINESS DAY" shall mean
any day which is a Business Day described in clause (i) and which is also a day
for trading by and between banks in Dollar deposits in the London interbank
market.

            "CAPITAL EXPENDITURES" means, for any period, the aggregate of all
expenditures of Company and its Subsidiaries during such period determined on a
consolidated basis that, in accordance with GAAP, are or should be included in
"additions to plant, property and equipment" or similar items reflected in the
consolidated statement of cash flows of Company and its Subsidiaries.

            "CAPITAL LEASE" means, as applied to any Person, any lease of any
property (whether real, personal or mixed) by that Person as lessee that, in
conformity with GAAP, is or should be accounted for as a capital lease on the
balance sheet of that Person.

            "CAPITAL STOCK" means any and all shares, interests, participations
or other equivalents (however designated) of capital stock of a corporation, any
and all equivalent ownership interests in a Person (other than a corporation),
including, without limitation, partnership interests and membership interests,
and any and all warrants, rights or options to purchase or other arrangements or
rights to acquire any of the foregoing from the issuer thereof.

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            "CASH" means money, currency or a credit balance in any demand or
Deposit Account.

            "CASH EQUIVALENTS" means, as at any date of determination, (i)
marketable securities (a) issued or directly and unconditionally guaranteed as
to interest and principal by the United States Government or (b) issued by any
agency of the United States the obligations of which are backed by the full
faith and credit of the United States, in each case maturing within one year
after such date; (ii) marketable direct obligations issued by any state of the
United States of America or any political subdivision of any such state or any
public instrumentality thereof, in each case maturing within one year after such
date and having, at the time of the acquisition thereof, a rating of at least
A-1 from S&P or at least P-1 from Moody's; (iii) commercial paper maturing no
more than one year from the date of creation thereof and having, at the time of
the acquisition thereof, a rating of at least A-1 from S&P or at least P-1 from
Moody's; (iv) certificates of deposit or bankers' acceptances maturing within
one year after such date and issued or accepted by any Lender or by any
commercial bank organized under the laws of the United States of America or any
state thereof or the District of Columbia that (a) is at least "adequately
capitalized" (as defined in the regulations of its primary Federal banking
regulator) and (b) has Tier 1 capital (as defined in such regulations) of not
less than $100,000,000; (v) shares of any money market mutual fund that (a) has
at least 95% of its assets invested continuously in the types of investments
referred to in clauses (i) and (ii) above, and (b) has net assets of not less
than $500,000,000; (vi) any repurchase agreement having a term of 30 days or
less entered into with any commercial banking institution satisfying the
criteria set forth in clause (iv) which is secured by a fully perfected security
interest in any obligation of the type described in clause (i), above, (vii)
securities and investments held by Foreign Subsidiaries pursuant to the
requirements of Project documents to which they are a party, (viii) other
investment-grade instruments and securities held by Foreign Subsidiaries, (ix)
auction rate securities or auction rate preferred stock having a rate reset
frequency of less than ninety (90) days and having, at the time of the
acquisition thereof, a rating of at least A from S&P or from Moody's and (x)
such other securities and investments held by Excluded Subsidiaries and Foreign
Subsidiaries as Company and Administrative Agent may agree.

            "CERTIFICATE RE NON-BANK STATUS" means a certificate substantially
in the form of Exhibit F.

            "CHANGE OF CONTROL" means, at any time, (i) Holdings shall cease to
beneficially own and control, directly or indirectly on a fully diluted basis,
all of the economic and voting interests in the Capital Stock of Company; (ii)
the majority of the seats (other than vacant seats) on the board of directors
(or similar governing body) of Company cease to be occupied by Persons who
either (a) were members of the board of directors of Company on the Closing Date
or (b) were nominated for election by the board of directors of Company, a
majority of whom were directors on the Closing Date or whose election or
nomination for election was previously approved by a majority of such directors;
(iii) any Person or "group" (within the meaning of Rules 13d-3 and 13d-5 under
the Exchange Act) other than SZ Investments, LLC, Third Avenue Trust, LLC, D.E.
Shaw Laminar Portfolios, LLC and EGI-FUND (05-07) Investors, L.L.C. or any of
their Affiliates (a) shall have acquired beneficial ownership of 40% on a fully
diluted basis of the voting and/or economic interest in the Capital Stock of
Holdings or (b) shall have obtained the power to control the board of directors
(or similar governing body) of Holdings; or

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(iv) any "change of control" or similar event under (a) the MSW Notes, the MSW
Refinancing Notes, the ARC Notes, the ARC Refinancing Notes, the New MSW Notes
or the New ARC Notes that would require Company to tender for or otherwise give
rise to an accelerated repayment of any such notes (except in the case of the
MSW Notes to the extent directly resulting from the Acquisition) or (b) the
First Lien Credit Agreement or Second Lien Notes Indenture.

            "CLOSING DATE" means the date on which the Loans are made.

            "CLOSING DATE CERTIFICATE" means a Closing Date Certificate
substantially in the form of Exhibit G-1.

            "CLOSING DATE MORTGAGED PROPERTY" as defined in Section 3.1(h).

            "COLLATERAL" means, collectively, all of the real, personal and
mixed property (including Capital Stock) in which Liens are purported to be
granted pursuant to the Collateral Documents as security for the Obligations.

            "COLLATERAL AGENT" as defined in the preamble hereto.

            "COLLATERAL DOCUMENTS" means the Pledge and Security Agreement, the
Holdings Pledge Agreement, the Control Agreements, the Mortgages, the
Intercreditor Agreement, and all other instruments, documents and agreements
delivered by any Credit Party pursuant to this Agreement or any of the other
Credit Documents in order to grant to Collateral Agent, for the benefit of
Lenders, a Lien on any real, personal or mixed property of that Credit Party as
security for the Obligations.

            "COMMITMENT" means the commitment of a Lender to make or otherwise
fund a Loan and "COMMITMENTS" means such commitments of all Lenders in the
aggregate. The amount of each Lender's Commitment, if any, is set forth on
Appendix A or in the applicable Assignment Agreement, subject to any adjustment
or reduction pursuant to the terms and conditions hereof. The aggregate amount
of the Commitments as of the Closing Date is $400,000,000.

            "COMMODITIES AGREEMENT" means any long-term or forward purchase
contract or option contract to buy, sell or exchange commodities or similar
agreement or arrangement to which Company or any of its Subsidiaries is a party
unless, under the terms of such ordinary course, non-speculative purchase
contract, option contract agreement or arrangement Company expects to make or
take delivery of all of the commodities which are the subject thereof.

            "COMPANY" as defined in the preamble hereto.

            "COMPANY CASH BALANCE" means, for the end of any Fiscal Quarter and
without duplication, an amount determined for Company and its Subsidiaries in
accordance with GAAP equal to (a) cash and cash equivalents reflected on the
consolidated balance sheet of Company and its Subsidiaries, plus (b) Marketable
Securities reflected on the consolidated balance sheet of Company and its
Subsidiaries, minus (c) cash and cash equivalents of Foreign Subsidiaries of
Company, minus (d) Marketable Securities of Foreign Subsidiaries of Company,
minus (e) cash

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<PAGE>

and cash equivalents of Domestic Subsidiaries of Company constituting part of
the Acquired Business, minus (f) Marketable Securities of Domestic Subsidiaries
of Company constituting part of the Acquired Business, minus (g) cash and cash
equivalents of all Other Domestic Subsidiaries, minus (h) Marketable Securities
of all Other Domestic Subsidiaries. For the purposes of this definition, "cash
and cash equivalents" in each of the above references shall be determined in
accordance with GAAP and as set forth on the balance sheet of Company for the
relevant period.

            "COMPANY CASH FLOW" means, for any Fiscal Quarter, (a) the Company
Cash Balance for the end of such Fiscal Quarter minus (b) the Company Cash
Balance for the end of the immediately preceding Fiscal Quarter.

            "COMPANY CASH INTEREST EXPENSE" means, for any period, the sum of
(i) total interest expense that was required to be paid in Cash by Company with
respect to Company Total Debt during such period whether or not paid in such
period, including all commissions, discounts and other fees and charges owed
with respect to net costs under Interest Rate Agreements and (ii) other fees and
charges owed with respect to letters of credit; provided that Company Cash
Interest Expense shall not include Transaction Costs or Related Transaction
Costs.

            "COMPANY LEVERAGE RATIO" means, as of any date of determination, the
ratio of (a) the aggregate amount of Company Total Debt at such date (other than
intercompany Indebtedness that would be eliminated in consolidation) to (b) the
Adjusted Company Operating Cash Flow (as calculated pursuant to the proviso
below), plus transition costs of the type and maximum aggregate amount set out
on Schedule 1.1(d) incurred in connection with integration of the Acquired
Business for the four Fiscal Quarter period of Company ending on such date,
taken as a single accounting period (or if such date of determination is not the
last day of a Fiscal Quarter, for the four Fiscal Quarter period ending as of
the last day of the most recently concluded Fiscal Quarter); provided that
Adjusted Company Operating Cash Flow for such four Fiscal Quarter period shall
be calculated by adding (i) Adjusted Company Operating Cash Flow for the Fiscal
Quarter ending on such date to the sum of (ii) Adjusted Company Operating Cash
Flow for each of the three Fiscal Quarters immediately prior to the Fiscal
Quarter measured in (i) above, as set forth in the Compliance Certificate for
each such Fiscal Quarter; provided further that with respect to any calculation
period ending prior to the first anniversary of the Closing Date, the foregoing
shall be subject to adjustment as set forth in Schedule 1.1(a).

            "COMPANY TOTAL DEBT" means, as of any date of determination, the
aggregate stated balance sheet amount (but excluding unamortized premiums) of
all Indebtedness of Company of the type identified in clauses (i) through (iv)
of the definition of Indebtedness (other than Indebtedness owed by Company to
its Subsidiaries) determined in accordance with GAAP. For the avoidance of
doubt, Company Total Debt shall not include, without limitation, Performance
Guarantees, Limited Recourse Debt, the MSW Notes, the ARC Notes, the New MSW
Notes, the New ARC Notes, the ARC Refinancing Notes, the MSW Refinancing Notes
and undrawn letters of credit.

            "COMPLIANCE CERTIFICATE" means a Compliance Certificate
substantially in the form of Exhibit C.

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

            "CONTRIBUTING GUARANTORS" as defined in Section 7.2.

            "CONTROL AGREEMENTS" means each control agreement to be executed and
delivered by Collateral Agent, a securities intermediary or depositary bank and
Company or a Guarantor Subsidiary pursuant to the terms of the Pledge and
Security Agreement with such modifications as Collateral Agent may reasonably
approve.

            "CONVERSION/CONTINUATION DATE" means the effective date of a
continuation or conversion, as the case may be, as set forth in the applicable
Conversion/Continuation Notice.

            "CONVERSION/CONTINUATION NOTICE" means a Conversion/Continuation
Notice substantially in the form of Exhibit A-2.

            "CORPORATE SERVICES REIMBURSEMENT AGREEMENT" means the corporate
services and expense reimbursement agreement entered into by Holdings and
Company on March 10, 2004, as such agreement may be amended, restated,
supplemented or otherwise modified from time to time to the extent permitted
thereunder and under Section 6.14.

            "CO-SYNDICATION AGENTS" as defined in the preamble hereto.

            "COUNTERPART AGREEMENT" means a Counterpart Agreement substantially
in the form of Exhibit H delivered by a Subsidiary of Company pursuant to
Section 5.10.

            "COVANTA WARREN DEBT" as defined in the definition of Restricted
Junior Payments.

            "COVANTA WARREN ENTITIES" as defined in the definition of Affected
Entities.

            "CREDIT DOCUMENT" means any of this Agreement, the Notes, if any,
the Collateral Documents and all other certificates, instruments or agreements
executed and delivered by a Credit Party for the benefit of any Agent, or any
Lender in connection herewith.

            "CREDIT EXTENSION" means and includes the making (but not the
conversion or continuation) of a Loan.

            "CREDIT PARTY" means Company and each Guarantor and any other
Subsidiary of Company which is a party to a Credit Document.

            "CREDIT SUISSE" as defined in the preamble hereto.

            "CURRENCY AGREEMENT" means any foreign exchange contract, currency
swap agreement, futures contract, option contract, synthetic cap or other
similar agreement or

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arrangement, each of which is for the purpose of hedging the foreign currency
risk associated with Company's and its Subsidiaries' operations and not for
speculative purposes.

            "DEFAULT" means a condition or event that, after notice or lapse of
time or both, would constitute an Event of Default.

            "DEPOSIT ACCOUNT" means a demand, time, savings, passbook or like
account with a bank, savings and loan association, credit union or like
organization, other than an account evidenced by a negotiable certificate of
deposit.

            "DEVELOPMENT SUBSIDIARY" means, solely for the purpose of excluding
such Subsidiary from Company's obligation to comply with Section 5.10 with
respect to such Subsidiary, a Subsidiary established by Company or any of its
Subsidiaries for the sole purpose of bidding on a prospective Project; provided
that (i) any equity Investment in such Subsidiary by Company or another
Subsidiary of Company in aggregate when taken together with all other equity
Investments in Development Subsidiaries shall not exceed $1,000,000 at any one
time outstanding; (ii) such Subsidiary shall have no assets other than Cash
pursuant to clause (i) of this definition and intercompany Indebtedness
permitted hereunder and the agreements to which it is party and which are
entered into in the ordinary course of business and are necessary for it to
develop or bid on prospective Projects and (iii) such Subsidiary's sole business
shall be limited to those actions necessary to develop or bid on prospective
Projects. At such time, if any, as such Subsidiary shall incur any Indebtedness
(other than intercompany Indebtedness permitted hereunder), grant any Liens or
make any Investment or Restricted Junior Payment or carry on any activity after
then that expressly permitted by sub-clause (iii) above, such Subsidiary shall
cease to become a Development Subsidiary.

            "DHC TAX SHARING AGREEMENT" means the tax sharing agreement among
Holdings, Company and CPIH dated as of March 10, 2004, as amended by Amendment
No. 1 thereto dated as of the Closing Date, as such agreement may be amended,
restated, supplemented or otherwise modified from time to time to the extent
permitted thereunder and under Section 6.14.

            "DOLLARS" and the sign "$" mean the lawful money of the United
States of America.

            "DOMESTIC SUBSIDIARY" means any Subsidiary of Company organized
under the laws of the United States of America, any State thereof or the
District of Columbia.

            "ELIGIBLE ASSIGNEE" means (i) any Lender, any Affiliate of any
Lender and any Related Fund (any two or more Related Funds being treated as a
single Eligible Assignee for all purposes hereof), and (ii) any commercial bank,
insurance company, investment or mutual fund or other entity that is an
"accredited investor" (as defined in Regulation D under the Securities Act) and
which extends credit or buys loans as one of its businesses; provided, that no
Affiliate of Company or Holdings shall be an Eligible Assignee.

            "EMPLOYEE BENEFIT PLAN" means any "employee benefit plan" as defined
in Section 3(3) of ERISA which is or was sponsored, maintained or contributed to
by, or required to be contributed by, Company, any of its Subsidiaries or any of
their respective ERISA Affiliates.

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<PAGE>

            "ENVIRONMENTAL CLAIM" means any investigation, notice of violation,
claim, action, suit, proceeding, demand, abatement order or other order or
directive, by any Governmental Authority or any other Person, arising (i)
pursuant to or in connection with any actual or alleged violation of any
Environmental Law; (ii) in connection with any Release or threatened Release of
Hazardous Material; or (iii) in connection with any actual or alleged damage,
injury, threat or harm to health, safety, natural resources or the environment.

            "ENVIRONMENTAL LAWS" means any and all current or future foreign or
domestic, federal or state (or any subdivision of either of them), statutes,
ordinances, orders, rules, regulations, judgments, Governmental Authorizations,
or any other requirements of Governmental Authorities relating to (i)
environmental matters, including those relating to any Release or threatened
Release of Hazardous Materials; (ii) the generation, use, storage,
transportation, treatment, processing, removal, remediation or disposal of
Hazardous Materials; or (iii) occupational safety and health, industrial
hygiene, land use or the protection of human, plant or animal health or welfare,
in any manner applicable to Company or any of its Subsidiaries or any Facility.

            "ERISA" means the Employee Retirement Income Security Act of 1974,
as amended from time to time, and any successor thereto.

            "ERISA AFFILIATE" means, as applied to any Person, (i) any
corporation which is a member of a controlled group of corporations within the
meaning of Section 414(b) of the Internal Revenue Code of which that Person is a
member; (ii) any trade or business (whether or not incorporated) which is a
member of a group of trades or businesses under common control within the
meaning of Section 414(c) of the Internal Revenue Code of which that Person is a
member; and (iii) any member of an affiliated service group within the meaning
of Section 414(m) or (o) of the Internal Revenue Code of which that Person, any
corporation described in clause (i) above or any trade or business described in
clause (ii) above is a member. Any former ERISA Affiliate of Company or any of
its Subsidiaries shall continue to be considered an ERISA Affiliate of Company
or any such Subsidiary within the meaning of this definition with respect to the
period such entity was an ERISA Affiliate of Company or such Subsidiary and with
respect to liabilities arising after such period for which Company or such
Subsidiary could be liable under the Internal Revenue Code or ERISA.

            "ERISA EVENT" means (i) a "reportable event" within the meaning of
Section 4043 of ERISA and the regulations issued thereunder with respect to any
Pension Plan (excluding those for which the provision for 30-day notice to the
PBGC has been waived by regulation); (ii) the failure to meet the minimum
funding standard of Section 412 of the Internal Revenue Code with respect to any
Pension Plan (whether or not waived in accordance with Section 412(d) of the
Internal Revenue Code) or the failure to make by its due date a required
installment under Section 412(m) of the Internal Revenue Code with respect to
any Pension Plan or the failure to make any required contribution to a
Multiemployer Plan; (iii) the provision by the administrator of any Pension Plan
pursuant to Section 4041(a)(2) of ERISA of a notice of intent to terminate such
plan in a distress termination described in Section 4041(c) of ERISA; (iv) the
withdrawal by Company, any of its Subsidiaries or any of their respective ERISA
Affiliates from any Pension Plan with two or more contributing sponsors or the
termination of any such Pension Plan resulting in liability to Company, any of
its Subsidiaries or any of their respective Affiliates pursuant to Section 4063
or 4064 of ERISA; (v) the institution by the PBGC of proceedings to terminate
any Pension Plan, or the occurrence of any event or condition which might
constitute grounds under ERISA for the termination of, or the appointment of a
trustee to administer, any Pension Plan; (vi) the imposition of liability on
Company, any of its Subsidiaries or any of their

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respective ERISA Affiliates pursuant to Section 4062(e) or 4069 of ERISA or by
reason of the application of Section 4212(c) of ERISA; (vii) the withdrawal of
Company, any of its Subsidiaries or any of their respective ERISA Affiliates in
a complete or partial withdrawal (within the meaning of Sections 4203 and 4205
of ERISA) from any Multiemployer Plan if there is any potential material
liability therefore, or the receipt by Company, any of its Subsidiaries or any
of their respective ERISA Affiliates of notice from any Multiemployer Plan that
it is in reorganization or insolvency pursuant to Section 4241 or 4245 of ERISA,
or that it intends to terminate or has terminated under Section 4041A or 4042 of
ERISA; (viii) the occurrence of an act or omission which could give rise to the
imposition on Company, any of its Subsidiaries or any of their respective ERISA
Affiliates of fines, penalties, taxes or related charges under Chapter 43 of the
Internal Revenue Code or under Section 409, Section 502(c), (i) or (l), or
Section 4071 of ERISA in respect of any Employee Benefit Plan; (ix) the
assertion of a material claim (other than routine claims for benefits) against
any Employee Benefit Plan other than a Multiemployer Plan or the assets thereof,
or against Company, any of its Subsidiaries or any of their respective ERISA
Affiliates in connection with any Employee Benefit Plan; (x) receipt from the
Internal Revenue Service of notice of the failure of any Pension Plan (or any
other Employee Benefit Plan intended to be qualified under Section 401(a) of the
Internal Revenue Code) to qualify under Section 401(a) of the Internal Revenue
Code, or the failure of any trust forming part of any Pension Plan to qualify
for exemption from taxation under Section 501(a) of the Internal Revenue Code;
or (xi) the imposition of a Lien pursuant to Section 401(a)(29) or 412(n) of the
Internal Revenue Code or pursuant to ERISA with respect to any Pension Plan.

            "EURODOLLAR RATE LOAN" means a Loan bearing interest at a rate
determined by reference to the Adjusted Eurodollar Rate.

            "EVENT OF DEFAULT" means each of the conditions or events set forth
in Section 8.1.

            "EXCESS CASH FLOW" means, for any Fiscal Year of Company, an amount
equal to:

                  (a) Adjusted Company Operating Cash Flow for such Fiscal Year,
                  (calculated by adding Adjusted Company Operating Cash Flow for
                  four Fiscal Quarters of such Fiscal Year, as set forth in the
                  Compliance Certificate for each such Fiscal Quarter); less

                  (b) (to the extent otherwise reflected in (a) above) the sum
                  (determined without duplication) of:

                        (i) payments in respect of Company Cash Interest Expense
                        made by Company during the Fiscal Year;

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                        (ii) any payment (other than voluntary prepayments and
                        prepayments made pursuant to Section 2.14(e)) of
                        principal of Company Total Debt; and

                        (iii) (A) Investments constituting intercompany loans
                        permitted under Sections 6.1(d), (e) (other than
                        subsections (i)(A), (i)(B) and (i)(D) thereof) and (t),
                        and (B) Investments incurred pursuant to Sections
                        6.7(g), (j) and (n)(ii).

            "EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended
from time to time, and any successor statute.

            "EXCLUDED ASSET SALES" means the collective reference to (i) any
sale or discount, in each case without recourse, of notes or accounts receivable
arising in the ordinary course of business, but only in connection with the
compromise or collection thereof or to resolve disputes that occur in the
ordinary course of business, (ii) any exchange of specific items of equipment
between Company and any of its Subsidiaries or among any Subsidiaries of
Company, so long as the purpose of each such exchange is to acquire replacement
items of equipment which are the functional equivalent of the item of equipment
so exchanged, (iii) disposals of obsolete, worn out or surplus property in the
ordinary course of business, (iv) the sale, lease, license, transfer or other
disposition of equipment, materials and other tangible assets by Company or any
Subsidiary of Company to any Subsidiary of Company; provided, however, that the
aggregate fair market value of all such equipment, materials and other tangible
assets sold, leased, licensed, transferred or otherwise disposed of pursuant to
this clause (iv) does not exceed $6,000,000 in any Fiscal Year or $12,000,000 in
the aggregate since the Closing Date, (v) sales of other assets for aggregate
consideration of less than $600,000 with respect to any transaction or series of
related transactions and less than $2,500,000 in the aggregate and (vi) any
license (other than an exclusive license) of intellectual property owned by
Company or its Subsidiaries in the ordinary course of business at fair market
value, if any.

            "EXCLUDED SUBSIDIARY" means each (i) Domestic Subsidiary of Company
or of any Subsidiary of Company for which becoming a Credit Party would
constitute a violation of (a) a Contractual Obligation existing on the Closing
Date or thereafter, a bona fide Contractual Obligation (the prohibition
contained in which was not entered into in contemplation of this provision), in
favor of a Person (other than Company or any of its Subsidiaries or Affiliates)
for which the required consents have not been obtained or (b) applicable law
affecting such Subsidiary, provided, that any such Subsidiary of Company or of
another Subsidiary shall cease to be covered under this clause at such time as
such Subsidiary's becoming a Credit Party would no longer constitute a violation
of such Contractual Obligation or applicable law, whether as a result of
obtaining the required consents or otherwise and (ii) each Domestic Subsidiary
of Company identified on Schedule 1.1(b)-1. The Excluded Subsidiaries, as of the
Closing Date, by virtue of clause (i), above, are listed on Schedule 1.1(b)-2.

            "EXISTING INDEBTEDNESS" means the Indebtedness under (i) that
certain Credit Agreement dated as of March 10, 2004 among Covanta Energy
Corporation, Bank of America, N.A., as Administrative Agent, Deutsche Bank
Securities, Inc., as Documentation Agent, Bank of America, N.A. and Deutsche
Bank Securities, Inc., as Co-Lead Arrangers, (ii) that certain

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Credit Agreement dated as of March 10, 2004 among Covanta Power International
Holdings, Inc. and Deutsche Bank AG, New York Branch, as Administrative Agent,
(iii) that certain Credit Agreement dated as of March 10, 2004 among Covanta
Power International Holdings, Inc. and Bank of America, N.A., as Administrative
Agent, Deutsche Bank Securities, Inc., as Documentation Agent, Bank of America,
N.A. and Deutsche Bank Securities, Inc., as Co-Lead Arrangers, (iv) that certain
Credit Agreement dated as of March 10, 2004 among Covanta Energy Corporation and
Bank One, N.A., as Administrative Agent, (v) that certain Indenture, dated as of
March 10, 2004, among Covanta Energy Corporation and the guarantors named
therein and U.S. Bank Trust National Association as Trustee in respect of the
8.25% Senior Secured Notes due 2011, (vi) the Indenture, dated as of March 10,
2004, between Covanta Energy Corporation and U.S. Bank Trust National
Association as Trustee in respect of the 7.5% Subordinated Unsecured Notes due
2012 and (vii) the Amended and Restated Credit Agreement dated as of May 1, 2003
among American Ref-Fuel Company LLC and Citicorp North America, Inc, as
Administrative Agent and (viii) the Reimbursement Agreements relating to the ARC
Equity Contribution Agreement letters of credit with Hypobank.

            "EXPANSION" means, with respect to any Project related to Company's
and its Subsidiaries waste disposal business in the United States of America in
existence as of the date hereof, additions or improvements to the existing
facilities of such Projects.

            "EXPOSURE" means, with respect to any Lender, as of any date of
determination, the outstanding principal amount of the Loans of such Lender;
provided, at any time prior to the making of the Loans, the Exposure of any
Lender shall be equal to such Lender's Commitment.

            "FACILITY" means any real property (including all buildings,
fixtures or other improvements located thereon) now, hereafter or heretofore
owned, leased, operated or used by Company or any of its Subsidiaries or any of
their respective predecessors or Affiliates of Company, any of its Subsidiaries,
or any such predecessors.

            "FAIR SHARE CONTRIBUTION AMOUNT" as defined in Section 7.2.

            "FAIR SHARE" as defined in Section 7.2.

            "FEDERAL FUNDS EFFECTIVE RATE" means for any day, the rate per annum
equal to the weighted average of the rates on overnight Federal funds
transactions with members of the Federal Reserve System arranged by Federal
funds brokers on such day, as published by the Federal Reserve Bank of New York
on the Business Day next succeeding such day; provided, (i) if such day is not a
Business Day, the Federal Funds Rate for such day shall be such rate on such
transactions on the next preceding Business Day as so published on the next
succeeding Business Day, and (ii) if no such rate is so published on such next
succeeding Business Day, the Federal Funds Rate for such day shall be the
average of the quotations received by Paying Agent from three federal funds
broker of recognized standing selected by Administrative Agent.

            "FINANCIAL PLAN" as defined in Section 5.1(i).

            "FIRST LIEN CREDIT AGREEMENT" means the Credit and Guaranty
Agreement dated as of the Closing Date among Company, Holdings, GSCP as joint
lead arranger, joint bookrunner, co-syndication agent, and administrative agent,
Credit Suisse, as joint lead arranger,

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joint bookrunner and co-syndication agent and the other agents and lenders party
thereto, as it may be amended, modified, renewed, refunded, replaced or
refinanced from time to time in accordance with Section 6.16.

            "FIRST LIEN FACILITIES" means the credit facilities made available
to Company under the First Lien Credit Agreement.

            "FIRST LIEN OBLIGATIONS" means the "Obligations" under and as
defined in the First Lien Credit Agreement; provided that the aggregate
outstanding principal amount of loans and letters of credit included therein
shall not exceed the "Cap Amount" as defined in the Intercreditor Agreement.

            "FISCAL QUARTER" means a fiscal quarter of any Fiscal Year.

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

            "FLOOD HAZARD PROPERTY" means any Real Estate Asset subject to a
Mortgage in favor of Collateral Agent, for the benefit of the Lenders, and
located in an area designated by the Federal Emergency Management Agency as
having special flood or mud slide hazards.

            "FOREIGN SUBSIDIARY" means any Subsidiary that is not a Domestic
Subsidiary. The Foreign Subsidiaries of Company, as of the Closing Date, are
listed on Schedule 1.1(c).

            "FUNDING GUARANTORS" as defined in Section 7.2.

            "FUNDING NOTICE" means a notice substantially in the form of Exhibit
A-1.

            "GAAP" means, subject to the limitations on the application thereof
set forth in Section 1.2, United States generally accepted accounting principles
in effect as of the date of determination thereof.

            "GOVERNMENTAL ACTS" means any act or omission, whether rightful or
wrongful, of any present or future de jure or de facto government or
Governmental Authority.

            "GOVERNMENTAL AUTHORITY" means any federal, state, municipal,
national or other government, governmental department, commission, board,
bureau, court, agency or instrumentality, political subdivision or any entity or
officer thereof exercising executive, legislative, judicial, regulatory or
administrative functions of any government or any court, in each case whether
associated with a state of the United States, the United States, or a foreign
entity or government.

            "GOVERNMENTAL AUTHORIZATION" means any permit, license,
authorization, plan, directive, consent order or consent decree of or from any
Governmental Authority.

            "GRANTOR" as defined in the Pledge and Security Agreement.

            "GSCP" as defined in the preamble hereto.

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            "GUARANTEED OBLIGATIONS" as defined in Section 7.1.

            "GUARANTOR" means Holdings and each Domestic Subsidiary of Company
(other than Excluded Subsidiaries).

            "GUARANTOR SUBSIDIARY" means each Guarantor other than Holdings.

            "GUARANTY" means the guaranty of each Guarantor set forth in Section
7.

            "HAZARDOUS MATERIALS" means any chemical, material or substance,
exposure to which is prohibited, limited or regulated by any Governmental
Authority or which may or could pose a hazard to the health and safety of the
owners, occupants or any Persons in the vicinity of any Facility or to the
indoor or outdoor environment.

            "HEDGE AGREEMENT" means (i) an Interest Rate Agreement or a Currency
Agreement entered into in order to satisfy the requirements of this Agreement or
otherwise in the ordinary course of Company's or any of its Subsidiaries'
businesses or (ii) a forward agreement or arrangement designed to hedge against
fluctuation in electricity rates pertaining to electricity produced by a
Project, so long as the contractual arrangements relating to such Project
contemplate that Company or its Subsidiaries shall deliver such electricity to
third parties.

            "HIGHEST LAWFUL RATE" means the maximum lawful interest rate, if
any, that at any time or from time to time may be contracted for, charged, or
received under the laws applicable to any Lender which are presently in effect
or, to the extent allowed by law, under such applicable laws which may hereafter
be in effect and which allow a higher maximum nonusurious interest rate than
applicable laws now allow.

            "HISTORICAL FINANCIAL STATEMENTS" means (x) for the purposes of
Section 1.2 hereof, the audited financial statements of Holdings and Company as
at December 31, 2004, consisting of balance sheets and the related consolidated
statements of income, stockholders' equity and cash flows for such Fiscal Years
then ended, together with such changes to accounting principles and policies as
Holdings and Company may make during their 2005 Fiscal Year in connection with
the consolidating of the Acquired Business, which changes are concurred with by
their independent public accountant and (y) for all other purposes as of the
Closing Date, (i) the audited financial statements of Holdings and Company for
the immediately preceding three Fiscal Years, and the audited financial
statements of the Acquired Business for the fiscal year ending December 31, 2004
consisting of balance sheet and the related consolidated statements of income,
stockholders' equity and cash flows for such Fiscal Years, and (ii) the
unaudited financial statements of Holdings, Company and the Acquired Business as
at the most recently ended Fiscal Quarter (if any) ending after the date of the
most recent financial statements referenced in clause (i) hereof, consisting of
a balance sheet and the related consolidated statements of income, stockholders'
equity and cash flows for the three-, six-or nine-month period, as applicable,
ending on such date, and, in the case of clauses (i) and (ii), (with respect to
the financial statements of Holdings and Company) certified by the chief
financial officer or chief accounting officer of Company that they fairly
present, in all material respects, the financial condition of Holdings and
Company and the Acquired Business at the

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dates indicated and the results of their operations and their cash flows for the
periods ended. as indicated, subject to changes resulting from audit and
year-end adjustments.

            "HOLDINGS" as defined in the preamble hereto.

            "HOLDINGS PLEDGE AGREEMENT" means the Pledge Agreement to be
executed by Holdings in favor of the Collateral Agent on the Closing Date
substantially in the form of Exhibit I-2, as it may be amended, supplemented or
otherwise modified from time to time.

            "INCREASED-COST LENDERS" as defined in Section 2.23.

            "INDEBTEDNESS", as applied to any Person, means, without
duplication, (i) all indebtedness for borrowed money; (ii) that portion of
obligations with respect to Capital Leases that is properly classified as a
liability on a balance sheet in conformity with GAAP; (iii) notes payable and
drafts accepted representing extensions of credit whether or not representing
obligations for borrowed money; (iv) any obligation owed for all or any part of
the deferred purchase price of property or services (excluding trade payables
incurred in the ordinary course of business, having a term of less than 12
months and payable in accordance with customary trade practices), which purchase
price is due more than six months from the date of incurrence of the obligation
in respect thereof; (v) all Indebtedness secured by any Lien on any property or
asset owned or held by that Person regardless of whether the Indebtedness
secured thereby shall have been assumed by that Person or is nonrecourse to the
credit of that Person; (vi) the face amount of any letter of credit issued for
the account of that Person or as to which that Person is otherwise liable for
reimbursement of drawings; (vii) the direct or indirect guaranty, endorsement
(otherwise than for collection or deposit in the ordinary course of business),
co-making, discounting with recourse or sale with recourse by such Person of the
obligation of another; (viii) any obligation of such Person the primary purpose
or intent of which is to provide assurance to an obligee that the obligation of
the obligor thereof will be paid or discharged, or any agreement relating
thereto will be complied with, or the holders thereof will be protected (in
whole or in part) against loss in respect thereof; (ix) any liability of such
Person for an obligation of another through any agreement (contingent or
otherwise) (a) to purchase, repurchase or otherwise acquire such obligation or
any security therefor, or to provide funds for the payment or discharge of such
obligation (whether in the form of loans, advances, stock purchases, capital
contributions or otherwise) or (b) to maintain the solvency or any balance sheet
item, level of income or financial condition of another if, in the case of any
agreement described under subclauses (a) or (b) of this clause (ix), the primary
purpose or intent thereof is as described in clause (viii) above; and (x) all
obligations of such Person in respect of any exchange traded or over the counter
derivative transaction, including, without limitation, any Interest Rate
Agreement and Currency Agreement (and Hedge Agreements that protect against
fluctuations in electricity rates), whether entered into for hedging or
speculative purposes; provided, in no event shall obligations under any Interest
Rate Agreement and any Currency Agreement be deemed "Indebtedness" for any
purpose under Section 6.8.

            "INDEMNIFIED LIABILITIES" means, collectively, any and all
liabilities, obligations, losses, damages (including natural resource damages),
penalties, claims (including Environmental Claims), reasonable out-of-pocket
costs (including the costs of any investigation, study, sampling, testing,
abatement, cleanup, removal, remediation or other response action

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necessary to remove, remediate, clean up or abate any Release or threatened
Release of Hazardous Materials), and reasonable out-of-pocket expenses of any
kind or nature whatsoever (including the reasonable fees and disbursements of
counsel for Indemnitees in connection with any investigative, administrative or
judicial proceeding commenced or threatened by any Person, whether or not any
such Indemnitee shall be designated as a party or a potential party thereto, and
any fees or expenses incurred by Indemnitees in enforcing this indemnity),
whether direct, indirect or consequential and whether based on any federal,
state or foreign laws, statutes, rules or regulations (including securities and
commercial laws, statutes, rules or regulations and Environmental Laws), on
common law or equitable cause or on contract or otherwise, that may be imposed
on or incurred by any such Indemnitee, in any manner relating to or arising out
of (i) this Agreement or the other Credit Documents or the transactions
contemplated hereby or thereby (including the Lenders' agreement to make the
Credit Extension or the use or intended use of the proceeds thereof, or any
enforcement of any of the Credit Documents (including any sale of, collection
from, or other realization upon any of the Collateral or the enforcement of the
Guaranty)); (ii) the statements contained in the commitment letter delivered by
any Lender to Holdings with respect to the transactions contemplated by this
Agreement; or (iii) any Environmental Claim or any Release or threatened Release
of Hazardous Materials arising from any past or present activity, operation,
land ownership, or practice of Company or any of its Subsidiaries, except to the
extent, in any such case, that any liability, obligation, loss, damage, penalty,
claim, costs, expense or disbursement results from the gross negligence, willful
misconduct or bad faith of such Indemnified Person.

            "INDEMNITEE" as defined in Section 10.3.

            "INSURANCE DEPOSIT AMOUNT" as defined in Section 3.1(o).

            "INSURANCE PREMIUM FINANCERS" means Persons who are non-Affiliates
of Company that advance insurance premiums for Company and its Subsidiaries
pursuant to Insurance Premium Financing Arrangements.

            "INSURANCE PREMIUM FINANCING ARRANGEMENTS" means, collectively, such
agreements with Insurance Premium Financers pursuant to which such Insurance
Premium Financers advance insurance premiums for Company and its Subsidiaries.
Such Insurance Premium Financing Arrangements (i) shall provide for the benefit
of such Insurance Premium Financers a security interest in no property of
Company or any of its Subsidiaries other than gross unearned premiums for the
insurance policies and related rights, (ii) shall not purport to prohibit any
portion of the Liens created in favor of Collateral Agent (for the benefit of
Secured Parties) pursuant to the Collateral Documents, and (iii) shall not
contain any provision or contemplate any transaction prohibited by this
Agreement and shall otherwise be in form and substance reasonably satisfactory
to Administrative Agent.

            "INSURANCE REGULATORY ACCOUNT" as defined in Section 3.1(o).

            "INSURANCE SUBSIDIARIES" means Danielson Indemnity Company and its
Subsidiaries.

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            "INTERCOMPANY MASTER NOTE" means a promissory note evidencing
Indebtedness of Company and each of its Subsidiaries which (a) to the extent the
Indebtedness evidenced thereby is owed to any Credit Party, is pledged pursuant
to the Collateral Documents, and (b) to the extent the Indebtedness evidenced
thereby is owed by a Subsidiary of Company, is senior Indebtedness of such
Subsidiary (except to the extent that requiring such Indebtedness to be senior
would breach a Contractual Obligation binding on such Subsidiary), except that
any such Indebtedness owed by any Credit Party to any Subsidiary which is not a
Credit Party shall be unsecured and subordinated in right of payment to the
payment in full of the Obligations pursuant to the terms of such note.

            "INTERCREDITOR AGREEMENT" means an Intercreditor Agreement
substantially in the form of Exhibit K, as it may be amended, supplemented or
otherwise modified from time to time.

            "INTEREST PAYMENT DATE" means with respect to (i) any Base Rate
Loan, each March 31, June 30, September 30 and December 31 of each year,
commencing on the first such date to occur after the Closing Date and the final
maturity date of such Loan; and (ii) any Eurodollar Rate Loan, the last day of
each Interest Period applicable to such Loan; provided, in the case of each
Interest Period of longer than three months "Interest Payment Date" shall also
include each date that is three months, or an integral multiple thereof, after
the commencement of such Interest Period.

            "INTEREST PERIOD" means, in connection with a Eurodollar Rate Loan,
an interest period of one-, two-, three- or six-months, as selected by Company
in the applicable Conversion/Continuation Notice, (i) initially, commencing on
the Conversion/Continuation Date thereof; and (ii) thereafter, commencing on the
day on which the immediately preceding Interest Period expires; provided, (a) if
an Interest Period would otherwise expire on a day that is not a Business Day,
such Interest Period shall expire on the next succeeding Business Day unless no
further Business Day occurs in such month, in which case such Interest Period
shall expire on the immediately preceding Business Day; (b) any Interest Period
that begins on the last Business Day of a calendar month (or on a day for which
there is no numerically corresponding day in the calendar month at the end of
such Interest Period) shall, subject to clause (c) of this definition, end on
the last Business Day of a calendar month; (c) no Interest Period shall extend
beyond the Maturity Date.

            "INTEREST RATE AGREEMENT" means any interest rate swap agreement,
interest rate cap agreement, interest rate collar agreement, interest rate
hedging agreement or other similar agreement or arrangement, each of which is
for the purpose of hedging the interest rate exposure associated with Company's
and its Subsidiaries' operations and not for speculative purposes.

            "INTEREST RATE DETERMINATION DATE" means, with respect to any
Interest Period, the date that is two Business Days prior to the first day of
such Interest Period.

            "INTERNAL REVENUE CODE" means the Internal Revenue Code of 1986, as
amended to the date hereof and from time to time hereafter, and any successor
statute.

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<PAGE>

            "INVESTMENT" means (i) any direct or indirect purchase or other
acquisition by Company or any of its Subsidiaries of, or of a beneficial
interest in, any of the Securities of any other Person (other than a Guarantor
Subsidiary); (ii) any direct or indirect redemption, retirement, purchase or
other acquisition for value, by any Subsidiary of Company from any Person (other
than Company or any Guarantor Subsidiary), of any Capital Stock of such Person;
(iii) any direct or indirect loan, advance (other than advances to employees for
moving, relocation, business, entertainment and travel expenses, drawing
accounts and similar expenditures in the ordinary course of business) or capital
contribution by Company or any of its Subsidiaries to any other Person (other
than Company or any Guarantor Subsidiary), including all Indebtedness and
accounts receivable from that other Person but only to the extent that the same
are not current assets or did not arise from sales to that other Person in the
ordinary course of business and (iv) Commodities Agreements not constituting
Hedge Agreements. The amount of any Investment shall be the original cost of
such Investment plus the cost of all additions thereto, without any adjustments
for increases or decreases in value, or write-ups, write-downs or write-offs
with respect to such Investment.

            "JOINT LEAD ARRANGERS" as defined in the preamble hereto.

            "JOINT VENTURE" means a joint venture, partnership or other similar
arrangement, whether in partnership or other legal form.

            "LENDER" means each financial institution listed on the signature
pages hereto as a Lender, and any other Person that becomes a party hereto
pursuant to an Assignment Agreement.

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

            "LIMITED RECOURSE DEBT" means, with respect to any Subsidiary of
Company, Indebtedness of such Subsidiary with respect to which the recourse of
the holder or obligee of such Indebtedness is limited to (i) assets associated
with the Project (which in any event shall not include assets held by any
Guarantor Subsidiary other than a Guarantor Subsidiary, if any, whose sole
business is the ownership and/or operation of such Project and substantially all
of whose assets are associated with such Project) in respect of which such
Indebtedness was incurred and/or (ii) such Subsidiary or the equity interests in
such Subsidiary, but in the case of clause (ii) only if such Subsidiary's sole
business is the ownership and/or operation of such Project and substantially all
of such Subsidiary's assets are associated with such Project. For purposes of
this Agreement, Indebtedness of a Subsidiary of Company shall not fail to be
Limited Recourse Debt solely by virtue of the fact that the holders of such
Limited Recourse Debt have recourse to Company or another Subsidiary of Company
pursuant to a contingent obligation supporting such Limited Recourse Debt or a
Performance Guaranty, so long as such contingent obligation or Performance
Guaranty is unsecured and permitted under Section 6.1.

            "LOAN" means a loan made by a Lender to Company pursuant to Section
2.1(a).

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            "MARGIN STOCK" as defined in Regulation U of the Board of Governors
of the Federal Reserve System as in effect from time to time.

            "MARKETABLE SECURITIES" means auction rate securities or auction
rate preferred stock having a rate reset frequency of less than ninety (90) days
and having, at the time of the acquisition thereof, a rating of at least A from
S&P or from Moody's.

            "MATERIAL ADVERSE EFFECT" means a material adverse effect on (i) the
business, operations, assets, liabilities or financial condition of Holdings and
its Subsidiaries taken as a whole; (ii) the ability of the Credit Parties as a
whole to perform their respective Obligations; and (iii) the rights, remedies
and benefits available to, or conferred upon, the Secured Parties under any
Credit Document.

            "MATERIAL CONTRACT" means any contract or other arrangement to which
Company or any of its Subsidiaries is a party (other than the Credit Documents,
the First Lien Credit Agreement and Second Lien Notes Indenture, the MSW
Indenture, the MSW Refinancing Indenture, the New MSW Indenture, the ARC
Indenture, the ARC Refinancing Indenture, the New ARC Indenture and the
principal agreements and instruments entered into in connection with any
refinancing thereof) for which breach, nonperformance, cancellation or failure
to renew could reasonably be expected to have a Material Adverse Effect.

            "MATERIAL REAL ESTATE ASSET" means any fee-owned Real Estate Asset
having a fair market value in excess of $2,000,000 as of the date of the
acquisition thereof.

            "MATERIAL SUBSIDIARY" means, with respect to any Person, any
Subsidiary of such Person now existing or hereafter acquired or formed by such
Person which, on a consolidated basis for such Subsidiary and all of its
Subsidiaries, (i) for the most recent fiscal year of such Person accounted for
more than 2% of the consolidated revenues of such Person and its Subsidiaries,
or (ii) as at the end of such fiscal year, was the owner of more than 2% of the
consolidated assets of such Person and its Subsidiaries.

            "MATURITY DATE" means the earlier of (i) the eighth anniversary of
the Closing Date, and (ii) the date that all the Loans shall become due and
payable in full hereunder, whether by acceleration or otherwise.

            "MOODY'S" means Moody's Investor Services, Inc.

            "MORTGAGE" means a Mortgage substantially in the form of Exhibit J,
as it may be amended, supplemented or otherwise modified from time to time.

            "MSW I" means MSW Energy Holdings LLC, a Delaware corporation, and
MSW Energy Finance Co., Inc.

            "MSW II" means MSW Energy Holdings II LLC, a Delaware corporation,
and MSW Energy Finance Co. II, Inc.

            "MSW I INDENTURE" means that certain Indenture in respect of the
Series A and Series B 81/2% Senior Secured Notes due 2010, dated as of June 25,
2003, among MSW Energy

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Holdings LLC, MSW Energy Finance Co., Inc., the guarantors named therein and
Wells Fargo Bank Minnesota, National Association, as trustee, as such indenture
may be further amended, restated, supplemented, refinanced, replaced or modified
from time to time in accordance with Section 6.15.

            "MSW II INDENTURE" means that certain Indenture in respect of the
Series A and Series B 73/8% Senior Secured Notes due 2010, dated as of November
24, 2003, among MSW Energy Holdings II LLC, MSW Energy Finance Co. II, Inc., the
guarantors named therein and Wells Fargo Bank Minnesota, National Association,
as trustee, as such indenture may be further amended, restated, supplemented,
refinanced, replaced or modified from time to time in accordance with Section
6.15.

            "MSW I NOTES" means the Series A and Series B 81/2% Senior Secured
Notes due 2010 of MSW I.

            "MSW II NOTES" means the Series A and Series B 73/8% Senior Secured
Notes due 2010 of MSW II.

            "MSW INDENTURES" means the MSW I Indenture and the MSW II Indenture.

            "MSW NOTES" means the MSW I Notes and the MSW II Notes.

            "MSW PUT-RELATED COSTS" means any principal, premium, accrued
interest, fees, costs and expenses (in each case to the date of redemption in
respect of the notes redeemed) owed by MSW I and/or MSW II to holders of the MSW
Notes in connection with any valid exercise of the mandatory redemption right
arising from the Acquisition.

            "MSW REFINANCING INDENTURE" means a trust indenture in form and
substance reasonably satisfactory to Administrative Agent pursuant to which any
MSW Refinancing Notes may be issued in accordance with the terms of this
Agreement, as such indenture may be further amended, restated, supplemented,
modified, extended, renewed or replaced from time to time in accordance with
Section 6.15 of this Agreement.

            "MSW REFINANCING NOTES" as defined in Section 6.1(n).

            "MULTIEMPLOYER PLAN" means any Employee Benefit Plan which is a
"multiemployer plan" as defined in Section 3(37) of ERISA.

            "NAIC" means The National Association of Insurance Commissioners,
and any successor thereto.

            "NET ASSET SALE PROCEEDS" means, with respect to any Asset Sale, an
amount equal to: (i) Cash payments (including any Cash received by way of
deferred payment pursuant to, or by monetization of, a note receivable or
otherwise, but only as and when so received) received by Company or any of its
Subsidiaries from such Asset Sale, minus (ii) any bona fide direct costs
incurred in connection with such Asset Sale (or if such costs have not then been
incurred or invoiced, Company's good faith estimate thereof), including (a)
income or gains taxes payable by the seller as a result of any gain recognized
in connection with such Asset Sale,

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(b) payment of the outstanding principal amount of, premium or penalty, if any,
and interest on any Indebtedness (other than the Loans and loans under the First
Lien Credit Agreement and, to the extent permitted under the Intercreditor
Agreement, the Loans and the Second Lien Notes) that is secured by a Lien on the
stock or assets in question and that is required to be repaid under the terms
thereof as a result of such Asset Sale, (c) other taxes actually payable (to the
extent actually subsequently so paid) upon or in connection with the closing of
such Asset Sale (including any transfer taxes or taxes on gross receipts), (d)
any taxes payable or reasonably estimated to be payable in connection with any
transactions effected (or deemed effected) to make prepayments (e.g., taxes
payable upon repatriation of funds from Subsidiaries), (e) actual, reasonable
and documented out-of-pocket fees and expenses (including legal fees, fees to
advisors and severance costs that are due (pursuant to a Contractual Obligation,
or pursuant to a written employment policy applicable to terminated employees
generally, of Company or any of its Subsidiaries in effect prior to such Asset
Sale or pursuant to applicable law) and payable to employees of Company and its
Subsidiaries that are terminated as a result thereof) paid to Persons other than
Company and its Subsidiaries and their respective Affiliates in connection with
such Asset Sale (including fees necessary to obtain any required consents of
such Persons to such Asset Sale), (f) a reasonable reserve for any
indemnification payments (fixed or contingent) attributable to seller's
indemnities and representations and warranties to purchaser in respect of such
Asset Sale undertaken by Company or any of its Subsidiaries in connection with
such Asset Sale and (g) amounts required to be paid to holders of "Allowed Class
6 Claims" (as such term is defined in the Plan of Reorganization) and other
entitled claimants with respect to the "CPIH Participation Interest" (as such
term is defined in the Plan of Reorganization) in an aggregate amount not to
exceed $4,000,000; provided, however, that Net Asset Sale Proceeds shall be
reduced in an amount equal to the amount of proceeds Subsidiaries of Company are
legally bound or required, pursuant to (i) agreements in effect on the Closing
Date, or which were entered into after the Closing Date with respect to the
financing or acquisition of a Project, and/or (ii) the ARC Indenture, ARC
Refinancing Indenture, New ARC Indenture, the MSW Indentures, MSW Refinancing
Indentures or the New MSW Indentures to use for prepayment thereunder (including
any premium, penalty and interest due in connection with such prepayment).

            "NET INSURANCE/CONDEMNATION PROCEEDS" means an amount equal to: (i)
any Cash payments or proceeds received by Company or any of its Subsidiaries (a)
under any casualty insurance policy in respect of a covered loss thereunder
(other than payments for business interruption) occurring after the Closing Date
or (b) as a result of the taking of any assets of Company or any of its
Subsidiaries by any Person pursuant to the power of eminent domain, condemnation
or otherwise, or pursuant to a sale of any such assets to a purchaser with such
power under threat of such a taking, minus (ii) (a) any actual and reasonable
costs incurred by Company or any of its Subsidiaries in connection with the
adjustment or settlement of any claims of Company or such Subsidiary in respect
thereof, and (b) any bona fide direct costs incurred in connection with any
adjustment or settlement or any such sale as referred to in clause (i)(b) of
this definition, including income taxes payable as a result of any gain
recognized in connection therewith and any actual, reasonable and documented
out-of-pocket fees and expenses (including legal fees, fees to advisors and
severance costs that are due (pursuant to a Contractual Obligation, or pursuant
to a written employment policy applicable to terminated employees generally, of
Company or any of its Subsidiaries in effect prior to such event or pursuant to
applicable law) and payable to employees of Company and its Subsidiaries that
are

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<PAGE>

terminated as a result thereof) paid to Persons other than Company and its
Subsidiaries and their respective Affiliates in connection with such event;
provided, that if any costs, fees or expenses that may be deducted under this
clause (ii) have not been incurred or invoiced at the time of any determination
of Net Insurance/Condemnation Proceeds, Company may deduct its good faith
estimate thereof to the extent actually subsequently so paid; provided, however,
that Net Insurance/Condemnation Proceeds shall be reduced in an amount equal to
the amount of proceeds Subsidiaries of Company are legally bound or required,
pursuant to (i) agreements in effect on the Closing Date, or which were entered
into after the Closing Date with respect to the financing or acquisition of a
Project, and (ii) the ARC Indenture, ARC Refinancing Indenture, New ARC
Indenture, MSW Indentures, MSW Refinancing Indentures, or New MSW Indentures to
use for prepayment thereunder (including any premium, penalty and interest due
in connection with such prepayment).

            "NEW ARC INDENTURE" means a trust indenture in form and substance
reasonably satisfactory to Administrative Agent pursuant to which any New ARC
Notes may be issued in accordance with the terms of this Agreement, as such
indenture may be further amended, restated, supplemented, modified, extended,
renewed or replaced from time to time in accordance with Section 6.15 of this
Agreement.

            "NEW ARC NOTES" means the notes issued by ARC LLC in accordance with
Section 6.1(n)(iii).

            "NEW MSW I INDENTURE" means a trust indenture in form and substance
reasonably satisfactory to Administrative Agent pursuant to which any New MSW I
Notes may be issued in accordance with the terms of this Agreement, as such
indenture may be further amended, restated, supplemented, modified, extended,
renewed or replaced from time to time in accordance with Section 6.15 of this
Agreement.

            "NEW MSW I NOTES" means the notes issued by MSW I in accordance with
Section 6.1(n)(ii).

            "NEW MSW II INDENTURE" means a trust indenture in form and substance
reasonably satisfactory to Administrative Agent pursuant to which any New MSW II
Notes may be issued in accordance with the terms of this Agreement, as such
indenture may be further amended, restated, supplemented, modified, extended,
renewed or replaced from time to time in accordance with Section 6.15 of this
Agreement.

            "NEW MSW II NOTES" means the notes issued by MSW II in accordance
with Section 6.1(n)(ii).

            "NEW MSW INDENTURES" means the New MSW I Indenture and the New MSW
II Indenture.

            "NEW MSW NOTES" means the New MSW I Notes and the New MSW II Notes.

            "NON-US LENDER" means (a) each Lender (or Administrative Agent or
Paying Agent) that is a foreign person as defined in Treasury Regulations
section 1.1441-1(c)(2) or (b) each Lender (Paying Agent or Administrative Agent)
that is disregarded for United States federal

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<PAGE>

tax purposes under Treasury Regulations section 301.7701-2(c)(2) as an entity
separate from its owner and whose single owner is a foreign person within the
meaning of Treasury Regulations section 1.1441-1(c)(2).

            "NOTE" means a promissory note in the form of Exhibit B, as it may
be amended, supplemented or otherwise modified from time to time.

            "NOTICE" means a Funding Notice or a Conversion/Continuation Notice.

            "OBLIGATIONS" means all obligations of every nature of each Credit
Party from time to time owed to the Agents (including former Agents), the
Lenders or any of them under any Credit Document or Hedge Agreement (including,
without limitation, with respect to a Hedge Agreement, obligations owed
thereunder to any person who was a Lender or an Affiliate of a Lender at the
time such Hedge Agreement was entered into), whether for principal, interest
(including interest which, but for the filing of a petition in bankruptcy with
respect to such Credit Party, would have accrued on any Obligation, whether or
not a claim is allowed against such Credit Party for such interest in the
related bankruptcy proceeding), payments for early termination of Hedge
Agreements, fees, expenses, indemnification or otherwise.

            "OBLIGEE GUARANTOR" as defined in Section 7.7.

            "ORGANIZATIONAL DOCUMENTS" means (i) with respect to any
corporation, its certificate or articles of incorporation or organization, as
amended, and its by-laws, as amended, (ii) with respect to any limited
partnership, its certificate of limited partnership, as amended, and its
partnership agreement, as amended, (iii) with respect to any general
partnership, its partnership agreement, as amended, and (iv) with respect to any
limited liability company, its articles of organization, as amended, and its
operating agreement, as amended. In the event any term or condition of this
Agreement or any other Credit Document requires any Organizational Document to
be certified by a secretary of state or similar governmental official, the
reference to any such "Organizational Document" shall only be to a document of a
type customarily certified by such governmental official.

            "OTHER DOMESTIC SUBSIDIARIES" means Domestic Subsidiaries of Company
other than Subsidiaries constituting part of the Acquired Business.

            "PBGC" means the Pension Benefit Guaranty Corporation or any
successor thereto.

            "PAYING AGENT" as defined in the preamble hereto.

            "PENSION PLAN" means any Employee Benefit Plan, other than a
Multiemployer Plan, which is subject to Section 412 of the Internal Revenue Code
or Section 302 of ERISA.

            "PERFORMANCE GUARANTY" means any performance guaranty agreement
entered into by Company or any of its Subsidiaries under which Company or any
such Subsidiary (i) guarantees the performance of a Subsidiary of Company under
a principal lease, service, construction or operating agreement relating to a
Project or (ii) is otherwise obligated to provide support in connection with
Projects.

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<PAGE>

            "PERMITTED ACQUISITION" means any acquisition by Company or any of
its Subsidiaries, whether by purchase, merger or otherwise, of all or
substantially all of the assets of, all of the Capital Stock of, or a business
line or unit or a division of, any Person; provided,

                  (i) immediately prior to, and after giving effect thereto, no
      Default or Event of Default shall have occurred and be continuing or would
      result therefrom;

                  (ii) all transactions in connection therewith shall be
      consummated, in all material respects, in accordance with all applicable
      laws and in conformity with all applicable Governmental Authorizations;

                  (iii) in the case of the acquisition of Capital Stock, all of
      the Capital Stock (except for any such Securities in the nature of
      directors' qualifying shares required pursuant to applicable law) acquired
      or otherwise issued by such Person or any newly formed Subsidiary of
      Company in connection with such acquisition shall be owned 100% by Company
      or a Guarantor Subsidiary thereof (except that Capital Stock Permitted
      Acquisitions, the consideration for which constitutes less than $6,000,000
      in the aggregate from the Closing Date may be made by Subsidiaries of
      Company which are not Guarantor Subsidiaries), and, to the extent a
      Guarantor Subsidiary is then acquired, Company shall have taken, or caused
      to be taken, as of the date such Person becomes a Guarantor Subsidiary of
      Company, each of the actions set forth in Sections 5.10 and/or 5.11, as
      applicable, unless, following a request by Company, such actions are not
      required by Administrative Agent;

                  (iv) Company and its Subsidiaries shall be in compliance with
      the financial covenant set forth in Section 6.8 on a pro forma basis after
      giving effect to such acquisition as of the last day of the Fiscal Quarter
      most recently ended;

                  (v) Company shall have delivered to Administrative Agent (A)
      at least 10 Business Days prior to such proposed acquisition, a Compliance
      Certificate evidencing compliance with Section 6.8 as required under
      clause (iv) above, together with all relevant financial information with
      respect to such acquired assets, including, without limitation, the
      aggregate consideration for such acquisition and any other information
      required to demonstrate compliance with Section 6.8; and

                  (vi) any Person or assets or division as acquired in
      accordance herewith (y) shall be in same business or lines of business in
      which Company and/or its Subsidiaries are engaged as of the Closing Date
      or in which Company and/or its Subsidiaries are expressly permitted
      hereunder to engage in and (z) shall have generated positive cash flow for
      the four quarter period most recently ended prior to the date of such
      acquisition.

            "PERMITTED LIENS" means each of the Liens permitted pursuant to
Section 6.2.

            "PERSON" means and includes natural persons, corporations, limited
partnerships, general partnerships, limited liability companies, limited
liability partnerships, joint stock companies, Joint Ventures, associations,
companies, trusts, banks, trust companies, land trusts,

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<PAGE>

business trusts or other organizations, whether or not legal entities, and
Governmental Authorities.

            "PHASE I ENVIRONMENTAL ASSESSMENT" means, with respect to any
Facility, a report that (i) conforms to the ASTM Standard Practice for
Environmental Site Assessments: Phase I Environmental Site Assessment Process, E
1527-00, or, if reasonably requested by Administrative Agent, the USEPA's
standards for all appropriate inquiry, (ii) was conducted no more than six
months prior to the date such report is required to be delivered hereunder, by
one or more environmental consulting firms reasonably satisfactory to
Administrative Agent, and (iii) shall expressly specify, or shall be accompanied
by a letter stating, in form and substance reasonably satisfactory to
Administrative Agent, that the report may be relied on by Administrative Agent
and the Lenders or Administrative Agent shall have received a letter so stating
in form and substance reasonably satisfactory to Administrative Agent.

            "PLAN OF REORGANIZATION" as defined in Section 6.2(t).

            "PLAN OF REORGANIZATION ACCOUNT" as defined in Section 3.1(p).

            "PLAN OF REORGANIZATION INITIAL DEPOSIT AMOUNT" as defined in
Section 3.1(p).

            "PLEDGE AND SECURITY AGREEMENT" means the Parity Lien Pledge and
Security Agreement to be executed by Company and each Guarantor Subsidiary on
the Closing Date substantially in the form of Exhibit I-1, as it may be amended,
supplemented or otherwise modified from time to time.

            "PREPAYMENT PREMIUM" as defined in Section 2.13.

            "PRIME RATE" means the rate of interest quoted by Bank of America,
N.A. as its "base" or "prime" rate of interest, as in effect from time to time.
The Prime Rate is a reference rate and does not necessarily represent the lowest
or best rate actually charged to any customer. Administrative Agent or any other
Lender may make commercial loans or other loans at rates of interest at, above
or below the Prime Rate.

            "PRINCIPAL OFFICE" means, for each of Administrative Agent and the
Paying Agent such Person's "Principal Office" as set forth on Appendix B, or
such other office or office of a third party or sub-agent, as appropriate, as
such Person may from time to time designate in writing to Company,
Administrative Agent and each Lender.

            "PROJECT" means any waste-to-energy facility, waste disposal or
collection facility and facilities related or ancillary thereto, electrical
generation plant, cogeneration plant, water treatment facility or other facility
for the generation of electricity or engaged in another line of business in
which Company and its Subsidiaries are permitted to be engaged hereunder for
which a Subsidiary or Subsidiaries of Company was, is or will be (as the case
may be) an owner, operator, manager or builder, provided, however, that a
Project shall cease to be a Project of Company and its Subsidiaries at such time
that Company or any of its Subsidiaries ceases to have any existing or future
rights or obligations (whether direct or indirect, contingent or matured)
associated therewith.

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<PAGE>

            "PROJECTIONS" as defined in Section 4.8.

            "PRO RATA SHARE" means for any Lender, the percentage obtained by
dividing (a) the Exposure of that Lender by (b) the aggregate Exposure of all
Lenders.

            "PUT LOANS" as defined in the Recitals.

            "PUT-RELATED EQUITY OFFERING" means the offering of preferred stock
(such securities having no mandatory redemption, repurchase, repayment or
similar requirements prior to the date which occurs six (6) months after the
Termination Date and upon which all dividends or distributions shall be payable
in additional shares of such securities) of Holdings to all or any of its
shareholders within 120 days of the Closing Date.

            "PUT-RELATED EQUITY OFFERING AGREEMENT" means the subscription
agreement, by and among Holdings and certain of its shareholders relating to the
Put-Related Equity Offering, as it may be amended, supplemented, restated or
otherwise modified from time to time in accordance with the provisions of
Section 6.14 hereof.

            "REAL ESTATE ASSET" means, at any time of determination, any
interest (fee, leasehold or otherwise) then owned by Company or any Guarantor
Subsidiary in any real property.

            "REFINANCING" as defined in the Recitals.

            "REGISTER" as defined in Section 2.7(b).

            "REGULATION D" means Regulation D of the Board of Governors of the
Federal Reserve System, as in effect from time to time.

            "RELATED AGREEMENTS" means, collectively, (i) the Stock Purchase
Agreement; (ii) the MSW Indentures, the MSW Refinancing Indentures, the ARC
Indenture, the ARC Refinancing Indenture, the New MSW Indentures and the New ARC
Indenture; (iii) the First Lien Credit Agreement and Second Lien Notes Indenture
and all collateral documents related thereto; (iv) the Rights Offering
Agreement; (v) the Corporate Services Reimbursement Agreement; (vi) DHC Tax
Sharing Agreement; and (vii) the Put-Related Equity Offering Agreement and the
documents evidencing the terms of the preferred stock related thereto.

            "RELATED FUND" means, with respect to any Lender that is an
investment fund, any other investment fund that invests in commercial loans and
that is managed or advised by the same investment advisor as such Lender or by
an Affiliate of such investment advisor.

            "RELATED PARTIES" means, with respect to any Person, such Person's
Affiliates and the partners, directors, officers, employees, agents, trustees
and advisors of such Person and of such Person's Affiliates.

            "RELATED TRANSACTION COSTS" means the fees, costs and expenses
payable by Company or its Subsidiaries in connection with the Related
Transactions within 180 days of the Closing Date.

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<PAGE>

            "RELATED TRANSACTIONS" means each of (i) the prepayment of the Loans
within 120 days of the Closing Date made solely with the proceeds of the Second
Lien Notes in an aggregate amount not to exceed 50% of the principal amount of
the Loans borrowed on the Closing Date, (ii) the issuance of the New MSW Notes,
(iii) any refinancings of the MSW Notes in connection with the valid exercise by
holders of the MSW Notes of mandatory redemption rights caused by the
Acquisition (and any refinancing of any bridge loans incurred, or remarketing of
securities undertaken, in connection therewith), (iv) issuance of New ARC Notes
and (v) the Put-Related Equity Offering.

            "RELEASE" means any release, spill, emission, leaking, pumping,
pouring, injection, escaping, deposit, disposal, discharge, dispersal, dumping,
leaching or migration of any Hazardous Material into the environment (including
the abandonment or disposal of any barrels, containers or other closed
receptacles containing any Hazardous Material), including the movement of any
Hazardous Material through the air, soil, surface water or groundwater.

            "REPLACEMENT LENDER" as defined in Section 2.23.

            "REQUISITE LENDERS" means one or more Lenders having or holding
Exposure and representing more than 50% of the sum of the aggregate Exposure of
all Lenders.

            "RESTRICTED JUNIOR PAYMENT" means (i) any dividend or other
distribution, direct or indirect, on account of any shares of any class of stock
of Company now or hereafter outstanding, except a dividend payable solely in
shares of stock to the holders of that class; (ii) any redemption, retirement,
sinking fund or similar payment, purchase or other acquisition for value, direct
or indirect, of any shares of any class of stock of Company now or hereafter
outstanding; (iii) any payment made to retire, or to obtain the surrender of,
any outstanding warrants, options or other rights to acquire shares of any class
of stock of Company now or hereafter outstanding; (iv) management or similar
fees payable to Holdings or any of its Affiliates (other than Company or
Guarantor Subsidiary); (v) any payment or prepayment of principal of, premium,
if any, or interest on, redemption, purchase, retirement, defeasance (including
in-substance or legal defeasance), sinking fund or similar payment with respect
to the MSW Notes, the MSW Refinancing Notes, the New MSW Notes, any Indebtedness
outstanding under Second Lien Notes Indenture, ARC Notes, ARC Refinancing Notes
and the New ARC Notes and (vi) any payment or prepayment of principal of,
premium, if any, or redemption, purchase, retirement, defeasance, sinking fund
or similar payment with respect to any Indebtedness for borrowed money of any
Covanta Warren Entity (the "COVANTA WARREN DEBT").

            "RIGHTS OFFERING" means the offering of common stock of Holdings to
its shareholders on the Closing Date.

            "RIGHTS OFFERING AGREEMENT" means the subscription agreement, dated
as of the Closing Date, by and among Holdings and certain of its shareholders
relating to the Rights Offering, as it may be amended, supplemented, restated or
otherwise modified from time to time in accordance with the provisions of
Section 6.14 hereof.

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<PAGE>

            "S&P" means Standard & Poor's Ratings Group, a division of The
McGraw Hill Corporation.

            "SECOND LIEN NOTES" means the Second Lien Notes to be issued under
the Second Lien Notes Indenture as they may be amended, modified, renewed,
refunded, replaced or refinanced from time to time in accordance with Section
6.16 to the extent the proceeds of such Second Lien Notes are used solely to
promptly prepay the Second Lien Term Loans in accordance with the provisions of
the Second Lien Credit Agreement.

            "SECOND LIEN NOTES INDENTURE" means the Indenture in respect of the
Second Lien Notes, between Company and the trustee thereunder as it may be
amended, modified, renewed, refunded, replaced or refinanced from time to time
in accordance with Section 6.16.

            "SECURED PARTIES" has the meaning assigned to that term in the
Pledge and Security Agreement.

            "SECOND PRIORITY" means, with respect to any Lien purported to be
created in any Collateral pursuant to any Collateral Document, that such Lien is
second in priority only to the Liens created under or relating to the First Lien
Credit Agreement, other than any Permitted Liens.

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

            "SECURITIES ACT" means the Securities Act of 1933, as amended from
time to time, and any successor statute.

            "SOLVENCY CERTIFICATE" means a Solvency Certificate of the chief
financial officer of Holdings substantially in the form of Exhibit G-2.

            "SOLVENT" means, with respect to any Credit Party, that as of the
date of determination, both (i) (a) the sum of such Credit Party's, debt
(including contingent liabilities) does not exceed the present fair saleable
value of such Credit Party's and its Subsidiaries, present assets; (b) such
Credit Party's capital is not unreasonably small in relation to its business as
contemplated on the Closing Date and reflected in the Projections or with
respect to any transaction contemplated or undertaken after the Closing Date;
and (c) such Person has not incurred and does not intend to incur, or believe
that it will incur, debts beyond its ability to pay such debts as they become
due (whether at maturity or otherwise); and (ii) such Person is "solvent" within
the meaning given that term and similar terms under applicable laws relating to
fraudulent transfers and conveyances. For purposes of this definition, the
amount of any contingent liability at any time shall be computed as the amount
that, in light of all of the facts and circumstances existing at such time,
represents the amount that can reasonably be expected

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<PAGE>

to become an actual or matured liability (irrespective of whether such
contingent liabilities meet the criteria for accrual under Statement of
Financial Accounting Standard No. 5).

            "STOCK PURCHASE AGREEMENT" means that certain Stock Purchase
Agreement, dated as of February 1, 2005, among the Acquired Business, the
sellers party thereto and Holdings, as it may be amended, supplemented, restated
or otherwise modified from time to time in accordance with the provisions of
Section 6.14 hereof.

            "SUBSIDIARY" means, with respect to any Person, any corporation,
partnership, limited liability company, association, joint venture or other
business entity of which more than 50% of the total voting power of shares of
stock or other ownership interests entitled (without regard to the occurrence of
any contingency) to vote in the election of the Person or Persons (whether
directors, managers, trustees or other Persons performing similar functions)
having the power to direct or cause the direction of the management and policies
thereof is at the time owned or controlled, directly or indirectly, by that
Person or one or more of the other Subsidiaries of that Person or a combination
thereof; provided, in determining the percentage of ownership interests of any
Person controlled by another Person, no ownership interest in the nature of a
"qualifying share" of the former Person shall be deemed to be outstanding; and
provided further, that in no event shall any Affected Entity constitute a
Subsidiary of Company or any of its Subsidiaries for so long as such Person
remains an Affected Entity, except that with respect to the Covanta Warren
Entities at any time after any payment is made pursuant to Section 6.5(h) such
Person shall be a Subsidiary.

            "TAX" means any present or future tax, levy, impost, duty,
assessment, charge, fee, deduction or withholding of any nature and whatever
called, by whomsoever, on whomsoever and wherever imposed, levied, collected,
withheld or assessed; provided, "Tax on the overall net income" of a Person
shall be construed as a reference to a tax imposed by the jurisdiction in which
that Person is organized or in which that Person's applicable principal office
(and/or, in the case of a Lender, its lending office) is located or in which
that Person (and/or, in the case of a Lender, its lending office) is deemed to
be doing business on all or part of the net income, profits or gains (whether
worldwide, or only insofar as such income, profits or gains are considered to
arise in or to relate to a particular jurisdiction, or otherwise) of that Person
(and/or, in the case of a Lender, its applicable lending office).

            "TERMINATION DATE" means the first date on which (i) the Commitment
has expired or been terminated and (ii) the principal amount of all Loans and
all other Obligations then due and payable have been paid in full.

            "TERMINATED LENDER" as defined in Section 2.23.

            "TITLE POLICY" as defined in Section 3.1(h)(iv).

            "TRANSACTION COSTS" means the fees, costs and expenses payable by
Company in connection with the Transactions within 180 days of the Closing Date.

            "TRANSACTIONS" means the Acquisition, the Refinancing, the entering
into this Agreement, the First Lien Credit Agreement and the Rights Offering.

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<PAGE>

            "TREASURY REGULATIONS" means the final and temporary (but not
proposed) income tax regulations promulgated under the Internal Revenue Code, as
such regulations may be amended from time to time (including corresponding
provisions of succeeding regulations).

            "TYPE OF LOAN" means a Base Rate Loan or a Eurodollar Rate Loan.

            "UCC" means the Uniform Commercial Code (or any similar or
equivalent legislation) as in effect in any applicable jurisdiction.

            "UNADJUSTED EURODOLLAR RATE COMPONENT" means that component of the
interest costs to Company in respect of a Eurodollar Rate Loan that is based
upon the rate obtained pursuant to clause (i) of the definition of Adjusted
Eurodollar Rate.

      1.2. ACCOUNTING TERMS. Except as otherwise expressly provided herein, all
accounting terms not otherwise defined herein shall have the meanings assigned
to them in conformity with GAAP. Financial statements and other information
required to be delivered by Company to Lenders pursuant to Sections 5.1(b) and
5.1(c) shall be prepared in accordance with GAAP (subject, in the case of
Section 5.1(b), to final year-end adjustments and the absence of footnotes) as
in effect at the time of such preparation (and delivered together with the
reconciliation statements provided for in Section 5.1(e), if applicable).
Subject to the foregoing, calculations in connection with the definitions,
covenants and other provisions used in Section 6.8 hereof shall utilize
accounting principles and policies in conformity with those used to prepare the
Historical Financial Statements. If at any time any change in GAAP would affect
the computation of any financial ratio or requirement set forth in any Credit
Document, and Company or Administrative Agent shall so request, Administrative
Agent and Company shall negotiate in good faith to amend such ratio or
requirement to preserve the original intent thereof in light of such change in
GAAP (subject to the approval of Requisite Lenders), provided that, until so
amended, such ratio or requirement shall continue to be computed in accordance
with GAAP prior to such change therein and Company shall provide to
Administrative Agent and Lenders reconciliation statements provided for in
Section 5.1(e).

      1.3. INTERPRETATION, ETC. Any of the terms defined herein may, unless the
context otherwise requires, be used in the singular or the plural, depending on
the reference. References herein to any Section, Appendix, Schedule or Exhibit
shall be to a Section, an Appendix, a Schedule or an Exhibit, as the case may
be, hereof unless otherwise specifically provided. The use herein of the word
"include" or "including", when following any general statement, term or matter,
shall not be construed to limit such statement, term or matter to the specific
items or matters set forth immediately following such word or to similar items
or matters, whether or not no limiting language (such as "without limitation" or
"but not limited to" or words of similar import) is used with reference thereto,
but rather shall be deemed to refer to all other items or matters that fall
within the broadest possible scope of such general statement, term or matter.

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<PAGE>

SECTION 2. LOANS

      2.1. LOANS.

            (a) Commitments. Subject to the terms and conditions hereof, each
Lender severally agrees to make, on the Closing Date, a Loan to Company in an
amount equal to such Lender's Commitment.

Company may make only one borrowing under the Commitment which shall be on the
Closing Date. Any amount borrowed under this Section 2.1(a) and subsequently
repaid or prepaid may not be reborrowed. Subject to Sections 2.13 and 2.14, all
amounts owed hereunder with respect to the Loans shall be paid in full no later
than the Maturity Date. Each Lender's Commitment shall terminate immediately and
without further action on the Closing Date after giving effect to the funding of
such Lender's Commitment on such date.

            (b) Borrowing Mechanics for Loans.

                  (i) Company shall deliver to Paying Agent a fully executed
   Funding Notice no later than one day prior to the Closing Date. Promptly upon
   receipt by Paying Agent of such Certificate, Paying Agent shall notify each
   Lender of the proposed borrowing.

                  (ii) Each Lender shall make its Loan available to Paying Agent
   not later than 12:00 p.m. (New York City time) on the Closing Date, by wire
   transfer of same day funds in Dollars, at the Principal Office designated by
   Paying Agent. Upon satisfaction or waiver of the conditions precedent
   specified herein, Paying Agent shall make the proceeds of the Loans available
   to Company on the Closing Date by causing an amount of same day funds in
   Dollars equal to the proceeds of all such Loans received by Paying Agent from
   Lenders to be credited to the account of Company at the Principal Office
   designated by Paying Agent or to such other account as may be designated in
   writing to Paying Agent by Company.

      2.2. [INTENTIONALLY LEFT BLANK.]

      2.3. [INTENTIONALLY LEFT BLANK.]

      2.4. [INTENTIONALLY LEFT BLANK.]

      2.5. PRO RATA SHARES; AVAILABILITY OF FUNDS.

            (a) Pro Rata Shares. All Loans shall be made, and all participations
purchased, by Lenders simultaneously and proportionately to their respective Pro
Rata Shares, it being understood that no Lender shall be responsible for any
default by any other Lender in such other Lender's obligation to make a Loan
requested hereunder or purchase a participation required hereby nor shall any
Commitment of any Lender be increased or decreased as a result of a default by
any other Lender in such other Lender's obligation to make a Loan requested
hereunder or purchase a participation required hereby.

            (b) Availability of Funds. Unless Paying Agent shall have been
notified by any Lender prior to the Closing Date that such Lender does not
intend to make available to Paying

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<PAGE>

Agent the amount of such Lender's Loan requested on such Closing Date, Paying
Agent may assume that such Lender has made such amount available to Paying Agent
on the Closing Date and Paying Agent may, in its sole discretion, but shall not
be obligated to, make available to Company a corresponding amount on the Closing
Date. If such corresponding amount is not in fact made available to Paying Agent
by such Lender, Paying Agent shall be entitled to recover such corresponding
amount on demand from such Lender together with interest thereon, for each day
from the Closing Date until the date such amount is paid to Paying Agent, at the
customary rate set by Paying Agent for the correction of errors among banks for
three Business Days and thereafter at the Base Rate. If such Lender does not pay
such corresponding amount forthwith upon Paying Agent's demand therefor, Paying
Agent shall promptly notify Company and Company shall immediately pay such
corresponding amount to Paying Agent together with interest thereon, for each
day from the Closing Date until the date such amount is paid to Paying Agent, at
the rate payable hereunder for Base Rate Loans. Nothing in this Section 2.5(b)
shall be deemed to relieve any Lender from its obligation to fulfill its
Commitments hereunder or to prejudice any rights that Company may have against
any Lender as a result of any default by such Lender hereunder.

      2.6. USE OF PROCEEDS. The proceeds of the Loan shall be applied by Company
to fund the Acquisition, the Refinancing and to pay the related fees,
commissions, premiums and expenses. No portion of the proceeds of any Credit
Extension shall be used in any manner that causes or might cause such Credit
Extension or the application of such proceeds to violate Regulation U or
Regulation X of the Board of Governors of the Federal Reserve System or any
other regulation thereof or to violate the Exchange Act.

      2.7. EVIDENCE OF DEBT; REGISTER; LENDERS' BOOKS AND RECORDS; NOTES.

            (a) Lenders' Evidence of Debt. Each Lender shall maintain on its
internal records an account or accounts evidencing the Obligations of Company to
such Lender, including the amounts of the Loans made by it and each repayment
and prepayment in respect thereof. Any such recordation shall be conclusive and
binding on Company, absent manifest error; provided, that the failure to make
any such recordation, or any error in such recordation, shall not affect
Company's Obligations in respect of any applicable Loans; and provided further,
in the event of any inconsistency between the Register and any Lender's records,
the recordations in the Register shall govern.

            (b) Register. Paying Agent (or its agent or sub-agent appointed by
it) shall maintain at the Principal Office a register for the recordation of the
names and addresses of Lenders and the Loans of each Lender from time to time
(the "REGISTER"). The Register, as in effect at the close of business on the
preceding Business Day, shall be available for inspection by Company or any
Lender at any reasonable time and from time to time upon reasonable prior
notice. Paying Agent shall record, or shall cause to be recorded, in the
Register, the Loans and in accordance with the provisions of Section 10.6, and
each repayment or prepayment in respect of the principal amount of the Loans,
and any such recordation shall be conclusive and binding on Company and each
Lender, absent manifest error; provided, that the failure to make any such
recordation, or any error in such recordation, shall not affect Company's
Obligations in respect of any Loan. The Paying Agent shall correct any failures
to record or errors in recording in the Register reasonably promptly after
discovery of such failure or error. Company hereby

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designates Credit Suisse to serve as Company's agent solely for purposes of
maintaining the Register as provided in this Section 2.7, and Company hereby
agrees that, to the extent Credit Suisse serves in such capacity, Credit Suisse
and its officers, directors, employees, agents, sub-agents and affiliates shall
constitute "Indemnitees." The Obligations are registered obligations and the
right, title and interest of any Lender and/or its assignees in and to such
Obligations shall be transferable only upon notation of such transfer in the
Register. This Section 2.7(b) shall be construed so that the Obligations are at
all times maintained in "registered form" within the meaning of sections 163(f),
871(h)(2) and 881(c)(2) of the Internal Revenue Code and any related Treasury
Regulations.

            (c) Notes. If so requested by any Lender by written notice to
Company (with a copy to Paying Agent) at least two Business Days prior to the
Closing Date, or at any time thereafter, Company shall execute and deliver to
such Lender (and/or, if applicable and if so specified in such notice, to any
Person who is an assignee of such Lender pursuant to Section 10.6) on the
Closing Date (or, if such notice is delivered after the Closing Date, promptly
after Company's receipt of such notice) a Note or Notes to evidence such
Lender's Loan.

      2.8. INTEREST ON LOANS.

            (a) Except as otherwise set forth herein, each Loan shall bear
interest on the unpaid principal amount thereof from the date made through
repayment (whether by acceleration or otherwise) thereof as follows:

                              (1) if a Base Rate Loan, at the Base Rate plus
            4.50%; or

                              (2) if a Eurodollar Rate Loan, at the Adjusted
            Eurodollar Rate plus 5.50%.

            (b) The basis for determining the rate of interest with respect to
any Loan, and the Interest Period with respect to any Eurodollar Rate Loan,
shall be selected by Company and notified to Paying Agent pursuant to the
Conversion/Continuation Notice; provided, that in respect of the Loans requested
on the Closing Date (i) Loans in the amount of $200,000,000 initially shall be
made as Eurodollar Rate Loans with an initial Interest Period of three months
and (ii) Loans in the amount of $200,000,000 initially shall be made as
Eurodollar Rate Loans with an Interest Period of one month. If on any day a Loan
is outstanding with respect to which a Conversion/Continuation Notice has not
been delivered to Paying Agent in accordance with the terms hereof specifying
the applicable basis for determining the rate of interest, then for that day
such Loan shall be a Base Rate Loan.

            (c) In connection with Eurodollar Rate Loans there shall be no more
than eight (8) Interest Periods outstanding at any time. In the event Company
fails to specify between a Base Rate Loan or a Eurodollar Rate Loan in the
applicable Conversion/Continuation Notice, such Loan (if outstanding as a
Eurodollar Rate Loan) will be automatically converted into a Base Rate Loan on
the last day of the then-current Interest Period for such Loan (or if
outstanding as a Base Rate Loan will remain as, or (if not then outstanding)
will be made as, a Base Rate Loan). In the event Company fails to specify an
Interest Period for any Eurodollar Rate Loan in the

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applicable Conversion/Continuation Notice, Company shall be deemed to have
selected an Interest Period of one month. As soon as practicable after 10:00
a.m. (New York City time) on each Interest Rate Determination Date, Paying Agent
shall determine (which determination shall, absent manifest error, be final,
conclusive and binding upon all parties) the interest rate that shall apply to
the Eurodollar Rate Loans for which an interest rate is then being determined
for the applicable Interest Period and shall promptly give notice thereof (in
writing or by telephone confirmed in writing) to Company and each Lender.

            (d) Interest payable pursuant to Section 2.8(a) shall be computed
(i) in the case of Base Rate Loans on the basis of a 365-day or 366-day year, as
the case may be, and (ii) in the case of Eurodollar Rate Loans, on the basis of
a 360-day year, in each case for the actual number of days elapsed in the period
during which it accrues. In computing interest on any Loan, the last Interest
Payment Date with respect to such Loan or, with respect to a Base Rate Loan
being converted from a Eurodollar Rate Loan, the date of conversion of such
Eurodollar Rate Loan to such Base Rate Loan, as the case may be, shall be
included, and the date of payment of such Loan or the expiration date of an
Interest Period applicable to such Loan or, with respect to a Base Rate Loan
being converted to a Eurodollar Rate Loan, the date of conversion of such Base
Rate Loan to such Eurodollar Rate Loan, as the case may be, shall be excluded;
provided, if a Loan is repaid on the same day on which it is made, one day's
interest shall be paid on that Loan.

            (e) Except as otherwise set forth herein, interest on each Loan
shall accrue on a daily basis and shall be payable in arrears (i) on each
Interest Payment Date; (ii) upon any prepayment of that Loan, whether voluntary
or mandatory, to the extent accrued on the amount being prepaid; and (iii) on
the Maturity Date; provided, however, with respect to any voluntary prepayment
of a Base Rate Loan, accrued interest shall instead be payable on the applicable
Interest Payment Date.

      2.9. CONVERSION/CONTINUATION.

            (a) Subject to Section 2.18 and (with respect to continuations of,
or conversions into, Eurodollar Rate Loans) so long as no Default or Event of
Default shall have occurred and then be continuing, Company shall have the
option:

                  (i) to convert at any time all or any part of any Loan equal
      to $500,000 and integral multiples of $250,000 in excess of that amount
      from one Type of Loan to another Type of Loan; provided, a Eurodollar Rate
      Loan may only be converted on the expiration of the Interest Period
      applicable to such Eurodollar Rate Loan unless Company shall pay all
      amounts due under Section 2.18 in connection with any such conversion; or

                  (ii) upon the expiration of any Interest Period applicable to
      any Eurodollar Rate Loan, to continue all or any portion of such Loan
      equal to $500,000 and integral multiples of $250,000 in excess of that
      amount as a Eurodollar Rate Loan.

            (b) Company shall deliver a Conversion/Continuation Notice to Paying
Agent no later than 10:00 a.m. (New York City time) at least three Business Days
in advance of the proposed conversion date (in the case of a conversion to a
Base Rate Loan) and at least three Business Days in advance of the proposed
conversion/continuation date (in the case of a

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<PAGE>

conversion to, or a continuation of, a Eurodollar Rate Loan). Except as
otherwise provided herein, a Conversion/Continuation Notice for conversion to,
or continuation of, any Eurodollar Rate Loans (or telephonic notice in lieu
thereof) shall be irrevocable on and after the related Interest Rate
Determination Date, and Company shall be bound to effect a conversion or
continuation in accordance therewith.

      2.10. DEFAULT INTEREST. The principal amount of all Loans not paid when
due and, to the extent permitted by applicable law, any interest payments on the
Loans or any fees or other amounts owed hereunder but not paid when due, shall
thereafter bear interest (including post-petition interest in any proceeding
under the Bankruptcy Code or other applicable bankruptcy laws) payable on demand
at a rate that is 2% per annum in excess of the highest interest rate otherwise
payable hereunder with respect to the applicable Loans (or, in the case of any
such fees and other amounts, at a rate which is 2% per annum in excess of the
highest interest rate otherwise then payable hereunder for Base Rate Loans);
provided, in the case of Eurodollar Rate Loans, upon the expiration of the
Interest Period in effect at the time any such increase in interest rate is
effective such Eurodollar Rate Loans shall thereupon become Base Rate Loans and
shall thereafter bear interest payable upon demand at a rate which is 2% per
annum in excess of the highest interest rate otherwise then payable hereunder
for Base Rate Loans. Payment or acceptance of the increased rates of interest
provided for in this Section 2.10 is not a permitted alternative to timely
payment and shall not constitute a waiver of any Event of Default or otherwise
prejudice or limit any rights or remedies of Administrative Agent, Paying Agent
or any Lender.

      2.11. FEES. Company agrees to pay to Agents fees in the amounts and at the
times separately agreed upon.

      2.12. REPAYMENT. Company shall repay the entire principal amount of the
outstanding Loans, together with all other amounts owed hereunder with respect
thereto, in full on the Maturity Date.

      2.13. VOLUNTARY PREPAYMENTS.

            (a) Voluntary Prepayments.

                  (i) Subject to the terms of (A) Section 2.13(b) below and (B)
      Section 4.1 of the Intercreditor Agreement:

                        (1) with respect to Base Rate Loans, Company may prepay
            any such Loans on any Business Day in whole or in part, in an
            aggregate minimum amount of $500,000 and integral multiples of
            $250,000 in excess of that amount; and

                        (2) with respect to Eurodollar Rate Loans, Company may
            prepay any such Loans on any Business Day in whole or in part in an
            aggregate minimum amount of $500,000 and integral multiples of
            $250,000 in excess of that amount.

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<PAGE>

                  (ii) All such prepayments shall be made:

                        (1) upon not less than one Business Day's prior written
            or telephonic notice in the case of Base Rate Loans;

                        (2) upon not less than three Business Days' prior
            written or telephonic notice in the case of Eurodollar Rate Loans;
            and

in each case given to Paying Agent, by 12:00 p.m. (New York City time) on the
date required and, if given by telephone, promptly confirmed in writing to
Paying Agent (and Paying Agent will promptly transmit such telephonic or
original notice for Loans by telefacsimile or telephone to each Lender). Upon
the giving of any such notice, the principal amount of the Loans specified in
such notice shall become due and payable on the prepayment date specified
therein. Any such voluntary prepayment shall be applied as specified in Section
2.15(a).

            (b) Call Protection. (i) Subject to the following clause (ii), in
the event that Company prepays, all or any part of the principal balance of any
Loan pursuant to this Section 2.13, Company shall pay to the Paying Agent, for
the ratable benefit of all Lenders entitled to a portion of such prepayment, a
premium (the "PREPAYMENT PREMIUM") on the amounts so prepaid as follows:

<TABLE>
<CAPTION>
                                        PREPAYMENT PREMIUM AS A
                                        PERCENTAGE OF THE AMOUNT
           RELEVANT PERIOD                     SO PREPAID
------------------------------------    ------------------------
<S>                                     <C>
        Prior to June 30, 2006                     3.0%

 On or after June 30, 2006 but prior               2.0%
           to June 30, 2007

 On or after June 30, 2007 but prior               1.0%
           to June 30, 2008

      On or after June 30, 2008                    0.0%
</TABLE>

(iii) No Prepayment Premium shall be payable in respect of a prepayment within
120 days of the Closing Date made solely with the proceeds of the Second Lien
Notes in an aggregate amount not to exceed 50% of the principal amount of the
Loans borrowed on the Closing Date.

      2.14. Mandatory Prepayments. To the extent permitted under Section 4.1 of
the Intercreditor Agreement, the Loans shall be repaid in the manner provided in
clauses (a) - (g) of this Section 2.14.

            (a) Asset Sales. No later than the fifth Business Day following the
date of receipt by Company or any of its Subsidiaries of any Net Asset Sale
Proceeds (or, in the event

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such Net Asset Sale Proceeds are subject to distribution limitations contained
in the ARC Indenture, any ARC Refinancing Indenture any New ARC Indenture,
either MSW Indenture, any MSW Refinancing Indenture, any New MSW Indenture or
any Project document or any instrument or agreement governing the terms of any
permitted refinancing thereof, no later than the fifth Business Day after the
last of such distribution limitations (as the same relates to such Net Asset
Sale Proceeds) expires), Company shall prepay the Loans as set forth in Section
2.15(b) in an aggregate amount equal to 100% of such Net Asset Sale Proceeds;
provided, (i) so long as no Default or Event of Default shall have occurred and
be continuing on the date of the related Asset Sale, and (ii) to the extent that
aggregate of such Net Asset Sale Proceeds from the Closing Date through the
applicable date of determination do not exceed $5,000,000 in any Fiscal Year or
$10,000,000 in the aggregate since the Closing Date (excluding, but only for the
purposes of calculating such cap and not the reinvestment provision itself, Net
Asset Sale Proceeds from the sale or other disposition of those assets
identified on Schedule 6.9-A), Company shall have the option, directly or
through one or more of its Subsidiaries, to invest such Net Asset Sale Proceeds
within three hundred sixty days of receipt thereof in long-term productive
assets of the general type used in the business of Company and its Subsidiaries.

            (b) Insurance/Condemnation Proceeds. No later than the fifth
Business Day following the date of receipt by Company or any of its
Subsidiaries, or Administrative Agent as loss payee, of any Net
Insurance/Condemnation Proceeds (or, in the event such Net
Insurance/Condemnation Proceeds are subject to distribution limitations
contained in the ARC Indenture, any ARC Refinancing Indenture, New ARC Indenture
either MSW Indenture, any MSW Refinancing Indenture and New MSW Indenture or any
Project document or any instrument or agreement governing the terms of any
permitted refinancing thereof, no later than the fifth Business Day after the
last of such distribution limitations (as the same relates to such Net
Insurance/Condemnation Proceeds) expires), Company shall prepay the Loans as set
forth in Section 2.15(b) in an aggregate amount equal to such Net
Insurance/Condemnation Proceeds; provided, so long as no Default or Event of
Default shall have occurred and be continuing on the date of such receipt,
Company shall have the option, directly or through one or more of its
Subsidiaries to invest or commit to reinvest such Net Insurance/Condemnation
Proceeds within three hundred sixty days of receipt thereof in long term
productive assets of the general type used in the business of Company and its
Subsidiaries, which investment may include the repair, restoration or
replacement of the applicable assets thereof (or to reimburse Company and its
Subsidiaries for costs incurred in respect of such loss).

            (c) Issuance of Equity Securities. On the fifth Business Day
following date of receipt by Company of any Cash proceeds from a capital
contribution to, or the issuance of any Capital Stock of, Company or any of its
Subsidiaries (other than (i) the Rights Offering and any equity contribution or
investment made by Holdings in Company with the proceeds thereof, (ii) the
Put-Related Equity Offering and any equity contribution or investment made by
Holdings in Company with the proceeds thereof, (iii) an equity contribution from
Holdings to Company to occur within 120 days of the Closing Date in an aggregate
amount not to exceed $25,000,000, the proceeds of which are on-lent pursuant to
Section 6.1(e) or invested pursuant Section 6.7(n)(iii) to pay MSW Put-Related
Costs, (iv) proceeds received by a Subsidiary of Company from Company or another
Subsidiary of Company and (v) pursuant to any employee and/or director stock or
stock option compensation plan), Company shall prepay the Loans as set forth in
Section 2.15(b) in an aggregate amount equal to 50% of such proceeds, net of
underwriting

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<PAGE>

discounts and commissions and other reasonable costs and expenses associated
therewith, including reasonable legal fees and expenses provided, that if any
such commissions, costs or expenses have not been incurred or invoiced at such
time, Company may deduct its good faith estimate thereof to extent subsequently
paid; provided, further, that the amount of such proceeds required to be prepaid
shall be reduced in an amount equal to the amount of proceeds Subsidiaries of
Company are legally bound, or required, pursuant to the ARC Indenture, the ARC
Refinancing Indenture, any New ARC Indenture, the MSW Indentures, MSW
Refinancing Indenture, MSW Refinancing Notes, any New MSW Indenture or any
refinancings thereof to use for prepayments thereunder.

            (d) Issuance of Debt. Subject to Section 2.13(b), no later than the
fifth Business Day following the date of receipt by Company or any of its
Subsidiaries of any Cash proceeds from the incurrence of any Indebtedness for
borrowed money of Company or any of its Subsidiaries (other than with respect to
any Indebtedness permitted to be incurred pursuant to Section 6.1), Company
shall prepay the Loans as set forth in Section 2.15(b) in an aggregate amount
equal to 100% of such proceeds, net of underwriting discounts and commissions
and other reasonable costs and expenses associated therewith, including
reasonable legal fees and expenses; provided, that if any such commissions,
costs or expenses have not been incurred or invoiced at such time, Company may
deduct its good faith estimate thereof to the extent subsequently paid.

            (e) Excess Cash Flow. In the event that there shall be Excess Cash
Flow for any Fiscal Year (commencing with Fiscal Year 2005, but for Fiscal Year
2005 calculated solely for the period from July 1, 2005 to the end of such
Fiscal Year), Company shall, no later than ninety days after the end of such
Fiscal Year, prepay the Loans as set forth in Section 2.15(b) in an aggregate
amount equal to 50% of such Excess Cash Flow; provided, during any period in
which the Company Leverage Ratio (determined for any such period by reference to
the most recent Compliance Certificate delivered pursuant to Section 5.1(d)
calculating the Company Leverage Ratio) shall be 4.00:1.00 or less, Company
shall only be required to make the prepayments and/or reductions otherwise
required hereby in an amount equal to 25% of such Excess Cash Flow. In
calculating amounts owing under this clause (e), credit shall be given for any
voluntary prepayments of the Loans or the Loans (as defined in the First Lien
Credit Agreement) (excluding repayments of Revolving Loans (as defined in the
First Lien Credit Agreement) or Swing Line Loans (as defined in the First Lien
Credit Agreement) except to the extent the Revolving Commitments (as defined in
the First Lien Credit Agreement) are permanently reduced in connection with such
repayments) made during the applicable Fiscal Year.

            (f) Prepayment Certificate. Concurrently with any prepayment of the
Loans pursuant to Sections 2.14(a) through 2.14(e), Company shall deliver to
Administrative Agent a certificate of an Authorized Officer demonstrating the
calculation of the amount of the applicable net proceeds or Excess Cash Flow, as
the case may be. In the event that Company shall subsequently determine that the
actual amount received exceeded the amount set forth in such certificate,
Company shall promptly make an additional prepayment of the Loans in an amount
equal to such excess, and Company shall concurrently therewith deliver to
Administrative Agent a certificate of an Authorized Officer demonstrating the
derivation of such excess.

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<PAGE>

            (g) First Lien Debt Override. Notwithstanding anything to the
contrary contained in this Section 2.14, Company shall not be required to repay
any of the Loans with proceeds, from any source, that are required to be applied
to a reduction of the loans under the First Lien Credit Agreement and/or the
Second Lien Notes both under the terms thereof and the Intercreditor Agreement.

      2.15. APPLICATION OF PREPAYMENTS.

            (a) Application of Voluntary Prepayments. Subject to Section 4.1 of
the Intercreditor Agreement, any prepayment of Loans pursuant to Section 2.13(a)
shall be applied as specified by Company in the applicable notice of prepayment;
provided, in the event Company fails to specify the Loans to which any such
prepayment shall be applied, such prepayment shall be applied to prepay the
Loans of each Lender on a pro rata basis.

            (b) Application of Mandatory Prepayments. Subject to Section 4.1 of
the Intercreditor Agreement and Section 2.14(g) hereof, any amount required to
be paid pursuant to Sections 2.14(a) through 2.14(e) shall be applied to prepay
Loans on a pro rata basis.

            (c) Application of Prepayments of Loans to Base Rate Loans and
Eurodollar Rate Loans. Any prepayment of Loans shall be applied first to Base
Rate Loans to the full extent thereof before application to Eurodollar Rate
Loans, in each case in a manner which minimizes the amount of any payments
required to be made by Company pursuant to Section 2.18(c).

      2.16. GENERAL PROVISIONS REGARDING PAYMENTS.

            (a) All payments by Company of principal, interest, fees and other
Obligations shall be made in Dollars in same day funds, without defense, setoff
or counterclaim, free of any restriction or condition, and delivered to Paying
Agent not later than 12:00 p.m. (New York City time) on the date due at the
Principal Office designated by Paying Agent for the account of Lenders; for
purposes of computing interest and fees, funds received by Paying Agent after
that time on such due date shall be deemed to have been paid by Company on the
next succeeding Business Day.

            (b) All payments in respect of the principal amount of any Loan
shall be accompanied by payment of accrued interest on the principal amount
being repaid or prepaid.

            (c) Paying Agent (or its agent or sub-agent appointed by it) shall
promptly distribute to each Lender at such address as such Lender shall indicate
in writing, such Lender's applicable Pro Rata Share of all payments and
prepayments of principal and interest due hereunder, together with all other
amounts due thereto, including, without limitation, all fees payable with
respect thereto, to the extent received by Paying Agent.

            (d) Notwithstanding the foregoing provisions hereof, if any
Conversion/Continuation Notice is withdrawn as to any Affected Lender or if any
Affected Lender makes Base Rate Loans in lieu of its Pro Rata Share of any
Eurodollar Rate Loans, Paying Agent shall give effect thereto in apportioning
payments received thereafter.

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<PAGE>

            (e) Subject to the provisos set forth in the definition of "Interest
Period", whenever any payment to be made hereunder with respect to any Loan
shall be stated to be due on a day that is not a Business Day, such payment
shall be made on the next succeeding Business Day.

            (f) Company hereby authorizes Paying Agent to charge Company's
accounts with Paying Agent in order to cause timely payment to be made to Paying
Agent of all principal, interest, fees and expenses due hereunder (subject to
sufficient funds being available in its accounts for that purpose).

            (g) Paying Agent shall deem any payment by or on behalf of Company
hereunder that is not made in same day funds prior to 12:00 p.m. (New York City
time) to be a non-conforming payment. Any such payment shall not be deemed to
have been received by Paying Agent until the later of (i) the time such funds
become available funds, and (ii) the applicable next Business Day. Paying Agent
shall give prompt telephonic notice to Company and each applicable Lender
(confirmed in writing) if any payment is non-conforming. Any non-conforming
payment may constitute or become a Default or Event of Default in accordance
with the terms of Section 8.1(a). Interest shall continue to accrue on any
principal as to which a non-conforming payment is made until such funds become
available funds (but in no event less than the period from the date of such
payment to the next succeeding applicable Business Day) at the rate determined
pursuant to Section 2.10 from the date such amount was due and payable until the
date such amount is paid in full.

            (h) If an Event of Default shall have occurred and not otherwise
been cured or waived, and the maturity of the Obligations shall have been
accelerated pursuant to Section 8.1, all payments or proceeds received by Agents
hereunder in respect of any of the Obligations, shall be applied in accordance
with the application arrangements described in Section 7.2 of the Pledge and
Security Agreement.

      2.17. RATABLE SHARING. Lenders hereby agree among themselves that, except
as otherwise provided in the Collateral Documents with respect to amounts
realized from the exercise of rights with respect to Liens on the Collateral, if
any of them shall, whether by voluntary payment (other than a voluntary
prepayment of Loans made and applied in accordance with the terms hereof),
through the exercise of any right of set-off or banker's lien, by counterclaim
or cross action or by the enforcement of any right under the Credit Documents or
otherwise, or as adequate protection of a deposit treated as cash collateral
under the Bankruptcy Code, receive payment or reduction of a proportion of the
aggregate amount of principal, interest, fees and other amounts then due and
owing to such Lender hereunder or under the other Credit Documents
(collectively, the "AGGREGATE AMOUNTS DUE" to such Lender) which is greater than
the proportion received by any other Lender in respect of the Aggregate Amounts
Due to such other Lender, then the Lender receiving such proportionately greater
payment shall (a) notify Administrative Agent and each other Lender of the
receipt of such payment and (b) apply a portion of such payment to purchase
participations (which it shall be deemed to have purchased from each seller of a
participation simultaneously upon the receipt by such seller of its portion of
such payment) in the Aggregate Amounts Due to the other Lenders so that all such
recoveries of Aggregate Amounts Due shall be shared by all Lenders in proportion
to the Aggregate Amounts Due to them; provided, if all or part of such
proportionately greater payment

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received by such purchasing Lender is thereafter recovered from such Lender upon
the bankruptcy or reorganization of Company or otherwise, those purchases shall
be rescinded and the purchase prices paid for such participations shall be
returned to such purchasing Lender ratably to the extent of such recovery, but
without interest. Company expressly consents to the foregoing arrangement and
agrees that any holder of a participation so purchased may exercise any and all
rights of banker's lien, set-off or counterclaim with respect to any and all
monies owing by Company to that holder with respect thereto as fully as if that
holder were owed the amount of the participation held by that holder.

      2.18. MAKING OR MAINTAINING EURODOLLAR RATE LOANS.

            (a) Inability to Determine Applicable Interest Rate. In the event
that Administrative Agent shall have determined in good faith (which
determination shall be final and conclusive and binding upon all parties
hereto), on any Interest Rate Determination Date with respect to any Eurodollar
Rate Loans, that by reason of circumstances affecting the London interbank
market adequate and fair means do not exist for ascertaining the interest rate
applicable to such Loans on the basis provided for in the definition of Adjusted
Eurodollar Rate, Administrative Agent shall on such date give notice (by
telefacsimile or by telephone confirmed in writing) to Company and each Lender
of such determination, whereupon (i) no Loans may be made as, or converted to,
Eurodollar Rate Loans until such time as Administrative Agent notifies Company
and Lenders that the circumstances giving rise to such notice no longer exist,
and (ii) any Conversion/Continuation Notice given by Company with respect to the
Loans in respect of which such determination was made shall be deemed to be
rescinded by Company.

            (b) Illegality or Impracticability of Eurodollar Rate Loans. In the
event that on any date any Lender shall have determined in good faith (which
determination shall be final and conclusive and binding upon all parties hereto
but shall be made only after consultation with Company and Administrative Agent)
that the making, maintaining or continuation of its Eurodollar Rate Loans (i)
has become unlawful as a result of compliance by such Lender in good faith with
any law, treaty, governmental rule, regulation, guideline or order (or would
conflict with any such treaty, governmental rule, regulation, guideline or order
not having the force of law even though the failure to comply therewith would
not be unlawful), or (ii) has become impracticable, as a result of contingencies
occurring after the date hereof which materially and adversely affect the London
interbank market or the position of such Lender in that market, then, and in any
such event, such Lender shall be an "AFFECTED LENDER" and it shall on that day
give notice (by telefacsimile or by telephone confirmed in writing) to Company
and Administrative Agent of such determination (which notice Administrative
Agent shall promptly transmit to each other Lender). Thereafter (1) the
obligation of the Affected Lender to make Loans as, or to convert Loans to,
Eurodollar Rate Loans shall be suspended until such notice shall be withdrawn by
the Affected Lender, (2) to the extent such determination by the Affected Lender
relates to a Eurodollar Rate Loan then being requested by Company pursuant to a
Conversion/Continuation Notice, the Affected Lender shall make such Loan as (or
continue such Loan as or convert such Loan to, as the case may be) a Base Rate
Loan, (3) the Affected Lender's obligation to maintain its outstanding
Eurodollar Rate Loans (the "AFFECTED LOANS") shall be terminated at the earlier
to occur of the expiration of the relevant Interest Periods, then in effect with
respect to the Affected Loans or when required by law, and (4) the Affected
Loans shall automatically convert into Base Rate Loans on the date of such
termination. Notwithstanding the foregoing, to the

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extent a determination by an Affected Lender as described above relates to a
Eurodollar Rate Loan then being requested by Company pursuant to a
Conversion/Continuation Notice, Company shall have the option, subject to the
provisions of Section 2.18(c), to rescind such Conversion/Continuation Notice as
to all Lenders by giving notice (by telefacsimile or by telephone confirmed in
writing) to Administrative Agent of such rescission on the date on which the
Affected Lender gives notice of its determination as described above (which
notice of rescission Administrative Agent shall promptly transmit to each other
Lender). If Company does not rescind such Funding Notice or
Conversion/Continuation Notice, the Affected Lender's Pro-Rata Share of such
Loan shall constitute a Base Rate Loan. Except as provided in the immediately
preceding sentence, nothing in this Section 2.18(b) shall affect the obligation
of any Lender other than an Affected Lender to make or maintain Loans as, or to
convert Loans to, Eurodollar Rate Loans in accordance with the terms hereof.

            (c) Compensation for Breakage or Non-Commencement of Interest
Periods. Company shall compensate each Lender, upon written request by such
Lender (which request shall set forth the basis for requesting such amounts),
for all reasonable losses, expenses and liabilities (including (x) the
difference between any interest paid by such Lender to lenders of funds borrowed
by it to make or carry its Eurodollar Rate Loans and the Adjusted Eurodollar
Rate such Lender would receive in connection with the liquidation or
reemployment of such funds and (y) any expense or liability sustained by such
Lender in connection with the liquidation or re-employment of such funds) which
such Lender may sustain: (i) if for any reason, a conversion to or continuation
of any Eurodollar Rate Loan does not occur on a date specified therefor in a
Conversion/Continuation Notice or a telephonic request for conversion or
continuation; (ii) if any prepayment or other principal payment of, or any
conversion of, any of its Eurodollar Rate Loans occurs on a date prior to the
last day of an Interest Period applicable to that Loan; or (iii) if any
prepayment of any of its Eurodollar Rate Loans is not made on any date specified
in a notice of prepayment given by Company; provided, Company shall not be
obligated to compensate Lender for any such losses, expenses or liabilities
attributable to any such circumstance occurring prior to the date that is 90
days prior to the date on which such Lender requested such compensation from
Company.

            (d) Booking of Eurodollar Rate Loans. Any Lender may make, carry or
transfer Eurodollar Rate Loans at, to, or for the account of any of its branch
offices or the office of an Affiliate of such Lender.

            (e) Assumptions Concerning Funding of Eurodollar Rate Loans.
Calculation of all amounts payable to a Lender under Section 2.18(c) shall be
made as though such Lender had actually funded each of its relevant Eurodollar
Rate Loans through the purchase of a Eurodollar deposit bearing interest at the
rate obtained pursuant to clause (i) of the definition of Adjusted Eurodollar
Rate in an amount equal to the amount of such Eurodollar Rate Loan and having a
maturity comparable to the relevant Interest Period and through the transfer of
such Eurodollar deposit from an offshore office of such Lender to a domestic
office of such Lender in the United States of America; provided, however, each
Lender may fund each of its Eurodollar Rate Loans in any manner it sees fit and
the foregoing assumptions shall be utilized only for the purposes of calculating
amounts payable under Section 2.18(c).

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      2.19. INCREASED COSTS; CAPITAL ADEQUACY.

            (a) Compensation For Increased Costs and Taxes. Subject to the
provisions of Section 2.20 (which shall be controlling with respect to the
matters covered thereby), in the event that any Lender shall determine (which
determination shall, absent manifest error, be final and conclusive and binding
upon all parties hereto) that any law, treaty or governmental rule, regulation
or order, or any change therein or in the interpretation, administration or
application thereof (including the introduction of any new law, treaty or
governmental rule, regulation or order), or any determination of a court or
governmental authority, in each case that becomes effective after the date
hereof, or compliance by such Lender with any guideline, request or directive
issued or made after the date hereof by any central bank or other governmental
or quasi-governmental authority (whether or not having the force of law): (i)
subjects such Lender (or its applicable lending office) to any additional Tax
(other than any Tax on the overall net income of such Lender) with respect to
this Agreement or any of the other Credit Documents or any of its obligations
hereunder or thereunder or any payments to such Lender (or its applicable
lending office) of principal, interest, fees or any other amount payable
hereunder; (ii) imposes, modifies or holds applicable any reserve (including any
marginal, emergency, supplemental, special or other reserve), special deposit,
compulsory loan, FDIC insurance or similar requirement against assets held by,
or deposits or other liabilities in or for the account of, or advances or loans
by, or other credit extended by, or any other acquisition of funds by, any
office of such Lender (other than any such reserve or other requirements with
respect to Eurodollar Rate Loans that are reflected in the definition of
Adjusted Eurodollar Rate, or (iii) imposes any other condition (other than with
respect to a Tax matter) on or affecting such Lender (or its applicable lending
office) or its obligations hereunder or the London interbank market; and the
result of any of the foregoing is to increase the cost to such Lender of
agreeing to make, making or maintaining Loans hereunder or to reduce any amount
received or receivable by such Lender (or its applicable lending office) with
respect thereto; in any such case, Company shall promptly pay to such Lender,
upon receipt of the statement referred to in the next sentence, such additional
amount or amounts (in the form of an increased rate of, or a different method of
calculating, interest or otherwise as such Lender in its sole discretion shall
determine) as may be necessary to compensate such Lender for any such increased
cost or reduction in amounts received or receivable hereunder; provided, Company
shall not be obligated to pay such Lender any compensation attributable to any
period prior to the date that is 180 days prior to the date on which such Lender
gave notice to Company of the circumstances entitling such Lender to
compensation. Such Lender shall deliver to Company (with a copy to
Administrative Agent) a written statement, setting forth in reasonable detail
the basis for calculating the additional amounts owed to such Lender under this
Section 2.19(a) and in the calculation thereof, which statement shall be
conclusive and binding upon all parties hereto absent manifest error.

            (b) Capital Adequacy Adjustment. In the event that any Lender shall
have determined that the adoption, effectiveness, phase-in or change in
applicability after the Closing Date of any law, rule or regulation (or any
provision thereof) regarding capital adequacy, or any change therein or in the
interpretation or administration thereof by any Governmental Authority, central
bank or comparable agency charged with the interpretation or administration
thereof, or compliance by any Lender (or its applicable lending office) with any
guideline, request or directive regarding capital adequacy (whether or not
having the force of law) of any such Governmental Authority, central bank or
comparable agency, has or would have the effect of

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reducing the rate of return on the capital of such Lender or any corporation
controlling such Lender as a consequence of, or with reference to, such Lender's
Loans, or participations therein or other obligations hereunder with respect to
the Loans to a level below that which such Lender or such controlling
corporation could have achieved but for such adoption, effectiveness, phase-in,
change in applicability, change or compliance (taking into consideration the
policies of such Lender or such controlling corporation with regard to capital
adequacy), then from time to time, within five Business Days after receipt by
Company from such Lender of the statement referred to in the next sentence,
Company shall pay to such Lender such additional amount or amounts as will
compensate such Lender or such controlling corporation on an after-tax basis for
such reduction; provided, Company shall not be obligated to pay such Lender any
compensation attributable to any period prior to the date that is 180 days prior
to the date on which such Lender gave notice to Company of the circumstances
entitling such Lender to compensation. Such Lender shall deliver to Company
(with a copy to Administrative Agent) a written statement, setting forth in
reasonable detail the basis for calculating the additional amounts owed to
Lender under this Section 2.19(b) and in the calculation thereof, which
statement shall be conclusive and binding upon all parties hereto absent
manifest error.

      2.20. TAXES; WITHHOLDING, ETC.

            (a) Payments to Be Free and Clear. All sums payable by any Credit
Party hereunder and under the other Credit Documents shall (except to the extent
required by law) be paid free and clear of, and without any deduction or
withholding on account of, any Tax (other than a Tax on the overall net income
of any Lender imposed, levied, collected, withheld or assessed by or within the
United States of America or any political subdivision in or of the United States
of America or any other jurisdiction from or to which a payment is made by or on
behalf of any Credit Party.

            (b) Withholding of Taxes. If any Credit Party or any other Person is
required by law to make any deduction or withholding on account of any such Tax
from any sum paid or payable by any Credit Party to Paying Agent or any Lender
under any of the Credit Documents: (i) Company shall notify Paying Agent of any
such requirement or any change in any such requirement reasonably promptly after
Company becomes aware of it; (ii) Company shall pay or cause to be paid any such
Tax before the date on which penalties attach thereto; (iii) the sum payable by
such Credit Party in respect of which the relevant deduction, withholding or
payment is required shall be increased to the extent necessary to ensure that,
after the making of that deduction, withholding or payment, Paying Agent or such
Lender, as the case may be, receives on the due date a net sum equal to what it
would have received had no such deduction, withholding or payment been required
or made; and (iv) within thirty days after paying any sum from which it is
required by law to make any deduction or withholding, and within thirty days
after the due date of payment of any Tax which it is required by clause (ii)
above to pay, Company shall deliver to Paying Agent evidence reasonably
satisfactory to the other affected parties of such deduction, withholding or
payment and of the remittance thereof to the relevant taxing or other authority;
provided, no such additional amount shall be required to be paid to Paying Agent
or any Lender under clause (iii) above except to the extent that any change in
any applicable law, treaty or governmental rule, regulation, or order or, or any
change in the interpretation, administration or application thereof, after the
date hereof (in the case of each Lender listed on the signature pages hereof on
the Closing Date) or after the effective date of the

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Assignment Agreement pursuant to which such Lender became a Lender (in the case
of each other Lender) in any such requirement for a deduction, withholding or
payment as is mentioned therein shall result in an increase in the rate of such
deduction, withholding or payment from that in effect at the date hereof or at
the date of such Assignment Agreement, as the case may be, in respect of
payments to Paying Agent or such Lender.

            (c) Evidence of Exemption From U.S. Withholding Tax. Each Non-US
Lender shall deliver to Paying Agent and Company, on or prior to the Closing
Date (in the case of each Lender listed on the signature pages hereof on the
Closing Date) or on or prior to the date of the Assignment Agreement pursuant to
which it becomes a Lender (in the case of each other Lender), and at such other
times as may be necessary in the determination of Company or Paying Agent (each
in the reasonable exercise of its discretion), (i) two original copies of
Internal Revenue Service Form W-8BEN, W-8ECI or W-8IMY (including therewith any
withholding certificates and withholding statements required under applicable
Treasury Regulations) (or any successor forms), properly completed and duly
executed by such Lender, and such other documentation required under the
Internal Revenue Code and the applicable Treasury Regulations and reasonably
requested by Company to establish that such Lender is not subject to deduction
or withholding of United States federal income tax with respect to any payments
to such Lender of principal, interest, fees or other amounts payable under any
of the Credit Documents, or (ii) if such Lender is not a "bank" or other Person
described in Section 881(c)(3) of the Internal Revenue Code and cannot deliver
Internal Revenue Service Form W-8ECI pursuant to clause (i) above, a Certificate
re Non-Bank Status together with two original copies of Internal Revenue Service
Form W-8BEN (or any successor form), properly completed and duly executed by
such Lender, and such other documentation required under the Internal Revenue
Code and the applicable Treasury Regulations and reasonably requested by Company
to establish that such Lender is not subject to deduction or withholding of
United States federal income tax with respect to any payments to such Lender of
interest payable under any of the Credit Documents. Each Lender required to
deliver any forms, certificates or other evidence with respect to United States
federal income tax withholding matters pursuant to this Section 2.20(c) hereby
agrees, from time to time after the initial delivery by such Lender of such
forms, certificates or other evidence, whenever a lapse in time or change in
circumstances renders such forms, certificates or other evidence obsolete or
inaccurate in any material respect, that such Lender shall promptly deliver to
Paying Agent and Company two new original copies of Internal Revenue Service
Form W-8BEN, W-8ECI or W-8IMY (including therewith any withholding certificates
and withholding statements required under applicable Treasury Regulations), or a
Certificate re Non-Bank Status and two original copies of Internal Revenue
Service Form W-8BEN (or any successor form), as the case may be, properly
completed and duly executed by such Lender, and such other documentation
required under the Internal Revenue Code and the applicable Treasury Regulations
and reasonably requested by Company to confirm or establish that such Lender is
not subject to deduction or withholding of United States federal income tax with
respect to payments to such Lender under the Credit Documents, or notify Paying
Agent and Company of its inability to deliver any such forms, certificates or
other evidence. Each Lender that is organized under the laws of the United
States or any State or political subdivision thereof and that is not an "exempt
recipient" (as defined in Treasury Regulations section 1.6049-4(c)) with respect
to which no backup withholding is required shall, on or prior to the Closing
Date (in the case of each Lender listed on the signature pages hereof on the
Closing Date), or on or prior to the date of the Assignment Agreement pursuant
to which it becomes a Lender (in the

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case of each other Lender) provide Paying Agent and Company with two original
copies of Internal Revenue Service Form W-9 (certifying that such Person is
entitled to an exemption from United States backup withholding tax) or any
successor form, and each such Lender shall thereafter provide Paying Agent and
Company with such supplements and amendments thereto and such additional forms,
certificates, statements or documents as may from time to time be required by
applicable law. Company shall not be required to pay any additional amount to
any Lender under Section 2.20(b)(iii) if such Lender shall have failed (1) to
deliver the forms, certificates or other evidence referred to in this Section
2.20(c), or (2) to notify Paying Agent and Company of its inability to deliver
any such forms, certificates or other evidence, as the case may be; provided, if
such Lender shall have satisfied the requirements of the first sentence or third
sentence, as applicable, of this Section 2.20(c) on the Closing Date or on the
date of the Assignment Agreement pursuant to which it became a Lender, as
applicable, nothing in this last sentence of this Section 2.20(c) shall relieve
Company of its obligation to pay any additional amounts pursuant to Section
2.20(b)(iii) in the event that, as a result of any change in any applicable law,
treaty or governmental rule, regulation or order, or any change in the
interpretation, administration or application thereof, such Lender is no longer
legally entitled to deliver forms, certificates or other evidence at a
subsequent date establishing the fact that such Lender is not subject to
withholding as described herein.

            (d) If any Lender or Paying Agent shall become aware that it is
entitled to receive a refund in respect of Taxes paid by Company or as to which
it has received additional amounts under Section 2.20(b)(iii), it shall promptly
notify Company of the availability of such refund and shall, within ninety days
after receipt of a request by Company, apply for such refund at Company's
expense. If any Lender or Paying Agent actually receives a refund in respect of
any Taxes paid by Company or as to which it has received additional amounts
under Section 2.20(b)(iii), it shall promptly notify Company of such refund and
shall, within ninety days after receipt of a request by Company (or promptly
upon receipt, if Company has requested application for such refund pursuant
hereto), repay such refund to Company (to the extent of amounts that have been
paid by Company under Section 2.20(b)(iii) with respect to such refund plus
interest that is received by such Lender or Paying Agent as part of the refund),
net of all reasonable out-of-pocket expenses of such Lender or Paying Agent and
without additional interest thereon; provided, that Company, upon the request of
such Lender or Paying Agent, agrees to return such refund to such Lender or
Paying Agent in the event such Lender or Paying Agent is required to repay such
refund. Nothing contained in this Section 2.20(d) shall require any Lender or
Paying Agent to make available any of its tax returns (or any other information
relating to its taxes that it deems to be confidential).

      2.21. OBLIGATION TO MITIGATE. Each Lender agrees that, as promptly as
practicable after the officer of such Lender responsible for administering its
Loans, becomes aware of the occurrence of an event or the existence of a
condition that would cause such Lender to become an Affected Lender or that
would entitle such Lender to receive payments under Section 2.18, 2.19 or 2.20,
it will, to the extent not inconsistent with the internal policies of such
Lender and any applicable legal or regulatory restrictions, use reasonable
efforts to (a) maintain its Credit Extensions, including any Affected Loans,
through another office of such Lender, or (b) take such other measures as such
Lender may in good faith deem reasonable, if as a result thereof the
circumstances which would cause such Lender to be an Affected Lender would cease
to exist or the additional amounts which would otherwise be required to be paid
to such Lender pursuant to

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Section 2.18, 2.19 or 2.20 would be materially reduced and if, as determined by
such Lender in its sole discretion, the maintaining of such Loans through such
other office or in accordance with such other measures, as the case may be,
would not otherwise adversely affect such Loans or the interests of such Lender;
provided, such Lender will not be obligated to utilize such other office
pursuant to this Section 2.21 unless Company agrees to pay all incremental
expenses incurred by such Lender as a result of utilizing such other office as
described in clause (i) above. A certificate as to the amount of any such
expenses payable by Company pursuant to this Section 2.21 (setting forth in
reasonable detail the basis for requesting such amount) submitted by such Lender
to Company (with a copy to Paying Agent) shall be conclusive absent manifest
error.

      2.22 [INTENTIONALLY LEFT BLANK.]

      2.22. [INTENTIONALLY LEFT BLANK.]

      2.23. REMOVAL OR REPLACEMENT OF A LENDER. Anything contained herein to the
contrary notwithstanding, in the event that: (a) (i) any Lender (an
"INCREASED-COST LENDER") shall give notice to Company that such Lender is an
Affected Lender or that such Lender is entitled to receive payments under
Section 2.18, 2.19 or 2.20, (ii) the circumstances which have caused such Lender
to be an Affected Lender or which entitle such Lender to receive such payments
shall remain in effect, and (iii) such Lender shall fail to withdraw such notice
within five Business Days after Company's request for such withdrawal; or (b) in
connection with any proposed amendment, modification, termination, waiver or
consent with respect to any of the provisions hereof as contemplated by Section
10.5(b), the consent of Requisite Lenders shall have been obtained, but the
consent of one or more of such other Lenders (each a "NON-CONSENTING LENDER")
whose consent is required shall not have been obtained; then, with respect to
each such Increased-Cost Lender or Non-Consenting Lender (the "TERMINATED
LENDER"), Company may, by giving written notice to Administrative Agent and any
Terminated Lender of its election to do so, elect to cause such Terminated
Lender (and such Terminated Lender hereby irrevocably agrees) to assign all or
any part of its outstanding Loans, if any, in full to one or more Eligible
Assignees (each a "REPLACEMENT LENDER") in accordance with the provisions of
Section 10.6 and Terminated Lender shall pay any fees payable thereunder in
connection with such assignment; provided, (1) on the date of such assignment,
the Replacement Lender shall pay to Terminated Lender an amount equal to the sum
of (A) an amount equal to the principal of, and all accrued interest on, all
outstanding Loans of the Terminated Lender, (B) an amount equal to all
unreimbursed drawings that have been funded by such Terminated Lender, together
with all then unpaid interest with respect thereto at such time and (C) an
amount equal to all accrued, but theretofore unpaid fees owing to such
Terminated Lender pursuant to Section 2.11; (2) on the date of such assignment,
Company shall pay any amounts payable to such Terminated Lender pursuant to
Section 2.18(c), 2.19 or 2.20; and (3) in the event such Terminated Lender is a
Non-Consenting Lender, each Replacement Lender shall consent, at the time of
such assignment, to each matter in respect of which such Terminated Lender was a
Non-Consenting Lender. In connection with any such replacement, if the replaced
Lender does not execute and deliver to the Administrative Agent a duly completed
Assignment and Acceptance reflecting such replacement within a period of time
deemed reasonable by the Administrative Agent, then such replaced Lender shall
be deemed to have executed and delivered such Assignment and Acceptance. Upon
the prepayment of all amounts owing to any Terminated Lender such Terminated
Lender shall no longer constitute a "Lender" for purposes

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hereof; provided, any rights of such Terminated Lender to indemnification
hereunder shall survive as to such Terminated Lender.

SECTION 3. CONDITIONS PRECEDENT

      3.1. CLOSING DATE. The obligation of any Lender to make a Credit Extension
on the Closing Date is subject to the satisfaction, or waiver in accordance with
Section 10.5, of the following conditions on or before the Closing Date:

            (a) Credit Documents. Administrative Agent shall have received
sufficient copies of each Credit Document originally executed and delivered by
Holdings, Company and each of its Subsidiaries, as applicable, for each Lender.

            (b) Organizational Documents; Incumbency. Administrative Agent shall
have received (i) sufficient copies of each Organizational Document of Holdings,
Company and each Guarantor Subsidiary, as applicable, and, to the extent
applicable, certified as of a recent date by the appropriate governmental
official, for each Lender, each dated the Closing Date or a recent date prior
thereto; (ii) signature and incumbency certificates of the officers of such
Person executing the Credit Documents to which it is a party; (iii) resolutions
of the board of directors or similar governing body of Holdings, Company and
each Guarantor Subsidiary approving and authorizing the execution, delivery and
performance of this Agreement and the other Credit Documents and the Related
Agreements to which it is a party or by which it or its assets may be bound as
of the Closing Date, certified as of the Closing Date by its secretary or an
assistant secretary as being in full force and effect without modification or
amendment; (iv) a good standing certificate from the applicable Governmental
Authority (A) of the jurisdiction of incorporation, organization or formation of
Holdings, Company and each Guarantor Subsidiary, (B), with respect to Company,
of each jurisdiction in which it is qualified as a foreign corporation or other
entity to do business and (C), with respect to Holdings and each Guarantor
Subsidiary, of each jurisdiction in which each such entity has its principal
assets, each dated a recent date prior to the Closing Date; and (v) such other
documents as Administrative Agent may reasonably request.

            (c) Organizational and Capital Structure. The organizational
structure and capital structure of Holdings, Company and its Subsidiaries, both
before and after giving effect to the Transactions, shall be as set forth on
Schedule 4.1.

            (d) Consummation of Transactions.

                  (i) Company shall have received the gross proceeds from the
      borrowings of the term loans under the First Lien Credit Agreement in an
      aggregate amount in cash of not less than $275,000,000;

                  (ii) Company shall have delivered to Administrative Agent
      complete, correct and conformed copies of the First Lien Credit Agreement.

                  (iii)Administrative Agent shall have received a fully executed
      or conformed copy of each Related Agreement (except the Second Lien Notes
      Indenture, the MSW

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      Refinancing Indentures, the New MSW Indentures, the ARC Refinancing
      Indenture, the New ARC Indenture and the Put-Related Equity Offering
      Agreement and all collateral documents related to each) executed on or
      prior to the Closing Date and each such Related Agreement shall be in full
      force and effect.

                  (iv) Since the date of execution thereof, there shall have
      been no amendment, restatement, or other modification or waiver of the
      terms and conditions of the Stock Purchase Agreement which, in the
      reasonable opinion of Administrative Agent, is in any manner materially
      adverse to the Lenders without the prior written consent of Administrative
      Agent (which consent shall not be unreasonably withheld).

                  (v) Holdings shall have completed the Rights Offering and
      Company shall have received at least $399,000,000 from (i) the cash
      contribution to Company by Holdings of the proceeds of the Rights
      Offering, (ii) the cash contribution to Company by Holdings of
      unrestricted cash on hand at Holdings and/or (iii) no more than
      $25,000,000 in cash from pro forma consolidated cash on hand at Company.

                  (vi) There shall not exist, after giving effect to the
      Transactions, any default or potential event of default under the First
      Lien Credit Agreement or any Credit Document or (except to the extent
      expressly described as Schedule 3.1(d)) any material Indebtedness of
      Holdings and its Subsidiaries including, without limitation, the MSW
      Indentures and the ARC Indenture.

            (e) Existing Indebtednesection On the Closing Date, Company and its
Subsidiaries shall have (i) repaid in full all Existing Indebtedness, (ii)
terminated any commitments to lend or make other extensions of credit under
Existing Indebtedness, (iii) delivered to Administrative Agent all documents or
instruments necessary to release all Liens securing Existing Indebtedness or
other obligations of Company and its Subsidiaries thereunder being repaid on the
Closing Date or otherwise made arrangements reasonably satisfactory to
Administrative Agent with respect thereto, and (iv) made arrangements reasonably
satisfactory to Administrative Agent with respect to the cancellation of any
letters of credit outstanding thereunder or the issuance of new Letters of
Credit under the First Lien Facilities to support the obligations of Company and
its Subsidiaries with respect thereto.

            (f) Transaction Costs. On or prior to the Closing Date, Company
shall have delivered to Administrative Agent Company's estimate of the
Transactions Costs.

            (g) Governmental Authorizations and Consents. Each Credit Party
shall have obtained all Governmental Authorizations and all consents of other
Persons, in each case that are necessary in connection with the transactions
contemplated by the Credit Documents and the Related Agreements to be entered
into on or prior to the Closing Date and each of the foregoing shall be in full
force and effect and in form and substance reasonably satisfactory to
Administrative Agent. All applicable waiting periods shall have expired without
any action being taken or threatened by any competent authority which would
restrain, prevent or otherwise impose adverse conditions on the Transactions or
the financing thereof and no action, request for stay, petition for review or
rehearing, reconsideration, or appeal with respect to any of the

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foregoing shall be pending, and the time for any applicable agency to take
action to set aside its consent on its own motion shall have expired.

            (h) Real Estate Assets. In order to create in favor of Collateral
Agent, for the benefit of Secured Parties, a valid and, subject to any filing
and/or recording referred to herein, perfected Second Priority security interest
in certain Real Estate Assets, Collateral Agent shall have received from Company
and each applicable Guarantor Subsidiary:

                  (i) fully executed and notarized Mortgages, in proper form for
      recording in all appropriate places in all applicable jurisdictions,
      encumbering each Real Estate Asset listed in Schedule 3.1(h) (each, a
      "CLOSING DATE MORTGAGED PROPERTY");

                  (ii) an opinion of counsel (which counsel shall be reasonably
      satisfactory to Collateral Agent) in each state in which a Closing Date
      Mortgaged Property is located with respect to the enforceability of the
      Mortgages to be recorded in such state and such other matters as
      Collateral Agent may reasonably request, in each case in form and
      substance reasonably satisfactory to Collateral Agent;

                  (iii)(a) ALTA mortgagee title insurance policies or
      unconditional commitments therefor issued by one or more title companies
      reasonably satisfactory to Collateral Agent with respect to each Closing
      Date Mortgaged Property (each, a "TITLE POLICY"), in amounts not less than
      the fair market value of each Closing Date Mortgaged Property or such
      other amount reasonably required by Collateral Agent, together with a
      title report issued by a title company with respect thereto, dated not
      more than thirty days prior to the Closing Date and copies of all recorded
      documents listed as exceptions to title or otherwise referred to therein,
      each in form and substance reasonably satisfactory to Collateral Agent and
      (B) evidence satisfactory to Collateral Agent that Company or such
      Guarantor Subsidiary has paid to the title company or to the appropriate
      governmental authorities all expenses and premiums of the title company
      and all other sums required in connection with the issuance of each Title
      Policy and all recording and stamp taxes (including mortgage recording and
      intangible taxes) payable in connection with recording the Mortgages for
      each Closing Date Mortgaged Property in the appropriate real estate
      records;

                  (iv) evidence of flood insurance with respect to each Flood
      Hazard Property that is located in a community that participates in the
      National Flood Insurance Program, in each case in compliance with any
      applicable regulations of the Board of Governors of the Federal Reserve
      System, in form and substance reasonably satisfactory to Collateral Agent;
      and

                  (v) ALTA surveys of all Closing Date Mortgaged Properties,
      certified to Collateral Agent with a form of certification reasonably
      satisfactory to Collateral Agent and dated not more than thirty days prior
      to the Closing Date.

            (i) Personal Property Collateral. In order to create in favor of
Collateral Agent, for the benefit of Secured Parties, a valid, perfected Second
Priority security interest in the personal property Collateral, Collateral Agent
shall have received:

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                  (i) evidence satisfactory to Collateral Agent of the
      compliance by Holdings with the Holdings Pledge Agreement and by Company
      or each Guarantor Subsidiary of their obligations under the Pledge and
      Security Agreement and the other Collateral Documents (including, without
      limitation, their obligations to execute and/or deliver UCC financing
      statements, originals of securities, instruments and chattel paper and any
      agreements governing deposit and/or securities accounts as provided
      therein);

                  (ii) (A) the results of a recent search, by a Person
      reasonably satisfactory to Collateral Agent, of the UCC filing offices in
      the jurisdictions specified by Company, together with copies of all such
      filings disclosed by such search, and (B) UCC termination statements (or
      similar documents) duly authorized by all applicable Persons for filing in
      all applicable jurisdictions as may be necessary to terminate any
      effective UCC financing statements (or equivalent filings) disclosed in
      such search (other than any such financing statements in respect of
      Permitted Liens);

                  (iii)opinions of counsel (which counsel shall be reasonably
      satisfactory to Collateral Agent) with respect to the creation and
      perfection of the security interests in favor of Collateral Agent in such
      Collateral and such other matters governed by the laws of each
      jurisdiction in which Company or any Guarantor Subsidiary is located as
      Collateral Agent may reasonably request, in each case in form and
      substance reasonably satisfactory to Collateral Agent; and

                  (iv) evidence that Company or each Guarantor Subsidiary shall
      have taken or caused to be taken any other action, executed and delivered
      or caused to be executed and delivered any other agreement, document and
      instrument (including without limitation, any intercompany notes
      evidencing Indebtedness permitted to be incurred pursuant to Section
      6.1(b) including, without limitation, the Intercompany Master Note in each
      case delivered to the Collateral Agent (as defined in the First Lien
      Credit Agreement) subject to the provisions of Section 5.4 of the
      Intercreditor Agreement) and made or caused to be made any other filing
      and recording (other than as set forth herein) reasonably required by
      Collateral Agent to create or perfect a Second Priority Lien on the
      personal property Collateral, in each case except for matters contemplated
      in Section 5.18.

            (j) Environmental Reports. Administrative Agent shall have received
reports and other information, in form and substance satisfactory to
Administrative Agent, regarding environmental matters relating to the
Facilities.

            (k) Financial Statements; Projections. Administrative Agent shall
have received from Holdings, Company and Acquired Business (i) the Historical
Financial Statements, (ii) pro forma consolidated balance sheets of Holdings,
Company and Acquired Business as at December 31, 2004, and reflecting the
consummation of the Transactions, the related financings, which pro forma
financial statements shall be in form and substance reasonably satisfactory to
Administrative Agent, and (iii) the Projections.

            (l) Evidence of Insurance. Collateral Agent shall have received a
certificate from Company's insurance broker or other evidence reasonably
satisfactory to it that all insurance required to be maintained pursuant to
Section 5.5 is in full force and effect, together

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with endorsements naming the Collateral Agent, for the benefit of Lenders, as
additional insured and loss payee thereunder to the extent required under
Section 5.5.

            (m) Opinions of Counsel to Credit Parties. Lenders and their
respective counsel shall have received originally executed copies of the
favorable written opinions of (i) Skadden, Arps, Slate, Meagher & Flom LLP,
counsel for Credit Parties, (ii) LeBoeuf, Lamb, Greene & MacRae LLP, and (iii)
and Timothy Simpson as general counsel to the Company, in the form of Exhibit
D-1, Exhibit D-2 and Exhibit D-3, respectively, dated as of the Closing Date and
otherwise in form and substance reasonably satisfactory to Administrative Agent
(and each Credit Party hereby instructs such counsel to deliver such opinions to
Agents and Lenders).

            (n) Chief Financial Officer Certificate. Company shall have
delivered to Administrative Agent and Lenders an originally executed chief
financial officer certificate certifying that the pro forma Consolidated
Adjusted EBITDA (as defined in the First Lien Credit Agreement) of Company and
its Subsidiaries for the twelve-month period ended December 31, 2004 and for the
latest twelve-month period for which financial statements are available (which
pro forma ratio shall be calculated reflecting the Transactions on a pro forma
basis and reflecting the methodology set forth in Exhibit 1 to the commitment
letter delivered by GSCP and Credit Suisse to Holdings with respect to the
transactions contemplated by this Agreement) is not less than $485,000,000.

            (o) Holdings Restricted Account. Administrative Agent shall be
satisfied that Holdings has funded a segregated account in an amount not less
than $6,471,000 (the "INSURANCE DEPOSIT AMOUNT") for the sole purpose of funding
any regulatory capital or other requirements relating to the Insurance
Subsidiaries of Holdings (the "INSURANCE REGULATORY ACCOUNT").

            (p) Plan of Reorganization Restricted Account. Administrative Agent
shall be satisfied that Company has established and funded a segregated account
in an amount not less than $4,000,000 (the "PLAN OF REORGANIZATION INITIAL
DEPOSIT AMOUNT") for the sole purpose of satisfying the "Class 4 Claims" (as
such term is defined in the Plan of Reorganization) (the "PLAN OF REORGANIZATION
ACCOUNT"), and shall have paid to U.S. Bank Trust National Association as
Trustee under the Indenture dated as of March 10, 2004, between Company and U.S.
Bank Trust National Association in respect of the 7.5% Subordinated Unsecured
Notes due 2012 an amount sufficient to discharge all obligations under all notes
issued under such indenture.

            (q) Fees. Company shall have paid to Co-Syndication Agents, Joint
Lead Arrangers, Administrative Agent and Paying Agent, the fees payable on the
Closing Date referred to in Section 2.11.

            (r) Solvency Certificate. On the Closing Date, Administrative Agent
shall have received a Solvency Certificate from Holdings dated the Closing Date
and addressed to Administrative Agent and Lenders, and in the form of Exhibit
G-2 hereto demonstrating that after giving effect to the consummation of the
Acquisition, the Refinancing, the Rights Offering and the borrowings under this
Agreement and the First Lien Credit Agreement, Holdings and its Subsidiaries on
a consolidated basis are Solvent.

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            (s) Closing Date Certificate. Holdings and Company shall have
delivered to Administrative Agent an originally executed Closing Date
Certificate, together with all attachments thereto.

            (t) Credit Rating. The credit facilities provided for under this
Agreement shall have been assigned a credit rating by each of S&P and Moody's.

            (u) [Intentionally left blank.]

            (v) No Litigation. There shall not exist any action, suit,
investigation, litigation or proceeding or other legal or regulatory
developments, pending or threatened in any court or before any arbitrator or
Governmental Authority, singly or in the aggregate, that seeks to prohibit the
Transactions, the financing thereof or any of the other transactions
contemplated by the Credit Documents or that has had or could reasonably be
expected to have a Material Adverse Effect.

            (w) Completion of Proceedings. All partnership, corporate and other
similar proceedings taken or to be taken in connection with the transactions
contemplated hereby and all documents incidental thereto shall be reasonably
satisfactory in form and substance to Administrative Agent, and Administrative
Agent shall have received all such counterpart originals or certified copies of
such documents as Administrative Agent may reasonably request.

            (x) Administrative Agent shall have received a fully executed and
delivered Funding Notice.

            (y) the representations and warranties contained herein and in the
other Credit Documents shall be true and correct in all material respects on and
as of the Closing Date to the same extent as though made on and as of that date,
except to the extent such representations and warranties specifically relate to
an earlier date, in which case such representations and warranties shall have
been true and correct in all material respects on and as of such earlier date;
and

            (z) no event shall have occurred and be continuing or would result
from the consummation of the applicable Credit Extension that would constitute
an Event of Default or a Default.

Each Lender, by delivering its signature page to this Agreement and funding a
Loan on the Closing Date, shall be deemed to have acknowledged receipt of, and
consented to and approved, each Credit Document and each other document required
to be approved by any Agent, Requisite Lenders or Lenders, as applicable on the
Closing Date.

SECTION 4. REPRESENTATIONS AND WARRANTIES

            In order to induce Lenders to enter into this Agreement and to make
the Credit Extension to be made thereby, Company represents and warrants to each
Lender on the Closing Date that the following statements are true and correct
(it being understood and agreed that these representations and warranties are
deemed to be made concurrently with the consummation of the Transactions
contemplated hereby):

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      4.1. ORGANIZATION; REQUISITE POWER AND AUTHORITY; QUALIFICATION. Each of
Holdings, Company and its Subsidiaries (a) is duly organized, validly existing
and in good standing under the laws of its jurisdiction of organization as
identified in Schedule 4.1, (b) has all requisite power and authority to own and
operate its properties, to carry on its business as now conducted and as
proposed to be conducted, to enter into the Credit Documents, if any, to which
it is a party and to carry out the transactions contemplated thereby, and (c) is
qualified to do business and in good standing in every jurisdiction where its
assets are located and wherever necessary to carry out its business and
operations, except in jurisdictions where the failure to be so qualified or in
good standing has not had, and could not be reasonably expected to have, a
Material Adverse Effect.

      4.2. CAPITAL STOCK AND OWNERSHIP. The Capital Stock of each of Company and
its Subsidiaries the shares of which are pledged under the Pledge and Security
Agreement has been duly authorized and validly issued and is fully paid and
non-assessable. Except as set forth on Schedule 4.2, as of the date hereof,
there is no existing option, warrant, call, right, commitment or other agreement
to which, Company or any of its Subsidiaries is a party requiring, and there is
no membership interest or other Capital Stock of Company or any of its
Subsidiaries outstanding which upon conversion or exchange would require, the
issuance by Company or any of its Subsidiaries of any additional membership
interests or other Capital Stock of Company or any of its Subsidiaries or other
Securities convertible into, exchangeable for or evidencing the right to
subscribe for or purchase, a membership interest or other Capital Stock of
Company or any of its Subsidiaries. Schedule 4.2 correctly sets forth the
ownership interest of Holdings, Company and each of its Subsidiaries in their
respective Subsidiaries as of the Closing Date both before and after giving
effect to the Transactions. Each Domestic Subsidiary of Company which is not
identified on Schedule 1.1(b)-1 or Schedule 1.1(b)-2 is a Guarantor as of the
Closing Date.

      4.3. DUE AUTHORIZATION. The execution, delivery and performance of the
Credit Documents have been duly authorized by all necessary action on the part
of each Credit Party that is a party thereto.

      4.4. NO CONFLICT. The execution, delivery and performance by Credit
Parties of the Credit Documents to which they are parties and the consummation
of the transactions contemplated by the Credit Documents do not and will not (a)
violate any provision of any law or any governmental rule or regulation
applicable to Holdings, Company or any of its Subsidiaries, any of the
Organizational Documents of Holdings, Company or any of its Subsidiaries, or any
order, judgment (other than de minimis judgments) or decree of any court or
other agency of government binding on Holdings, Company or any of its
Subsidiaries; (b) 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
Holdings, Company or any of its Subsidiaries; (c) result in or require the
creation or imposition of any Lien upon any of the properties or assets of
Holdings, Company or any of its Subsidiaries (other than any Liens created under
any of the Credit Documents in favor of Collateral Agent, on behalf of Secured
Parties, and Liens securing the obligations under the First Lien Credit
Agreement pursuant to Section 6.2(o)); or (d) require any material approval of
stockholders, members or partners or any approval or material consent of any
Person under any material Contractual Obligation of Holdings, Company or any of
its Subsidiaries, except for such approvals or consents which will be obtained
on or before the Closing Date and disclosed to Administrative Agent.

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      4.5. GOVERNMENTAL CONSENTS. The execution, delivery and performance by
Credit Parties of the Credit Documents to which they are parties and the
consummation of the transactions contemplated by the Credit Documents do not and
will not require any registration with, consent or approval of, or notice to, or
other action to, with or by, any Governmental Authority except as contemplated
in Section 3.1 or as otherwise set forth in the Related Agreements, and except
for filings and recordings with respect to the Collateral to be made, or
otherwise delivered to Collateral Agent and to the agent under the First Lien
Credit Agreement for filing and/or recordation, as of the Closing Date.

      4.6. BINDING OBLIGATION. Each Credit Document has been duly executed and
delivered by each Credit Party that is a party thereto and is the legally valid
and binding obligation of such Credit Party, enforceable against such Credit
Party in accordance with its respective terms, except as may be limited by
bankruptcy, insolvency, reorganization, moratorium or similar laws relating to
or limiting creditors' rights generally or by equitable principles (whether
enforcement is sought in equity or at law).

      4.7. HISTORICAL FINANCIAL STATEMENTS. The Historical Financial Statements
were prepared in conformity with GAAP and fairly present, in all material
respects, the financial position, on a consolidated basis, of the Persons
described in such financial statements as at the respective dates thereof and
the results of operations and cash flows, on a consolidated basis, of the
entities described therein for each of the periods then ended, subject, in the
case of any such unaudited financial statements, to changes resulting from audit
and normal year-end adjustments and the absence of foot notes. As of the Closing
Date, none of Holdings, Company or any of Company's Subsidiaries has any
contingent liability or liability for taxes, long-term lease or unusual forward
or long-term commitment that is not reflected in the Historical Financial
Statements or the notes thereto and which in any such case is material in
relation to the business, operations, assets, liabilities or financial condition
of Holdings, Company and its Subsidiaries taken as a whole.

      4.8. PROJECTIONS. On and as of the Closing Date, the Projections of
Company and its Subsidiaries for the period Fiscal Year 2005 through and
including Fiscal Year 2012 (the "PROJECTIONS") are based on good faith estimates
and assumptions made by the management of Company believed by management to have
been reasonable at the time made; provided, the Projections are not to be viewed
as facts and that actual results during the period or periods covered by the
Projections may differ from such Projections and that the differences may be
material.

      4.9. NO MATERIAL ADVERSE CHANGE. Since December 31, 2004, no event,
circumstance or change has occurred that has caused a Material Adverse Effect.

      4.10. NO RESTRICTED JUNIOR PAYMENTS. Since December 31, 2004, and prior to
the Closing Date neither Company nor any of its Subsidiaries has directly or
indirectly declared, ordered, paid or made, or set apart any sum or property
for, any Restricted Junior Payment of the type identified in clauses (i) through
(iv) of the definition thereof in excess of $10,000,000 or agreed to do so.

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      4.11. ADVERSE PROCEEDINGS, ETC. There are no Adverse Proceedings,
individually or in the aggregate, that could reasonably be expected to have a
Material Adverse Effect. Neither Company nor any of its Subsidiaries (a) is in
violation of any applicable laws (including Environmental Laws) that,
individually or in the aggregate, could reasonably be expected to have a
Material Adverse Effect, or (b) is subject to or in default with respect to any
final judgments, writs, injunctions, decrees, rules or regulations of any court
or any federal, state, municipal or other governmental department, commission,
board, bureau, agency or instrumentality, domestic or foreign, that,
individually or in the aggregate, could reasonably be expected to have a
Material Adverse Effect.

      4.12. PAYMENT OF TAXES. Except as otherwise permitted under Section 5.3,
all income and other material tax returns and reports of Holdings and its
Subsidiaries required to be filed by any of them have been timely filed, and all
taxes shown on such tax returns to be due and payable and all material
assessments, fees and other governmental charges upon Holdings and its
Subsidiaries and upon their respective properties, assets, income, businesses
and franchises which are due and payable have been paid when due and payable.
Holdings knows of no material tax assessment that has been proposed in writing
against Holdings or any of its Subsidiaries as of the Closing Date which is not
being actively contested by Holdings or such Subsidiary in good faith and by
appropriate proceedings; provided, such reserves or other appropriate
provisions, if any, as shall be required in conformity with GAAP shall have been
made or provided therefor.

      4.13. PROPERTIES.

            (a) Title. Each of Company and its Subsidiaries has (i) good,
sufficient and legal title to (in the case of fee interests in real property),
(ii) valid leasehold interests in (in the case of leased personal property), and
(iii) good title to or rights in (in the case of all other personal property),
all of their respective properties and assets reflected in their respective
Historical Financial Statements referred to in Section 4.7 and in the most
recent financial statements delivered pursuant to Section 5.1, in each case
except for assets disposed of since the date of such financial statements in the
ordinary course of business or as otherwise permitted under Section 6.9. Except
as permitted by this Agreement, all such properties and assets are free and
clear of Liens.

            (b) Real Estate. As of the Closing Date, Schedule contains a true,
accurate and complete list of (i) all Real Estate Assets, and (ii) all leases,
subleases or assignments of leases (together with all amendments, modifications,
supplements, renewals or extensions of any thereof) affecting each Real Estate
Asset of Company or any of its Guarantor Subsidiaries, regardless of whether
Company or such Guarantor Subsidiary is the landlord or tenant (whether directly
or as an assignee or successor in interest) under such lease, sublease or
assignment.

      4.14. ENVIRONMENTAL MATTERS. Neither Company nor any of its Subsidiaries
nor any of their respective Facilities or operations are subject to any
outstanding written order, consent decree or settlement agreement with any
Person relating to any Environmental Law, any Environmental Claim, or any
Release or threatened Release of Hazardous Materials that, individually or in
the aggregate, could reasonably be expected to have a Material Adverse Effect.
Neither Company nor any of its Subsidiaries has received any letter or request
for information

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under Section 104 of the Comprehensive Environmental Response, Compensation, and
Liability Act (42 U.S.C. Section 9604) or any comparable state law, except, with
respect to matters that either have been fully resolved or matters that
individually or in the aggregate could not reasonably be expected to have a
Material Adverse Effect. To Company's and its Subsidiaries' knowledge, there are
and have been, no conditions or occurrences, including any Release, threatened
Release, use, generation, storage, treatment, transportation, processing,
disposal, removal or remediation of Hazardous Materials, which could reasonably
be expected to form the basis of an Environmental Claim against Company or any
of its Subsidiaries that, individually or in the aggregate, could reasonably be
expected to have a Material Adverse Effect. Neither Holdings nor any Subsidiary
has been issued or required to obtain a permit for the treatment, storage or
disposal of hazardous waste for any of its currently owned or operated
Facilities, pursuant to the federal Resource Conservation and Recovery Act, 42
U.S.C. Section 6901, et. seq. and its implementing regulations ("RCRA"), or any
equivalent State law, nor are any such Facilities regulated as "interim status"
facilities required to undergo corrective action pursuant to RCRA, except in
either case to the extent that such Facilities' obligations pursuant to RCRA,
individually or in the aggregate, could not reasonably be expected to have a
Material Adverse Effect. Compliance with all current requirements of
Environmental Law or, to Company's and its Subsidiaries' knowledge reasonably
likely future requirements arising from (i) existing environmental regulations
or (ii) environmental regulations that have been formally proposed but have not
been finalized could not reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect.

      4.15. NO DEFAULTS. Neither Company nor any of its Subsidiaries is in
default in the performance, observance or fulfillment of any of the obligations,
covenants or conditions contained in any of its Contractual Obligations, and no
condition exists which, with the giving of notice or the lapse of time or both,
could constitute such a default, except where the consequences, direct or
indirect, of such default or defaults, if any, could not reasonably be expected
to have a Material Adverse Effect.

      4.16. MATERIAL CONTRACTS. Schedule 4.16 contains a true, correct and
complete list of all the Material Contracts in effect on the Closing Date, and
except as described thereon, and to the knowledge of Company as of the Closing
Date all such Material Contracts are in full force and effect and no defaults
currently exist thereunder by Company and/or its Subsidiaries party thereto.

      4.17. GOVERNMENTAL REGULATION. Neither Company nor any of its Subsidiaries
is subject to regulation under the Public Utility Holding Company Act of 1935,
the Federal Power Act or the Investment Company Act of 1940 or under any other
federal or state statute or regulation which may limit its ability to incur
Indebtedness or which may otherwise render all or any portion of the Obligations
unenforceable. Neither Company nor any of its Subsidiaries is a "registered
investment company" or a company "controlled" by a "registered investment
company" as such terms are defined in the Investment Company Act of 1940.

      4.18. MARGIN STOCK. Neither Company nor any of its Subsidiaries is engaged
principally, or as one of its important activities, in the business of extending
credit for the purpose of purchasing or carrying any Margin Stock. No part of
the proceeds of the Loans made to such Credit Party will be used to purchase or
carry any such Margin Stock or to extend credit

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to others for the purpose of purchasing or carrying any such Margin Stock or for
any purpose that violates, or is inconsistent with, the provisions of Regulation
U or X of said Board of Governors.

      4.19. EMPLOYEE MATTERS. Neither Company nor any of its Subsidiaries is
engaged in any unfair labor practice that could reasonably be expected to have a
Material Adverse Effect. There is (a) no unfair labor practice complaint pending
against Company or any of its Subsidiaries, or to the best knowledge of Company,
threatened against any of them before the National Labor Relations Board and no
grievance or arbitration proceeding arising out of or under any collective
bargaining agreement that is so pending against Company or any of its
Subsidiaries or to the best knowledge of Company, threatened against any of
them, (b) no strike or work stoppage in existence or threatened involving
Company or any of its Subsidiaries that could reasonably be expected to have a
Material Adverse Effect, and (c) to the best knowledge of Company, no union
representation question existing with respect to the employees of Company or any
of its Subsidiaries and, to the best knowledge of Company, no union organization
activity that is taking place, except (with respect to any matter specified in
clause (a), (b) or (c) above, either individually or in the aggregate) such as
is not reasonably likely to have a Material Adverse Effect.

      4.20. EMPLOYEE BENEFIT PLANS. Company, each of its Subsidiaries and each
of their respective ERISA Affiliates are in material compliance with all
applicable provisions and requirements of ERISA and the Internal Revenue Code
and the regulations and published interpretations thereunder with respect to
each Employee Benefit Plan, and have performed all their obligations under each
Employee Benefit Plan which the failure to perform would result in a Material
Adverse Effect. Each Employee Benefit Plan which is intended to qualify under
Section 401(a) of the Internal Revenue Code has received a favorable
determination letter from the Internal Revenue Service indicating that such
Employee Benefit Plan is so qualified and, to the knowledge of Company, nothing
has occurred subsequent to the issuance of such determination letter which would
cause such Employee Benefit Plan to lose its qualified status. No liability to
the PBGC (other than required premium payments), the Internal Revenue Service,
any Employee Benefit Plan or any trust established under Title IV of ERISA has
been or is expected to be incurred by Company, any of its Subsidiaries or any of
their ERISA Affiliates. No ERISA Event has occurred or is reasonably expected to
occur. The present value of the aggregate benefit liabilities under each Pension
Plan sponsored, maintained or contributed to by Holdings, any of its
Subsidiaries or any of their ERISA Affiliates, (determined as of the end of the
most recent plan year on the basis of the actuarial assumptions specified for
funding purposes in the most recent actuarial valuation for such Pension Plan),
did not exceed the aggregate current value of the assets of such Pension Plan by
more than $2,000,000. As of the most recent valuation date for each
Multiemployer Plan for which the actuarial report is available, the potential
liability of Holdings, its Subsidiaries and their respective ERISA Affiliates
for a complete withdrawal from such Multiemployer Plan (within the meaning of
Section 4203 of ERISA), when aggregated with such potential liability for a
complete withdrawal from all Multiemployer Plans, based on information available
pursuant to Section 4221(e) of ERISA is not greater than $5,000,000. Company,
each of its Subsidiaries and each of their ERISA Affiliates have complied with
the requirements of Section 515 of ERISA with respect to each Multiemployer Plan
and are not in material "default" (as defined in Section 4219(c)(5) of ERISA)
with respect to payments to a Multiemployer Plan.

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      4.21. CERTAIN FEES. Except as disclosed to Administrative Agent, no
broker's or finder's fee or commission will be payable with respect hereto or
any of the transactions contemplated hereby.

      4.22. SOLVENCY. Each Credit Party and its Subsidiaries on a consolidated
basis, are Solvent on the Closing Date.

      4.23. RELATED AGREEMENTS.

            (a) Delivery. Company has delivered to Administrative Agent complete
and correct copies of each Related Agreement and of all exhibits and schedules
thereto as of the date hereof as in effect on the date hereof.

            (b) Representations and Warranties. Except to the extent otherwise
expressly set forth herein or in the schedules hereto, and subject to the
qualifications set forth therein, each of the representations and warranties
given by any Credit Party in the Stock Purchase Agreement and in any other
Related Agreement entered into on the Closing Date is true and correct in all
material respects as of the Closing Date (or as of any earlier date to which
such representation and warranty specifically relates).

            (c) Governmental Approvals. As of the Closing Date, Governmental
Authorizations and all other authorizations, approvals and consents of any other
Person required by the Related Agreements in effect on such date or to
consummate the Transactions have been obtained and are in full force and effect.

            (d) Conditions Precedent. On the Closing Date, (i) all of the
conditions to effecting or consummating the Transactions set forth in the
Related Agreements in effect on such date have been duly satisfied or, with the
consent of Administrative Agent, waived, and (ii) the Transactions being
consummated on or prior to the Closing Date have been consummated in accordance
with the Related Agreements in effect on such date and all applicable laws.

      4.24. DISCLOSURE. No representation or warranty of any Credit Party
contained in any Credit Document or in any other documents, certificates or
written statements furnished to Lenders by or on behalf of any Credit Party for
use in connection with the transactions contemplated hereby contains, when taken
as a whole with other representations, warranties, documents, certificates and
statements, any untrue statement of a material fact or omits to state a material
fact (known to the Credit Parties, in the case of any document not furnished by
either of them) necessary in order to make the statements contained herein or
therein not misleading in light of the circumstances in which the same were
made. Any projections and pro forma financial information contained in such
materials are based upon good faith estimates and assumptions believed by the
Credit Parties to be reasonable at the time made, it being recognized by Lenders
that such projections as to future events are not to be viewed as facts and that
actual results during the period or periods covered by any such projections may
differ from the projected results and that such differences may be material.
There are no facts known to the Credit Parties (other than matters of a general
economic nature) as of the Closing Date that, individually or in the aggregate,
could reasonably be expected to result in a Material Adverse

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Effect and that have not been disclosed herein or in such other documents,
certificates and statements furnished to Lenders for use in connection with the
transactions contemplated hereby.

      4.25. PATRIOT ACT. To the extent applicable, each Credit Party is in
compliance, in all material respects, with the (i) Trading with the Enemy Act,
as amended, and each of the foreign assets control regulations of the Untied
States Treasury Department (31 CFR, Subtitle B, Chapter V, as amended) and any
other enabling legislation or executive order relating thereto, and (ii) Uniting
and Strengthening America by Providing Appropriate Tools Required to Intercept
and Obstruct Terrorism (USA Patriot Act of 2001) (the "Act"). No part of the
proceeds of the Loans will be used, directly or indirectly, for any payments to
any governmental official or employee, political party, official of a political
party, candidate for political office, or anyone else acting in an official
capacity, in order to obtain, retain or direct business or obtain any improper
advantage, in violation of the United States Foreign Corrupt Practices Act of
1977, as amended.

      4.26. FINANCING STATEMENTS. Other than the financing statements filed in
favor of the Collateral Agent, no effective UCC financing statement, fixture
filing or other instrument similar in effect under any applicable law which is
effective to perfect a security interest under the UCC as in effect on the
Closing Date in all or any part of the Collateral is on file in any filing or
recording office on the Closing Date or has been authorized by such Grantor at
any time thereafter except for (x) financing statements or other instruments
similar in effect for which proper termination statements or releases have been
delivered to the Collateral Agent for filing and (y) financing statements or
other instruments similar in effect filed in connection with Permitted Liens.

SECTION 5. AFFIRMATIVE COVENANTS

            Each of Company and each Guarantor Subsidiary covenants and agrees
that until the Termination Date each of Company and each Guarantor Subsidiary
shall perform, and shall cause each of its Subsidiaries to perform, all
covenants in this Section.

      5.1. FINANCIAL STATEMENTS AND OTHER REPORTS. Company will deliver to
Administrative Agent and Lenders (which delivery to Lenders may be satisfied by
the posting of relevant documents to Intralinks or other similar service
reasonably satisfactory to Administrative Agent):

            (a) Monthly Reports. As soon as available, and in any event within
30 days after the end of each month ending after the Closing Date (commencing in
respect of August 2005) (or, for any month which is the end of a Fiscal Quarter
or a Fiscal Year, no later than the date on which the financial statements for
any such Fiscal Quarter or Fiscal Year are due pursuant to Section 5.1(b) or
(c), as applicable), the unaudited consolidated balance sheet of Company and its
Subsidiaries as at the end of such month and the related unaudited consolidated
statements of income and cash flows of Company and its Subsidiaries for such
month and for the period from the beginning of the then current Fiscal Year to
the end of such month (in each case, without footnotes), setting forth in each
case in comparative form the corresponding figures from the Financial Plan for
the current Fiscal Year (commencing in respect of January 2006); provided

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that any cash flow reports delivered pursuant to this Section 5.1(a) shall be in
a form consistent with the form presented to the Lenders prior to the Closing
Date with such non-material changes thereto as the Company shall adopt in
connection with its internal board and management reporting and such other
changes as to which the Administrative Agent may consent;

            (b) Quarterly Financial Statements. As soon as available, and in any
event within forty-five (45) days after the end of each of the first three
Fiscal Quarters of each Fiscal Year, the unaudited consolidated balance sheets
of Company and its Subsidiaries as at the end of such Fiscal Quarter and the
related unaudited consolidated statements of income and cash flows of Company
and its Subsidiaries for such Fiscal Quarter and for the period from the
beginning of the then current Fiscal Year to the end of such Fiscal Quarter, (in
each case, without footnotes) setting forth in each case, commencing with the
2006 Fiscal Year, in comparative form the corresponding figures for the
corresponding periods of the previous Fiscal Year all in reasonable detail,
together with a copy of Holdings' Form 10-Q for such period;

            (c) Annual Financial Statements. As soon as available, and in any
event within ninety (90) days after the end of each Fiscal Year, (i) the
consolidated balance sheets of Company and its Subsidiaries as at the end of
such Fiscal Year and the related consolidated statements of income and cash
flows of Company and its Subsidiaries for such Fiscal Year, setting forth in
each case, commencing with the 2006 Fiscal Year, in comparative form the
corresponding figures for the previous Fiscal Year in reasonable detail,
together with a copy of Holdings' Form 10-K for such period; and (ii) with
respect to such consolidated financial statements a report thereon of Ernst &
Young LLP or other independent certified public accountants of recognized
national standing selected by Company, and reasonably satisfactory to
Administrative Agent (which report shall be unqualified as to going concern and
scope of audit) a written statement by the independent certified public
accountants stating that in connection with their audit, nothing came to their
attention that caused them to believe that Company failed to comply with the
terms and provisions of Section 6.8, insofar as they relate to accounting
matters, or, if such a failure to comply has come to their attention, specifying
the nature and, if readily discernable from the information gathered during the
audit, period of existence thereof (it being understood that their audit is not
directed primarily toward obtaining knowledge of non-compliance and that such
accountants shall not be liable by reason of any failure to obtain knowledge of
any such non-compliance that would not be disclosed in the course of their
audit);

            (d) Compliance Certificate. Together with each delivery of financial
statements of Company and its Subsidiaries pursuant to Sections 5.1(b) and
5.1(c), a duly executed and completed Compliance Certificate;

            (e) Statements of Reconciliation after Change in Accounting
Principles. If, as a result of any change in accounting principles and policies
from those used in the preparation of the Historical Financial Statements, the
consolidated financial statements of Company and its Subsidiaries delivered
pursuant to Section 5.1(b) or 5.1(c) will differ in any material respect from
the consolidated financial statements that would have been delivered pursuant to
such subdivisions had no such change in accounting principles and policies been
made, then, together with the first delivery of such financial statement after
such change, one or more statements of reconciliation for all such prior
financial statements in form and substance satisfactory to Administrative Agent;

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            (f) Notice of Default. Promptly upon any Authorized Officer of
Company obtaining knowledge (i) of any condition or event that constitutes a
Default or an Event of Default or that notice has been given to Company with
respect thereto; (ii) that any Person has given any notice to Company or any of
its Subsidiaries or taken any other action with respect to any event or
condition set forth in Section 8.1(b); or (iii) of the occurrence of any event
or change that has caused or evidences, either in any case or in the aggregate,
a Material Adverse Effect, a certificate of its Authorized Officers specifying
the nature and period of existence of such condition, event or change, or
specifying the notice given and action taken by any such Person and the nature
of such claimed Event of Default, Default, default, event or condition, and what
action Company has taken, is taking and proposes to take with respect thereto;

            (g) Notice of Litigation. Promptly upon any Authorized Officer of
Company obtaining knowledge of (i) the institution of, or non-frivolous threat
of, any Adverse Proceeding not previously disclosed in writing by Company to
Lenders, or (ii) any material development in any Adverse Proceeding that, in the
case of either (i) or (ii) could be reasonably expected to have a Material
Adverse Effect, or seeks to enjoin or otherwise prevent the consummation of, or
to recover any damages or obtain relief as a result of, the transactions
contemplated hereby, written notice thereof together with such other
non-privileged information as may be reasonably available to Company to enable
Lenders and their counsel to evaluate such matters;

            (h) ERISA. (i) Promptly upon becoming aware of the occurrence of or
forthcoming occurrence of any ERISA Event, a written notice specifying the
nature thereof, what action Company, any of its Subsidiaries or any of their
respective ERISA Affiliates has taken, is taking or proposes to take with
respect thereto and, when known, any action taken or threatened by the Internal
Revenue Service, the Department of Labor or the PBGC with respect thereto; and
(ii) with reasonable promptness, copies of (1) each Schedule B (Actuarial
Information) to the annual report (Form 5500 Series) filed by Company, any of
its Subsidiaries or any of their respective ERISA Affiliates with the Internal
Revenue Service with respect to each Pension Plan; (2) all notices received by
Company, any of its Subsidiaries or any of their respective ERISA Affiliates
from a Multiemployer Plan sponsor concerning an ERISA Event; and (3) copies of
such other documents or governmental reports or filings relating to any Employee
Benefit Plan as Administrative Agent shall reasonably request;

            (i) Financial Plan. As soon as practicable and in any event no later
than 30 days after the beginning of each Fiscal Year, the following projections
(the "FINANCIAL PLAN") a consolidated plan and financial forecast consisting of
(i) a forecasted consolidated balance sheet and forecasted consolidated
statements of income and cash flows of Company and its Subsidiaries for the then
current Fiscal Year, together with an explanation of the assumptions on which
such forecasts are based, (ii) a forecasted consolidated statement of income and
(in a form consistent with the form presented to the Lenders prior to the
Closing Date with such non-material changes thereto as the Company shall adopt
in connection with its internal board and management reporting and such other
changes as to which the Administrative Agent may consent) cash flows of Company
and its Subsidiaries for each month of such Fiscal Year, and (iii) forecasted
consolidated annual statements of income and cash flows of Company and its
Subsidiaries for each Fiscal Year (or portion thereof) after the current Fiscal
Year through the final maturity date of the Loans, which information shall be
accompanied by a certificate from the chief financial officer of Company
certifying that the projections contained therein are based

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upon good faith estimates and assumptions believed by Company to be reasonable
at the time made;

            (j) Insurance Report. As soon as practicable and in any event by the
thirtieth day of each Fiscal Year, a report in form and substance reasonably
satisfactory to Administrative Agent outlining all material insurance coverage
maintained for such Fiscal Year by Company and its Subsidiaries; and

            (k) MSW Put-Related Costs Certificate. As soon as practicable and in
no event later than two (2) Business Days prior to payment in full of the MSW
Put-Related Costs, a certificate in form and substance reasonably satisfactory
to Administrative Agent certifying as to the total amount of the principal,
interest and premiums comprised in the MSW Put-Related Costs and a good faith
estimate of the reasonable costs and expenses directly incurred in connection
therewith.

            (l) Other Information. (A) Promptly upon their becoming available,
copies of (i) all financial statements, reports, notices and proxy statements
sent or made available generally by Holdings to its security holders acting in
such capacity or by any Subsidiary of Holdings to its security holders other
than Holdings or another Subsidiary of Holdings (other than Project specific
information delivered to holders of Limited Recourse Debt or other Project
participants), (ii) all regular and periodic reports and all registration
statements (other than on Form S-8 or similar forms) and prospectuses, if any,
filed by Holdings or any of its Subsidiaries (other than Project specific
information) with any securities exchange or with the Securities and Exchange
Commission or any governmental or private regulatory authority, (iii) all press
releases and other statements made available generally by Holdings or any of its
Subsidiaries to the public concerning material developments in the business of
Holdings or any of its Subsidiaries, and (B) such other information and data
promptly upon request with respect to Holdings or any of its Subsidiaries
(including, without limitation, with respect to compliance with Sections 5.15
and 6.1) as from time to time may be reasonably requested by Administrative
Agent or any Lender.

      5.2. EXISTENCE. Except as otherwise permitted under Section 6.9, each of
Holdings, Company and its Subsidiaries will at all times preserve and keep in
full force and effect its existence and all rights and franchises, licenses and
permits material to its business; provided, neither Company nor any Subsidiary
of Company shall be required to preserve (a) any such existence of any
Subsidiary of Company if such Persons board of directors (or similar governing
body) shall determine that the preservation thereof is no longer desirable in
the conduct of the business of such Person, and that the loss thereof is not
disadvantageous in any material respect to such Person or to Lenders or (b) any
such rights franchises, licenses or permits except to the extent that failure to
do so could reasonably be expected to have a Material Adverse Effect,
individually or in the aggregate.

      5.3. PAYMENT OF TAXES AND CLAIMS. Each Credit Party will, and will cause
each of its Subsidiaries to pay all income and other material Taxes imposed upon
it or any of its properties or assets or in respect of any of its income,
businesses or franchises before any penalty or fine accrues thereon, and all
claims (including claims for labor, services, materials and supplies) for
material sums that have become due and payable and that by law have or may
become a Lien (other than a Permitted Lien) upon any of its properties or
assets, prior to the time when any

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penalty or fine shall be incurred with respect thereto; provided, no such Tax or
claim need be paid if it is being contested in good faith by appropriate
proceedings promptly instituted and diligently conducted, so long as (a)
adequate reserve or other appropriate provision, as shall be required in
conformity with GAAP, shall have been made therefor, and (b) in the case of a
Tax or claim which has or may become a Lien against any of the Collateral, such
contest proceedings conclusively operate to stay the sale of any portion of the
Collateral (other than a de minimis portion of the Collateral) to satisfy such
Tax or claim. No Credit Party will, nor will it permit any of its Subsidiaries
to, file or consent to the filing of any consolidated income tax return with any
Person (other than Holdings or any of its Subsidiaries).

      5.4. MAINTENANCE OF PROPERTIES. Each of Company and its Subsidiaries will,
and will cause each of their Subsidiaries to maintain or cause to be maintained
in good repair, working order and condition, ordinary wear and tear excepted,
all material properties used or useful in the business of Company and its
Subsidiaries and from time to time will make or cause to be made all appropriate
repairs, renewals and replacements thereof except that Company and its
Subsidiaries shall not be required to perform the foregoing obligations (i) with
respect to Subsidiaries or assets to which Persons other than Company and its
Subsidiaries have recourse under Limited Recourse Debt owed to such Persons
where the amount of such Limited Recourse Debt exceeds the fair market value of
such property (ii) to the extent that failure to perform such obligations,
individually or in the aggregate, could not reasonably be expected to have a
Material Adverse Effect.

      5.5. INSURANCE. Company will maintain or cause to be maintained, with
financially sound and reputable insurers, such public liability insurance, third
party property damage insurance, business interruption insurance and casualty
insurance with respect to liabilities, losses or damage in respect of the
assets, properties and businesses of Company and its Subsidiaries as may
customarily be carried or maintained under similar circumstances by Persons of
established reputation engaged in similar businesses, in each case in such
amounts (giving effect to self-insurance), with such deductibles, covering such
risks and otherwise on such terms and conditions as shall be customary for such
Persons except, in the case of Projects owned by Foreign Subsidiaries, to the
extent not commercially available at a reasonable cost. Without limiting the
generality of the foregoing, Company will maintain or cause to be maintained (a)
flood insurance with respect to each Flood Hazard Property that is located in a
community that participates in the National Flood Insurance Program, in each
case in compliance with any applicable regulations of the Board of Governors of
the Federal Reserve System, and (b) replacement value casualty insurance on the
Collateral under such policies of insurance, with such insurance companies, in
such amounts, with such deductibles, and covering such risks as are at all times
carried or maintained under similar circumstances by Persons of established
reputation engaged in similar businesses. Each such policy of insurance (other
than business interruption insurance) shall with respect to Company and each
Guarantor Subsidiary (i) in the case of liability insurance name Collateral
Agent, on behalf of Lenders as an additional insured thereunder as its interests
may appear, (ii) in the case of each casualty insurance policy, upon and after
the termination of the First Lien Credit Agreement and for so long as such
agreement is outstanding contain a loss payable clause or endorsement,
reasonably satisfactory in form and substance to Collateral Agent, that names
Collateral Agent, on behalf of Lenders as the loss payee thereunder, and (iii)
provides for at least thirty days' prior written notice to Collateral

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Agent of any cancellation or non-renewal of such policy except as the result of
non-payment of premiums, in which case ten days' prior written notice will be
provided.

      5.6. INSPECTIONS. Each of Company and its Subsidiaries will, and will
cause each of their Subsidiaries to permit any authorized representatives
designated by (i) Administrative Agent (prior to an Event of Default at
Administrative Agent's expense to the extent Administrative Agent visits more
than once per year) or (ii) any Lender (at such Lender's expense) to visit and
inspect any of the properties of any of Company and its Subsidiaries and any of
its respective Subsidiaries, to inspect, copy and take extracts from its and
their financial and accounting records, and to discuss its and their affairs,
finances and accounts with its and their officers and independent public
accountants (provided, that Company may, if it so chooses, be present and
participate in any such discussion), in each case all upon reasonable notice and
at such reasonable times during normal business hours and as often as may
reasonably be requested.

      5.7. LENDERS MEETINGS. Company will, upon the request of Administrative
Agent or Requisite Lenders, participate in a meeting of Administrative Agent and
Lenders once during each Fiscal Year to be held at Company's corporate offices
(or at such other location as may be agreed to by Company and Administrative
Agent) at such time as may be agreed to by Company and Administrative Agent.

      5.8. COMPLIANCE WITH LAWS. Each Credit Party will comply, and shall use
all reasonable efforts to cause each of its Subsidiaries and all other Persons,
if any, on or occupying any Facilities to comply, with the requirements of all
applicable laws, rules, regulations and orders of any Governmental Authority
(including all Environmental Laws), noncompliance with which could reasonably be
expected to have, individually or in the aggregate, a Material Adverse Effect.

      5.9. ENVIRONMENTAL.

            (a) Environmental Disclosure. Company will deliver to Administrative
Agent and Lenders:

                  (i) as soon as practicable following receipt thereof, copies
      of all environmental audits, investigations, analyses and reports of any
      kind or character, whether prepared by personnel of Company or any of its
      Subsidiaries or by independent consultants, governmental authorities or
      any other Persons, with respect to environmental matters at any Facility
      or to any Environmental Claims that could be reasonably expected to give
      rise to liability or expenses of Company or any of its Subsidiaries in
      excess of $2,000,000;

                  (ii) promptly upon the occurrence thereof, written notice
      describing in reasonable detail (1) any Release required to be reported to
      any federal, state or local governmental or regulatory agency under
      applicable Environmental Laws that could reasonably be expected to result
      in Environmental Claims or other liability or expenses of Company or any
      of its Subsidiaries in excess of $2,000,000, (2) any remedial action taken
      by Company or any other Person in response to (A) any Release or
      threatened Release of Hazardous Materials, which has a reasonable
      possibility of resulting in one or more

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      Environmental Claims that could reasonably be expected to have,
      individually or in the aggregate, a Material Adverse Effect, or (B) any
      Environmental Claims that could reasonably be expected to have,
      individually or in the aggregate, a Material Adverse Effect, and (3)
      Company's discovery of any occurrence or condition on any real property
      adjoining or in the vicinity of any Facility that could cause such
      Facility or any part thereof to be subject to any material legal
      restrictions on the ownership, occupancy, transferability or use thereof
      under any Environmental Laws;

                  (iii)as soon as practicable following the sending or receipt
      thereof by Holdings or any of its Subsidiaries, a copy of any and all
      written communications with respect to either (1) any Environmental Claims
      that could reasonably be expected to have, individually or in the
      aggregate, a Material Adverse Effect, or (2) any Release required to be
      reported to any federal, state or local governmental or regulatory agency
      that could reasonably be expected to have, individually or in the
      aggregate, a Material Adverse Effect;

                  (iv) prompt written notice describing in reasonable detail (1)
      any proposed acquisition of stock, assets, or property by Company or any
      of its Subsidiaries that could reasonably be expected to (A) expose
      Company or any of its Subsidiaries to, or result in, Environmental Claims
      that could reasonably be expected to have, individually or in the
      aggregate, a Material Adverse Effect or (B) affect the ability of Company
      or any of its Subsidiaries to maintain in full force and effect all
      material Governmental Authorizations required under any Environmental Laws
      for their respective operations and (2) any proposed action to be taken by
      Company or any of its Subsidiaries to modify current operations in a
      manner that could reasonably be expected to subject Company or any of its
      Subsidiaries to any additional material obligations or requirements under
      any Environmental Laws; and

                  (v) with reasonable promptness, such other material and
      relevant documents and information as from time to time may be reasonably
      requested by Administrative Agent in relation to any matters disclosed
      pursuant to this Section 5.9(a).

            (b) Hazardous Materials Activities, Etc. Each of Company and its
Subsidiaries shall promptly take, and shall cause each of its Subsidiaries
promptly to take, any and all actions necessary to (i) cure any violation of
applicable Environmental Laws by such Company or its Subsidiaries that could
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect, and (ii) make an appropriate response to any Environmental Claim
against such Company or any of its Subsidiaries and discharge any obligations it
may have to any Person thereunder where failure to do so could reasonably be
expected to have, individually or in the aggregate, a Material Adverse Effect.

            (c) Right of Access and Inspection. With respect to any event
described in Section 5.9(a), or if an Event of Default has occurred and is
continuing, or if Administrative Agent reasonably believes that Company or any
Subsidiary has breached any representation, warranty or covenant related to
environmental matters (including those contained in Sections 4.11, 4.14, 5.8 or
5.9):

                  (i) Administrative Agent and its representatives shall have
      the right, but not the obligation or duty, to enter the Facilities at
      reasonable times for the purposes of observing

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      the Facilities. Such access shall include, at the reasonable request of
      Administrative Agent, access to relevant documents and employees of
      Company and its Subsidiaries and to their outside representatives, to the
      extent necessary to obtain necessary information related to the event at
      issue. If an Event of Default has occurred and is continuing, the Credit
      Parties shall conduct such tests and investigations on the Facilities or
      relevant portion thereof, as reasonably requested by Administrative Agent,
      including the preparation of a Phase I Environmental Assessment or such
      other sampling or analysis as determined to be necessary under the
      circumstances by a qualified environmental engineer or consultant. If an
      Event of Default has occurred and is continuing, and if a Credit Party
      does not undertake such tests and investigations in a reasonably timely
      manner following the request of Administrative Agent, Administrative Agent
      may hire an independent engineer, at the Credit Parties' expense, to
      conduct such tests and investigations. Administrative Agent will make all
      reasonable efforts to conduct any such tests and investigations so as to
      avoid interfering with the operation of the Facility

                  (ii) Any observations, tests or investigations of the
      Facilities by or on behalf of Administrative Agent shall be solely for the
      purpose of protecting the Lenders' security interests and rights under the
      Credit Documents. The exercise of Administrative Agent's rights under this
      Subsection (c) shall not constitute a waiver of any default of any Credit
      Party or impose any liability on Administrative Agent or any of the
      Lenders. In no event will any observation, test or investigation by or on
      behalf of Administrative Agent be a representation that Hazardous
      Materials are or are not present in, on or under any of the Facilities, or
      that there has been or will be compliance with any Environmental Law and
      Administrative Agent shall not be deemed to have made any representation
      or warranty to any party regarding the truth, accuracy or completeness of
      any report or findings with regard thereto. Neither any Credit Party nor
      any other party is entitled to rely on any observation, test or
      investigation by or on behalf of Administrative Agent. Administrative
      Agent and the Lenders owe no duty of care to protect any Credit Party or
      any other party against, or to inform any Credit Party or any other party
      of, any Hazardous Materials or any other adverse condition affecting any
      of the Facilities. Administrative Agent may, in its sole discretion,
      disclose to the applicable Credit Party, or to any other party if so
      required by law, any report or findings made as a result of, or in
      connection with, its observations, tests or investigations. If a request
      is made of Administrative Agent to disclose any such report or finding to
      any third party, then Administrative Agent shall endeavor to give the
      applicable Credit Party prior notice of such disclosure and afford such
      Credit Party the opportunity to object or defend against such disclosure
      at its own and sole cost; provided, that the failure of Administrative
      Agent to give any such notice or afford such Credit Party the opportunity
      to object or defend against such disclosure shall not result in any
      liability to Administrative Agent. Each Credit Party acknowledges that it
      may be obligated to notify relevant Governmental Authorities regarding the
      results of any observation, test or investigation disclosed to such Credit
      Party, and that such reporting requirements are site and fact-specific and
      are to be evaluated by such Credit Party without advice or assistance from
      Administrative Agent.

            (d) If counsel to Company or any of its Subsidiaries reasonably
determines (1) that provision to Administrative Agent of a document otherwise
required to be provided pursuant to this Section 5.9 (or any other provision of
this Agreement or any other Credit

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Document relating to environmental matters) would jeopardize an applicable
attorney-client or work product privilege pertaining to such document, then
Company or its Subsidiary shall not be obligated to deliver such document to
Administrative Agent but shall provide Administrative Agent with a notice
identifying the author and recipient of such document and generally describing
the contents of the document. Upon request of Administrative Agent, Company and
its Subsidiaries shall take all reasonable steps necessary to provide
Administrative Agent with the factual information contained in any such
privileged document.

      5.10. SUBSIDIARIES. In the event that any Person becomes a Domestic
Subsidiary of Company (other than an Excluded Subsidiary or a Development
Subsidiary) or any Domestic Subsidiary of Company ceases to be an Excluded
Subsidiary or a Development Subsidiary, then in each case, Company shall, within
twenty days of such event (a) cause such Domestic Subsidiary to become a
Guarantor hereunder and a Grantor under the Pledge and Security Agreement by
executing and delivering to Administrative Agent and Collateral Agent a
Counterpart Agreement, and (b) take all such actions and execute and deliver, or
cause to be executed and delivered, all such documents, instruments, agreements,
and certificates as are similar to those described in Sections 3.1(b), 3.1(h)
(to the extent applicable), 3.1(i), and 3.1(m). In the event that any Person
becomes a Foreign Subsidiary of Company, and the ownership interests of such
Foreign Subsidiary are directly owned by Company or by any Domestic Subsidiary
thereof (other than an Excluded Subsidiary), Company shall or shall cause such
Domestic Subsidiary to, deliver all such documents, instruments, agreements, and
certificates as are similar to those described in Sections 3.1(b), and Company
shall take, or shall cause such Domestic Subsidiary to take, all of the actions
referred to in Section 3.1(i)(i) necessary to grant and, subject to the rights
of the Collateral Agent (as defined in the First Lien Credit Agreement), to
perfect a Second Priority Lien in favor of Collateral Agent, for the benefit of
Secured Parties, under the Pledge and Security Agreement in 65% of such
ownership interests. With respect to each such Subsidiary, Company shall
promptly send to Administrative Agent written notice setting forth with respect
to such Person (i) the date on which such Person became a Subsidiary of Company,
and (ii) all of the data required to be set forth in Schedules 4.1 and 4.2 with
respect to all Subsidiaries of Company; provided, such written notice shall be
deemed to supplement Schedule 4.1 and 4.2 for all purposes hereof.

      5.11. ADDITIONAL MATERIAL REAL ESTATE ASSETS. In the event that Company or
any Guarantor Subsidiary acquires a Material Real Estate Asset and such interest
has not otherwise been made subject to the Lien of the Collateral Documents in
favor of Collateral Agent, for the benefit of Secured Parties, then Company or
such Guarantor Subsidiary, as soon as practicable after acquiring such Material
Real Estate Asset, shall take all such actions and execute and deliver, or cause
to be executed and delivered, all such mortgages, documents, instruments,
agreements, opinions and certificates similar to those described in Sections
3.1(h), 3.1(i) and 3.1(j) and a Phase I Environmental Assessment with respect to
each such Material Real Estate Asset that Collateral Agent shall reasonably
request to create in favor of Collateral Agent, for the benefit of Secured
Parties, a valid and, subject to any filing and/or recording referred to herein,
Second Priority Lien in such Material Real Estate Assets. In addition to the
foregoing, Company shall, at the request of Requisite Lenders, deliver, from
time to time, to Administrative Agent such appraisals as are required by law or
regulation of Real Estate Assets with respect to which Collateral Agent has been
granted a lien

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      5.12. INTEREST RATE PROTECTION. No later than the earlier of (i) 90 days
following the date of the issuance of the Second Lien Notes and (ii) 270 days
following the Closing Date and at all times thereafter, Company shall maintain,
or caused to be maintained, in effect one or more Interest Rate Agreements for a
term of not less than three (3) years and otherwise in form and substance
reasonably satisfactory to Administrative Agent, which Interest Rate Agreements
shall effectively limit the Unadjusted Eurodollar Rate Component of the interest
costs to Company with respect to an aggregate notional principal amount of not
less than an amount equal to (a) $337,500,000 less (b) the aggregate principal
amount of the Second Lien Notes, to a rate reasonably acceptable to
Administrative Agent.

      5.13. FURTHER ASSURANCES. At any time or from time to time at the request
of Administrative Agent, each Credit Party will, at its expense, promptly
execute, acknowledge and deliver such further documents and do such other acts
and things, as Administrative Agent or Collateral Agent may reasonably request
in order to effect fully the purposes of the Credit Documents that do not
involve material expansion of any Credit Party's obligations or duties under the
Credit Documents from those originally mutually intended or contemplated. In
furtherance and not in limitation of the foregoing, each Credit Party shall take
such actions as Administrative Agent or Collateral Agent may reasonably request
from time to time to ensure that the Obligations are guarantied by the
Guarantors and are secured by the Collateral (subject to limitations contained
in the Credit Documents).

      5.14. MISCELLANEOUS BUSINESS COVENANTS. Unless otherwise consented to by
Agents or Requisite Lenders:

            (a) Non-Consolidation. Company will and will cause each of its
Subsidiaries to: (i) maintain entity records and books of account separate from
those of any other entity which is an Affiliate of such entity; (ii) not
commingle its funds (other than consistent with Company's cash management
requirements as permitted hereunder) or assets with those of any other entity
which is an Affiliate of such entity; and (iii) provide that its board of
directors or other analogous governing body will hold all appropriate meetings
to authorize and approve such entity's actions, which meetings will be separate
from those of other entities.

            (b) Filing of Agreement. No later than the earlier of the next
filing of a quarterly report on Form 10Q or annual report on Form 10K, provided
that Holdings or any of its Subsidiaries is otherwise required to file periodic
reports with the Securities and Exchange Commission, Holdings or such
Subsidiaries shall file a copy of this Agreement and the schedules hereto as a
material contract with the Securities and Exchange Commission.

      5.15. CASH MANAGEMENT SYSTEMS. Company and its Subsidiaries' cash
management systems on the Closing Date are outlined on Schedule 5.15. Company
and its Subsidiaries may make such modifications to its cash management system
as it may deem appropriate (subject to the requirements of this Section 5.15)
provided that to the extent any such modification would (i) affect attributes of
the cash management system described in paragraphs 5, 6, 7, 8, 11, 12, 13, 14,
15 and 19 of Part A of Schedule 5.15 and paragraphs 3, 4 and 5 of Part B of
Schedule 5.15 or (ii) otherwise be material and adverse to the Secured Parties,
such modifications shall have been approved by Administrative Agent. Company and
each of its Guarantor Subsidiaries shall at all times after the Closing Date
ensure that all Cash and Cash Equivalents held by it are subject to a

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valid and, subject to the rights of the Collateral Agent (as defined in the
First Lien Credit Agreement), perfected Second Priority security interest in
favor of the Collateral Agent for the benefit of the Secured Parties; provided
that (i) Cash and Cash Equivalents maintained in the deposit accounts and
investment accounts identified on Schedule 2.2 of the Pledge and Security
Agreement in respect of "Class 4 Claims" (as such term is defined in the Plan of
Reorganization) or in payroll, trusts and similar accounts and (ii) other Cash
and Cash Equivalents of up to $2,000,000 in the aggregate at any one time for
Company and all Guarantor Subsidiaries shall not in either case be required to
be maintained in deposit accounts or investments accounts subject to Control
Agreements; provided further that Company and each of its Guarantor Subsidiaries
shall at all times thereafter ensure that no funds accumulate at any Excluded
Subsidiary, except (a) in the case of any Excluded Subsidiary owning an interest
in a Project, funds required to be accumulated pursuant to restrictions in
effect on the date hereof or in respect of Indebtedness permitted under Section
6.1(l), imposed under the documentation for the financing or operation of such
Project and required for such financing or operation, (b) as required by any
applicable requirement of law, (c) as required by Contractual Obligations in
effect as of the date hereof or entered into after the date hereof in accordance
with the provisions of this Agreement, (d) until the date that is six months
after the Closing Date and in an amount (net of amounts held against uncleared
drafts or wire payments) not to exceed $35,000,000, funds on deposit on the
Closing Date in accounts in the name of Subsidiaries of Company constituting
part of the Acquired Business, or (e) in an amount (net of amounts held against
uncleared drafts or wire payments and in addition to amounts referred to in
clause (d) above) not to exceed $5,000,000, funds in accounts in the name of
Subsidiaries of Company constituting part of the Acquired Business.

      5.16. INSURANCE REGULATORY ACCOUNT. Until the later of the fourth
anniversary of the Closing Date and such time as the net operating loss of
Holdings and its Subsidiaries is less than $50,000,000, Holdings shall maintain
Cash and Cash Equivalents of not less than the Insurance Deposit Amount (less
amounts applied from such account to the capitalization of the Insurance
Subsidiaries) in the Insurance Regulatory Account.

      5.17. PLAN OF REORGANIZATION ACCOUNT. Until all "Class 4 Claims" (as such
term is defined in the Plan of Reorganization) have been satisfied and
discharged as evidenced by a certificate delivered to Administrative Agent by
Company, Company shall maintain in the Plan of Reorganization Account Cash of
not less than the Plan of Reorganization Initial Deposit Amount minus the amount
of any "Class 4 Claims" (as such term is defined in the Plan of Reorganization)
which have been satisfied and discharged. Company shall maintain such account
and shall not make distributions from such account other than to make payments
of amounts due with regard to Class 4 Claims in accordance with the Plan of
Reorganization until all Class 4 Claims have been satisfied and discharged.

      5.18. POST CLOSING MATTERS. Holdings and Company shall, and shall cause
each of its Subsidiaries to, satisfy the requirements set forth on Schedule 5.18
on or before the date specified for such requirement or such later date to be
determined by Administrative Agent.

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SECTION 6. NEGATIVE COVENANTS

            Each of Company and Guarantor Subsidiaries covenants and agrees
that, until the Termination Date, Company and its Guarantor Subsidiaries shall
perform, and shall cause each of its Subsidiaries to perform, all covenants in
this Section 6.

      6.1. INDEBTEDNESS. Neither Company nor any Guarantor Subsidiary shall, nor
shall it permit any of its Subsidiaries to, directly or indirectly, create,
incur, assume or guaranty, or otherwise become or remain directly or indirectly
liable with respect to any Indebtedness, except:

            (a) the Obligations;

            (b) Indebtedness of any Guarantor Subsidiary to Company or to any
other Guarantor Subsidiary, or of Company to any Guarantor Subsidiary; provided,
(x) all such Indebtedness shall be evidenced by the Intercompany Master Note and
(y) any payment by any such Guarantor Subsidiary under any guaranty of the
Obligations shall result in a pro tanto reduction of the amount of any
Indebtedness owed by such Guarantor Subsidiary to Company or to any of its
Guarantor Subsidiaries for whose benefit such payment is made;

            (c) Subject to continued compliance with Sections 5.15 and 5.1(k)(B)
Indebtedness of any Subsidiary of Company other than the Guarantor Subsidiaries
to Company or any Guarantor Subsidiary so long as the proceeds of such
Indebtedness are applied to current requirements in respect of working capital,
maintenance capital expenditures, operation or payroll in the ordinary course of
business of such Subsidiary incurring such Indebtedness or to make payments of
debt service in connection with the Alexandria, Virginia and Fairfax, Virginia
facilities to the extent that such obligor with respect to such debt service
does not otherwise have funds available to make such payments and lease payments
in connection with the Delaware County, Pennsylvania facility, in each case to
the extent that the obligor with respect to such debt service or lease payments
is required to make such payments and payment of such debt service or lease
payments would not be prohibited under Section 6.5; provided, that following the
occurrence of and continuance of an Event of Default (without prejudicing or
impairing any of the Secured Parties' rights, privileges, powers and remedies
with respect thereto, which rights, privileges, powers and remedies are reserved
in full) no such Indebtedness may be incurred to make maintenance capital
expenditures other than those that, if not made, would materially compromise the
ability of a Subsidiary to operate and maintain one or more of the Projects in
compliance with law, all such intercompany Indebtedness shall be evidenced by
the Intercompany Master Note;

            (d) Indebtedness of Foreign Subsidiaries of Company to Company or
any Guarantor Subsidiary in an amount not to exceed (i) $3,500,000 incurred in
any Fiscal Year (with any unused amounts accumulating on a cumulative basis to
each subsequent Fiscal Year) or (ii) $17,500,000 in the aggregate at any one
time outstanding which is incurred after the Closing Date (plus the principal
amount of any Indebtedness repaid by a Foreign Subsidiary to Company or any
Guarantor Subsidiary after the Closing Date), provided, that (A) the proceeds of
such Indebtedness are used to finance the development, construction or capital
improvements to renewable energy or waste-to-energy Projects, (B) no more than
$2,500,000 of such Indebtedness incurred in any Fiscal Year may be incurred with
respect to Projects located in

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jurisdiction outside of the United Kingdom or Europe, (C) no such Indebtedness
may be incurred at any time that Company and its Subsidiaries are not in
compliance with Section 6.8, and (D) all such intercompany Indebtedness shall be
evidenced by the Intercompany Master Note;

            (e) (i) Indebtedness of MSW I and/or MSW II to the Company with
respect to the on-lending of (A) Put Loans in an aggregate principal amount not
to exceed $25,000,000, (B) the proceeds of the Put-Related Equity Offering (less
the amount of any Investment made pursuant to Section 6.7(n)(i)), (C) Cash and
Cash Equivalents from Company's operations, provided that after giving effect to
the incurrence of such Indebtedness and any Investment made pursuant to Section
6.7(n)(ii), unrestricted Cash and Cash Equivalents of Company and the Acquired
Businesses shall not be less than $50,000,000 (provided that for the purposes of
calculating such amount, no more than $5,000,000 of Marketable Securities shall
be included in such calculation) and/or (D) an equity contribution from Holdings
to Company to occur within 120 days of the Closing Date in an aggregate amount
not to exceed $25,000,000 (less the amount of any equity Investment made
pursuant to Section 6.7(n)(iii)), provided that the amounts on-lent to MSW I
and/or MSW II pursuant to clauses (A) through (D) immediately above shall be
used to pay MSW Put-Related Costs and when added to the equity Investments made
pursuant to Section 6.7(n) shall not exceed in the aggregate the amount set
forth on the certificate delivered pursuant to Section 5.1(k), (ii) Indebtedness
of MSW I and/or MSW II to ARC LLC with respect to the on-lending of the proceeds
of the New ARC Notes by ARC LLC to fund MSW Put-Related Costs, (iii)
Indebtedness of MSW I and/or MSW II to ARC LLC with respect to the on-lending of
the proceeds of the ARC Refinancing Notes by ARC LLC to redeem, refinance,
replace, renew or extend the MSW Notes in accordance with clause (n)(i) below,
(iv) Indebtedness of ARC LLC to MSW I and/or MSW II with respect to the
on-lending of the proceeds of the MSW Refinancing Notes by MSW I and/or MSW II
to redeem, refinance, replace, renew or extend the ARC Notes in accordance with
clause (n)(i) below, and (v) additional Indebtedness of Excluded Subsidiaries to
Company or any Guarantor Subsidiary in an amount not to exceed (A) $11,500,000
incurred in any Fiscal Year (with any unused amounts accumulating on a
cumulative basis to each subsequent Fiscal Year) or (B) $34,500,000 in the
aggregate at any one time outstanding which is incurred after the Closing Date,
provided, that in each case, (1) no such Indebtedness may be incurred at any
time such that Company and its Subsidiaries would not be in compliance with
Section 6.8, and (2) all such intercompany Indebtedness shall be evidenced by
the Intercompany Master Note, and provided further that notwithstanding anything
to contrary in this Agreement, no Credit Party shall cancel any Indebtedness
owed to it by any Subsidiary of Company (other than among Credit Parties) except
(a) in connection with the Foreign Subsidiary restructuring disclosed on
Schedule 6.9-B, (b) to the extent such cancellation directly results in material
savings (taking into consideration any tax savings) to Company and its
Subsidiaries on a group-wide basis and is not done in contemplation of any event
which would give rise to an Event of Default under Sections 8.1(f) or 8.1(g) or
(c) for adequate consideration and in the ordinary course of business;

            (f) Indebtedness of any Excluded Subsidiary to another Excluded
Subsidiary which is its direct or indirect parent or Subsidiary and Indebtedness
for any Foreign Subsidiary to another Foreign Subsidiary;

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            (g) Indebtedness incurred by Company or any of its Subsidiaries
arising from agreements providing for indemnification, adjustment of purchase
price or similar obligations incurred in connection with Permitted Acquisitions;

            (h) Indebtedness which may be deemed to exist pursuant to any
guaranties, performance, surety, statutory, appeal, bid, payment (other than
payment of Indebtedness) or similar obligations (including any bonds or letters
of credit issued with respect thereto and all reimbursement and indemnity
agreements entered into in connection therewith) incurred in the ordinary course
of business;

            (i) Indebtedness in respect of netting services, overdraft
protections and otherwise in connection with deposit accounts;

            (j) performance guaranties in the ordinary course of business and
consistent with historic practices of the obligations of suppliers, customers,
franchisees and licensees of Company and its Subsidiaries;

            (k) Indebtedness of any Subsidiary of Company to Company or any
other Subsidiary of Company, so long as the proceeds are used to fund capital
expenditures relating to the modifications to Projects, to the extent required
by applicable legal requirements; provided that if and to the extent that such
additional capital expenditures are estimated by Company to exceed $40,000,000
in the aggregate during the term of this Agreement, and are not otherwise
reimbursable by third parties, Company shall provide such estimate to
Administrative Agent for its review, and shall not incur such capital
expenditures in excess of $11,500,000 in connection with any such modification
until Administrative Agent has had an opportunity to review and provide its
comments, except to the extent failure to incur such capital expenditures would
in Company's reasonable judgment either (i) materially compromise its present
ability to continue to operate and maintain one or more of its Projects in
compliance with law or (ii) expose it or its Affiliates to material liability;

            (l) Indebtedness described in Schedule 6.1, but not any extensions,
renewals or replacements of such Indebtedness except (i) renewals, refinancings,
replacements and extensions expressly provided for in, or contemplated by, the
agreements relating to any such Indebtedness (or the related Projects) as the
same are in effect on the date of this Agreement and (ii) refinancings,
renewals, replacements and extensions of any such Indebtedness in whole or in
part at the then prevailing market rates if the non-economic terms and
conditions thereof are not less favorable to the obligor thereon or to the
Lenders than the Indebtedness being renewed, refinanced, replaced or extended,
taken as a whole (considering the economic benefits and disadvantages to Company
and its Subsidiaries from such refinancing, replacement, renewal or extension,
as well as the economic benefits and disadvantages to Company and its
Subsidiaries of the Project to which such Indebtedness relates); provided, that
the average life to maturity of such Indebtedness is greater than or equal to
that of the Indebtedness being refinanced, replaced, renewed or extended (unless
the client with respect thereto undertakes to service such principal through the
lease, service or operating agreement of the applicable Project), and provided
further, that such Indebtedness permitted under the immediately preceding clause
(i) or (ii) above shall not (A) include Indebtedness of an obligor that was not
an obligor with respect to the Indebtedness being extended, renewed, replaced or
refinanced, (B) exceed the principal amount

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of the Indebtedness being renewed, extended, replaced or refinanced plus any
reasonable and customary transaction costs and fees and any premium on the
Indebtedness required to be paid in connection with such repayment unless the
increase in the principal amount of such Indebtedness is permitted under another
subsection of this Section 6.1 (provided that such limitation shall not apply
with respect to Indebtedness that a client of a Project undertakes to service
through the lease, service or operating agreement of the applicable Project) or
(C) be incurred, created or assumed if any Default or Event of Default has
occurred and is continuing or would result therefrom;

            (m) (i) Indebtedness of Company or its Subsidiaries with respect to
Capital Leases entered into after the Closing Date and (ii) purchase money
Indebtedness of Subsidiaries of Company (including any Indebtedness acquired in
connection with a Permitted Acquisition) in an aggregate amount in the case of
(i) and (ii) together not to exceed $17,500,000 at any time; provided that any
purchase money Indebtedness (A) shall be secured only by the asset acquired in
connection with the incurrence of such Indebtedness, and (B) shall constitute
not less than 85% of the aggregate consideration paid with respect to such
asset;

            (n) (i) any debt securities issued by MSW I, MSW II and/or ARC LLC
in a combined aggregate principal amount not to exceed $665,000,000 plus any
accrued interest and senior subordinated debt securities or other indebtedness
issued by MSW I, MSW II and/or ARC LLC to redeem, refinance, replace, renew or
extend any of the MSW I Notes, the MSW II Notes and/or ARC Notes in full, in an
amount of up to the then aggregate outstanding principal amount of the MSW I
Notes or the MSW II Notes (in each case, for the avoidance of doubt, after
giving effect to any redemption, refinancing or replacement thereof pursuant to
the Indebtedness permitted under 6.1(n)(ii)), or ARC Notes, as applicable in
each case, plus any reasonable and customary transaction costs and fees and
required premium and debt service reserve requirements in connection therewith
(any such debt securities issued by MSW I and/or MSW II, the "MSW REFINANCING
NOTES" and any such debt securities issued by ARC LLC, the "ARC REFINANCING
NOTES") and guaranties related thereto; provided that the proceeds thereof are
used in each case to prepay or redeem the MSW Notes and/or ARC Notes so
redeemed, refinanced, replaced, renewed or extended and reasonable and customary
fees, commissions, legal fees and other costs and expenses incurred in
connection with such issuance and redemption or prepayment; provided further
that (A) (1) the terms of such additional Indebtedness shall not contain any
cross-default provisions (other than for material non-payment, and may include a
cross-acceleration provision), (2) the terms of such additional Indebtedness
shall not contain any financial maintenance covenants, (3) such additional
Indebtedness shall not be secured by any asset of Company or any of its
Subsidiaries (other than restricted Cash or Cash Equivalents allocated from the
funds representing such Indebtedness securing principal and interest payments to
the extent required pursuant to the terms of such additional Indebtedness) that
do not, in the case of MSW Refinancing Notes, secure the MSW Notes and in the
case of ARC Refinancing Notes, secure the ARC Notes, (4) no portion of the
principal of such additional Indebtedness shall be scheduled to be redeemed,
repurchased or otherwise repaid or prepaid (other than as a result of a change
of control, asset sales, receipt of equity and indebtedness proceeds,
condemnation and eminent domain, change of control events, acceleration or such
other provision as shall be customary for comparable high-yield debt securities)
prior to the earlier of (x) the date on which the corresponding portion of the
refinanced Indebtedness would be payable under, for MSW Refinancing Notes, the
MSW Notes,

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or for ARC Refinancing Notes, the ARC Notes, and (y) the date that is six months
after the Maturity Date, and (5) such Indebtedness shall otherwise, taken as a
whole, be on non-financial terms no less favorable to the obligors thereon, in
any material respects, than the terms of, for MSW Refinancing Notes, the MSW
Notes, or for ARC Refinancing Notes, the ARC Notes, taken as a whole
(considering the economic benefits and disadvantages of such refinancing,
replacement, renewal or extension); and (B) after giving effect to the
incurrence of such Indebtedness, (1) Company and its Subsidiaries shall be in
pro forma compliance with the financial covenant set forth in Section 6.8 and
(2) no Default or Event of Default shall exist or would result therefrom, (ii)
any debt securities issued by MSW I and/or MSW II to finance MSW Put-Related
Costs, in an aggregate amount up to $425,000,000, plus any reasonable and
customary transaction costs and fees and required premium in connection
therewith (the "NEW MSW NOTES"); provided that the proceeds thereof are used to
pay MSW Put-Related Costs and reasonable and customary fees, commissions, legal
fees and other costs and expenses incurred in connection with such issuance and
payment; provided further that (A) (1) the terms of such additional Indebtedness
shall not contain cross-default provisions to the MSW Indentures, (2) such
additional Indebtedness shall not be secured by any assets (other than Cash or
Cash Equivalents allocated from the funds representing such Indebtedness
securing principal and interest payments to the extent required pursuant to the
terms of such additional Indebtedness) that do not secure the MSW Notes and (3)
no portion of the principal of such additional Indebtedness shall be scheduled
to be redeemed, repurchased or otherwise repaid or prepaid (other than as a
result of a change of control, asset sales, receipt of equity and indebtedness
proceeds, condemnation and eminent domain, change of control events,
acceleration or such other provision as shall be customary for comparable
high-yield debt securities) prior to the earlier of (x) the date on which the
corresponding portion of the Indebtedness would be payable under the MSW Notes
and (y) the date that is six months after the Maturity Date; and (B) after
giving effect to the incurrence of such Indebtedness, (1) Company and its
Subsidiaries shall be in pro forma compliance with the financial covenant set
forth in Section 6.8 and (2) no Default or Event of Default shall exist or would
result therefrom, and (iii) any debt securities issued by ARC LLC to finance MSW
Put-Related Costs, in an amount up to $425,000,000, plus any reasonable and
customary transaction costs and fees and required premium in connection
therewith (the "NEW ARC NOTES"); provided that the proceeds thereof are used to
pay MSW Put-Related Costs and reasonable and customary fees, commissions, legal
fees and other costs and expenses incurred in connection with such issuance and
payment; provided further that (A) (1) the terms of such additional Indebtedness
shall not contain cross-default provisions to the ARC Indenture, (2) such
additional Indebtedness shall not be secured by any assets (other than Cash or
Cash Equivalents allocated from the funds representing such Indebtedness
securing principal and interest payments to the extent required pursuant to the
terms of such additional Indebtedness) that do not secure the ARC Notes and (3)
no portion of the principal of such additional Indebtedness shall be scheduled
to be redeemed, repurchased or otherwise repaid or prepaid (other than as a
result of a change of control, asset sales, receipt of equity and indebtedness
proceeds, condemnation and eminent domain, change of control events,
acceleration or such other provision as shall be customary for comparable
high-yield debt securities) prior to the earlier of (x) the date on which the
corresponding portion of the Indebtedness would be payable under the ARC Notes
and (y) the date that is six months after the Maturity Date; and (B) after
giving effect to the incurrence of such Indebtedness, (1) Company

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and its Subsidiaries shall be in pro forma compliance with the financial
covenant set forth in Section 6.8 and (2) no Default or Event of Default shall
exist or would result therefrom;

            (o) (i) the First Lien Obligations and Indebtedness incurred to
refinance, renew, extend or replace such Indebtedness in whole or in part, as
permitted by the Intercreditor Agreement and (ii) the Second Lien Notes owed
under the Second Lien Notes Indenture in an aggregate principal amount not to
exceed $400,000,000 plus any accrued interest, and guaranties related thereto,
and any Indebtedness incurred to refinance, renew, extend or replace such
Indebtedness in whole or in part at the then-prevailing market rates, and
guaranties related thereto; provided that with respect to any refinancing,
renewals, extensions or replacement of the Second Lien Notes, (A) the
non-economic terms and conditions of such Indebtedness, taken as a whole
(considering the economic benefits and disadvantages of such refinancing,
replacement, renewal or extension), are no less favorable in any material
respect to the obligors thereon than the Second Lien Notes Indenture (B) such
refinancing, renewal, extension or replacement is incurred only by the Person
who is the obligor on the Second Lien Notes being refinanced, renewed, extended
or replaced and guaranties related thereto and (C) the average life to maturity
thereof is greater than or equal to that of the Second Lien Notes;

            (p) to the extent no Default or Event of Default shall have occurred
and be continuing or shall be caused thereby at the time of the incurrence
thereof, Limited Recourse Debt the proceeds of which are applied to make
Expansions incurred after the Closing Date in an aggregate amount not to exceed
the greater of (i) $70,000,000 and (ii) 60% of the principal amount of Limited
Recourse Debt of Subsidiaries of Company outstanding as of the Closing Date
which has been permanently repaid (and not otherwise renewed, refinanced,
replaced or extended pursuant to Section 6.1(l) or otherwise) since the Closing
Date (up to a maximum principal amount under this clause (p) of $290,000,000;

            (q) Company and its Subsidiaries may become and remain liable with
respect to their obligations to pay for services rendered by Holdings to them
under and in accordance with the Corporate Services Reimbursement Agreement;

            (r) Company and its Subsidiaries may become and remain liable with
respect to usual and customary contingent obligations incurred in connection
with insurance deductibles or self-insurance retentions required by third party
insurers in connection with insurance arrangements entered into by Company and
its Subsidiaries with such insurers in compliance with Section 5.5;

            (s) Company and its Subsidiaries may become and remain liable with
respect to Performance Guaranties supporting Projects, provided, that (a) the
terms of any such Performance Guaranty shall be generally consistent with past
practice of Company and its Subsidiaries, (b) in no event shall any such
Performance Guaranty be secured by collateral, and (c) after the occurrence and
during the continuation of an Event of Default, neither Company nor any if its
Subsidiaries shall enter into any such Performance Guaranty or enter into a
contractual commitment to provide any such Performance Guaranty;

            (t) Indebtedness of any Covanta Warren Entity to Company or any of
its Subsidiaries to the extent the proceeds thereof are immediately used to make
the Restricted

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Junior Payment expressly permitted pursuant to Section 6.5(h) or to make the
payments contemplated under Section 6.7(l)(ii);

            (u) Company may become and remain liable with respect to
Indebtedness consisting solely of its obligations under Insurance Premium
Financing Arrangements, which obligations shall not exceed at any time
$46,000,000 in the aggregate;

            (v) Company and its Subsidiaries may become and remain liable with
respect to Hedge Agreements and with respect to long-term or forward purchase
contracts and option contracts to buy, sell or exchange commodities and similar
agreements or arrangements, so long as such contracts, agreements or
arrangements do not constitute Commodities Agreements;

            (w) Company and its Subsidiaries may become and remain liable with
respect to contingent obligations incurred in exchange (or in consideration) for
(a) the release of cash collateral pledged by Company or its Subsidiaries or (b)
the return and cancellation of undrawn letters of credit for which Company or
its Subsidiaries are liable for reimbursement;

            (x) Indebtedness of any Subsidiary of Company to Company reflecting
non-cash intercompany allocations of overhead and other parent-level costs in
accordance with its customary allocation practices; and

            (y) Additional unsecured Indebtedness of Company and its Guarantor
Subsidiaries in an amount not to exceed $11,500,000 in the aggregate since the
Closing Date.

      To the extent that the creation, incurrence or assumption of any
Indebtedness could be attributable to more than one subsection of this Section
6.1, Company may allocate such Indebtedness to any one or more of such
subsections and in no event shall the same portion of Indebtedness be deemed to
utilize or be attributable to more than one item.

      6.2. LIENS. Neither Company nor any Guarantor Subsidiary shall, and shall
not permit any of its Subsidiaries to, directly or indirectly, create, incur,
assume or permit to exist any Lien on or with respect to any property or asset
of any kind (including any document or instrument in respect of goods or
accounts receivable) of Company or any of its Subsidiaries, whether now owned or
hereafter acquired, or any income or profits therefrom, except:

            (a) Liens in favor of Collateral Agent for the benefit of Secured
Parties granted pursuant to any Credit Document;

            (b) Liens for Taxes if obligations with respect to such Taxes are
being contested in good faith by appropriate proceedings promptly instituted and
diligently conducted;

            (c) statutory Liens of landlords, banks (and rights of set-off), of
carriers, warehousemen, mechanics, repairmen, workmen and materialmen, and other
Liens imposed by law (other than any such Lien imposed pursuant to Section 401
(a)(29) or 412(n) of the Internal Revenue Code or by ERISA), in each case
incurred in the ordinary course of business (i) for amounts not yet overdue or
(ii) for amounts that are overdue and that (in the case of any such amounts
overdue for a period in excess of ten days) are being diligently contested in
good faith

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<PAGE>

by appropriate proceedings, so long as such reserves or other appropriate
provisions, if any, as shall be required by GAAP shall have been made for any
such contested amounts;

            (d) Liens incurred and deposits made in the ordinary course of
business in connection with workers' compensation, unemployment insurance and
other types of social security, or to secure the performance of tenders,
statutory obligations, surety, performance, bid, payment and appeal bonds, bids,
leases, government contracts, trade contracts, performance and return-of-money
bonds and other similar obligations (exclusive of obligations for the payment of
borrowed money) so long as no foreclosure, sale or similar proceedings have been
commenced with respect to any portion of the Collateral on account thereof and
Liens securing, or arising in connection with the establishment of, required
debt service reserve funds, provided that in the case of Liens securing debt
service reserve funds, completion obligations and similar accounts and
obligations (other than Indebtedness) of Subsidiaries of Company to Persons
other than Company and its Subsidiaries and their respective Affiliates, so long
as (a) each such obligation is associated with a Project, (b) such Lien is
limited to (1) assets associated with such Project (which in any event shall not
include assets held by Company or any of its Subsidiaries other than a
Subsidiary whose sole business is the ownership and/or operation of such Project
and substantially all of whose assets are associated with such Project) and/or
(2) the equity interests in such Subsidiary, but in the case of clause (2) only
if such Subsidiary's sole business is the ownership and/or operation of such
Project and substantially all of such Subsidiary's assets are associated with
such Project, and (c) such obligation is otherwise permitted under this
Agreement

            (e) easements, rights-of-way, restrictions, encroachments, and other
minor defects or irregularities in title, in each case which do not and will not
interfere with the ordinary conduct of the business of Company or any of its
Subsidiaries;

            (f) any interest or title of a lessor or sublessor under any lease
of real estate permitted hereunder;

            (g) Liens solely on any cash earnest money deposits made by Company
or any of its Subsidiaries in connection with any letter of intent or purchase
agreement permitted hereunder;

            (h) purported Liens evidenced by the filing of precautionary UCC
financing statements relating solely to operating leases of personal property
entered into in the ordinary course of business;

            (i) Lien on Cash or Cash Equivalents to the extent used to secure
principal and interest payments to the extent required pursuant to indentures
otherwise permitted hereunder and funded with the proceeds of the issuance of
notes thereunder;

            (j) Liens in favor of customs and revenue authorities arising as a
matter of law to secure payment of customs duties in connection with the
importation of goods;

            (k) any zoning or similar law or right reserved to or vested in any
governmental office or agency to control or regulate the use of any real
property, in each case which do not and will not interfere with or affect in any
material respect the use, value or operations of any

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<PAGE>

Closing Date Mortgaged Property or Material Real Estate Asset or the ordinary
conduct of the business of Company or any of its Subsidiaries;

            (l) licenses of patents, trademarks and other intellectual property
rights granted by Company or any of its Subsidiaries in the ordinary course of
business and not interfering in any respect with the ordinary conduct of the
business of Company or such Subsidiary;

            (m) Liens described in Schedule 6.2 or on a Title Policy delivered
pursuant to Section 3.1(h)(iv);

            (n) Liens (i) arising under Capital Leases entered into after the
Closing Date and (ii) securing purchase money Indebtedness in an aggregate
amount in the case of (i) and (ii) together not to exceed at any time
$17,500,000; provided, any such Lien shall encumber only the asset acquired with
the proceeds of such Indebtedness;

            (o) Liens on the Collateral securing obligations under the First
Lien Credit Agreement and/or Second Lien Notes and all collateral documents
related to either of them including permitted refinancings, renewals,
extensions, refundings and replacements thereof;

            (p) Liens on assets of any Subsidiary of Company and/or on the stock
or other equity interests of such Subsidiary, in each case to the extent such
Liens secure Limited Recourse Debt of such Subsidiary permitted by Section
6.1(p) and Liens on assets of any Foreign Subsidiary of Company constituting
equity interests in a Joint Venture to the extent such Liens secure Indebtedness
of such Joint Venture in respect of a Project;

            (q) Liens created pursuant to Insurance Premium Financing
Arrangements otherwise permitted under this Agreement, so long as such Liens
attach only to gross unearned premiums for the insurance policies and related
rights;

            (r) Liens securing refinancing Indebtedness permitted by Section
6.1(l), provided that in each case the Liens securing such refinancing
Indebtedness shall attach only to the assets that were subject to Liens securing
the Indebtedness so refinanced;

            (s) Liens securing Indebtedness permitted by Section 6.1(n)(i) and
Section 6.1(n)(ii);

            (t) rights and claims of creditors of Company and its Subsidiaries
to the bankruptcy reserve funds established in connection with the plan of
reorganization in the bankruptcy cases of Company and its Subsidiaries that
became effective on March 10, 2004 (the "PLAN OF REORGANIZATION") and held in
the designated account permitted under Section 5.17 and indicated on Schedule
5.15 and paid into such account prior to the Closing Date pursuant to such plan
of reorganizations);

            (u) Liens on cash collateral of Company and its Subsidiaries
securing insurance deductibles or self-insurance retentions required by third
party insurers in connection with (i) workers' compensation insurance
arrangements entered into by Company and its Subsidiaries with such insurers and
(ii) other insurance arrangements entered into by Company and its Subsidiaries
with such insurers in an amount not to exceed $2,500,000 in the aggregate;

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            (v) Liens on assets acquired (or on the assets of Persons acquired)
in a Permitted Acquisition that existed at the time of such acquisition and that
were not created in contemplation of such acquisition; and

            (w) other Liens on assets other than the Collateral securing
Indebtedness in an aggregate amount not to exceed $3,000,000 at any time
outstanding.

      6.3. [INTENTIONALLY LEFT BLANK].

      6.4. NO FURTHER NEGATIVE PLEDGES. Except with respect to (a) property
encumbered to secure payment of particular Indebtedness or to be sold pursuant
to an executed agreement with respect to an asset sale permitted hereunder, (b)
restrictions contained in the MSW Indentures, (c) restrictions contained in
leases and licenses that relate only to the property or rights leased or
licensed thereunder, (d) restrictions contained in the MSW Refinancing Indenture
or the New MSW Indentures and in any documents, instruments or agreements
pursuant to which the MSW Refinancing Notes or New MSW Notes may be refinanced
or replaced that are no more restrictive than those contained in the MSW
Indentures or the New MSW Indentures, as applicable, (e) restrictions contained
in the First Lien Credit Agreement and all collateral documents related thereto
as of the Closing Date and in Second Lien Notes Indenture, (f) restrictions
contained in any documents, instruments or agreements pursuant to which the
Second Lien Notes or First Lien Facilities may be refinanced or replaced that
are no more restrictive than those contained in the Second Lien Notes Indenture
or First Lien Credit Agreement, as applicable, (g) restrictions contained in the
ARC Indenture, (h) restrictions contained in any documents, instruments or
agreements pursuant to which the ARC Notes or the New ARC Notes may be
refinanced or replaced (including any ARC Refinancing Indenture) that are no
more restrictive than those contained in the ARC Indenture, (i) restrictions
contained in any instrument, document or agreement to which any Person acquired
by Company or a Subsidiary in a Permitted Acquisition is a party, provided that
such restrictions (A) were not created in contemplation of such acquisition and
(B) are not applicable to any Person, property or assets other than the Persons
so acquired (and its Subsidiaries), (j) restrictions by reason of customary
provisions restricting assignments, subletting or other transfers contained in
leases, licenses and similar agreements entered into in the ordinary course of
business (provided that such restrictions are limited to the property or assets
secured by such Liens or the property or assets subject to such leases, licenses
or similar agreements, as the case may be) and (k) provisions in the principal
lease, service and operating agreements pertaining to Projects or the
partnership and financing agreements relating to Projects, or any extension,
renewal or replacement thereof so long as in each case such lease, service,
operating, partnership or financing agreement is in effect as of the Closing
Date, is otherwise permitted to be entered into hereunder and, in the case of
any extension, renewal or replacement, such agreement contains no more
restrictive provisions relating to prohibiting the creation or assumption of any
Lien upon the properties or assets of the relevant Subsidiary than the lease,
service, operating, partnership or financing agreement so extended, renewed or
replaced, Company and its Subsidiaries shall not, and shall not permit any of
their Subsidiaries to, enter into any agreement prohibiting the creation or
assumption of any Lien upon any of its properties or assets, whether now owned
or hereafter acquired.

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<PAGE>

      6.5. RESTRICTED JUNIOR PAYMENTS. Neither Company nor any Guarantor
Subsidiary shall, nor shall it permit any of its Subsidiaries to, directly or
indirectly, declare, order, pay, make or set apart any sum for any Restricted
Junior Payment except that (a) MSW I, MSW II and ARC LLC may make regularly
scheduled payments of interest in respect of the MSW Notes, any MSW Refinancing
Notes, the ARC Notes, any ARC Refinancing Notes, the New MSW Notes, the New ARC
Notes and any instrument or agreement in respect of any permitted refinancing
thereof, and may make regularly scheduled payments of principal, mandatory
prepayments and redemptions (including payment of premium) of, or repay at
maturity, the MSW Notes, the ARC Notes, the New MSW Notes, the ARC Refinancing
Notes, the New ARC Notes and any instrument or agreement in respect of any
permitted refinancing thereof, all in accordance with the terms of, and only to
the extent required by, and subject to the subordination provisions, if any,
contained in the MSW Indentures, MSW Refinancing Indentures, the ARC Indentures,
the ARC Refinancing Indentures, the New MSW Indentures, the New ARC Indenture
and any instrument or agreement in respect of any permitted refinancing thereof;
(b) Company may make payments of principal and interest in respect of the
Indebtedness incurred under Second Lien Notes Indenture and any refinancing
thereof permitted hereunder and thereunder and pursuant to the Intercreditor
Agreement; (c) so long as no Event of Default pursuant to Section 8.1(a) shall
have occurred and be continuing, Company may make payments to Holdings to the
extent required under the Corporate Services Reimbursement Agreement and Company
may reimburse Holdings for the fees and reasonable costs and expenses paid or
payable by Holdings within 180 days of the Closing Date in connection with the
Transactions and the Related Transactions; (d) Company and its Subsidiaries may
make payments required under the DHC Tax Sharing Agreement; provided, that in no
event shall the amount paid by Company and its Subsidiaries exceed the lesser of
(i) the consolidated tax liabilities that would be payable if Company and its
Subsidiaries filed a consolidated tax return with Company as the parent company
and (ii) the consolidated tax liabilities of Holdings and its Subsidiaries; (e)
Company may make Restricted Junior Payments to Holdings in order to allow
Holdings to fund regulatory capital or other requirements relating to the
Insurance Subsidiaries of Holdings in an aggregate amount not to exceed
$3,500,000 in any Fiscal Year; provided that (i) no Default or Event of Default
shall have occurred and be continuing or shall be caused thereby and (ii)
Company and its Subsidiaries shall be in compliance with the financial covenants
set forth in Section 6.8 on a pro forma basis after giving effect to such
payment as of the last day of the Fiscal Quarter most recently ended; (f) so
long as no Default or Event of Default shall have occurred and be continuing or
would be caused thereby, Company may make additional Restricted Junior Payments
to Holdings, the proceeds of which may be utilized by Holdings to make
additional Restricted Junior Payments, in an aggregate amount not to exceed
$11,500,000; provided, that notwithstanding the foregoing, until (i) such time
as the Company Leverage Ratio determined on a pro forma basis is less than
4.25:1.00 at any date of determination, (ii) no Default or Event of Default
shall have occurred and be continuing or shall be caused thereby, (iii) Company
and its Subsidiaries shall be in compliance with the financial covenant set
forth in Section 6.8 on a pro forma basis after giving effect to such payment as
of the last day of the Fiscal Quarter most recently ended and (iv) the aggregate
amount of unrestricted Cash and Cash Equivalents of Company at such time, shall
not be less than $50,000,000; (g) so long as no Event of Default shall have
occurred and be continuing, Subsidiaries of Company may and (with respect to
First Lien Credit Agreement, the Second Lien Notes Indenture and any refinancing
thereof permitted thereunder) Company may, at the time Indebtedness is
refinanced or replaced as permitted under Section 6.1 by other

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<PAGE>

Indebtedness permitted under such section, pay principal, accrued interest and
other amounts owing on the Indebtedness being refinanced at such time, provided,
that such payments may be made with respect to Limited Recourse Debt during the
continuance of an Event of Default so long as such payments are from the
proceeds of Limited Recourse Debt permitted to be incurred hereunder and such
proceeds are required to be applied to make such payments under a binding
Contractual Obligation to a third party and ARC LLC may make regularly scheduled
payments of interest in respect of the notes issued under the ARC Indenture and
under any Indebtedness incurred to refinance the same and in respect of
principal of such notes only mandatorily prepay or redeem (including payment of
any premium) or repay at maturity, all in accordance with the terms of the ARC
Indenture and any Indebtedness incurred to refinance the same, and only to the
extent required by the ARC Indenture or terms of such refinancing Indebtedness;
and (h) so long as no Event of Default shall have occurred and be continuing,
Company or any of its Subsidiaries may repay the outstanding Covanta Warren Debt
pursuant to a confirmed plan of reorganization up to an aggregate amount not to
exceed $18,000,000; provided that each Covanta Warren Entity immediately
thereafter ceases to be an Affected Entity, becomes a Guarantor hereunder and a
Grantor under the Pledge and Security Agreement and complies with Section 5.10.

      6.6. RESTRICTIONS ON SUBSIDIARY DISTRIBUTIONS. Except as provided herein,
in the First Lien Credit Agreement, the Second Lien Notes Indenture, the ARC
Indentures, the ARC Refinancing Indenture, the New ARC Indenture, the MSW
Indentures, MSW Refinancing Indentures or the New MSW Indentures or any
document, instrument or agreement entered into in connection with a replacement
or refinancing of any of the foregoing permitted hereunder, neither Company nor
any Guarantor Subsidiary shall, nor shall it permit any of its Subsidiaries to,
create or otherwise cause or suffer to exist or become effective any consensual
encumbrance or restriction of any kind on the ability of any Subsidiary of
Company to (a) pay dividends or make any other distributions on any of such
Subsidiary's Capital Stock owned by Company or any other Subsidiary of Company,
(b) repay or prepay any Indebtedness owed by such Subsidiary to Company or any
other Subsidiary of Company, (c) make loans or advances to Company or any other
Subsidiary of Company, or (d) transfer any of its property or assets to Company
or any other Subsidiary of Company other than restrictions (i) in agreements
evidencing Indebtedness permitted by Sections 6.1(j) or (m) that impose
restrictions on the property so acquired, (ii) by reason of customary provisions
restricting assignments, subletting or other transfers contained in leases,
licenses, joint venture agreements and similar agreements, (iii) by reason of
provisions in the principal lease, service or operating agreements, partnership
agreements and financing agreements pertaining to Projects, so long as such
lease, service or operating agreements, partnership agreements and financing
agreements are extensions, renewals or replacements of such agreements are in
effect as of the Closing Date, are otherwise permitted to be entered into
hereunder and, in each case of any extensions, renewals or replacements, contain
no more restrictive provisions relating to the ability of the relevant
Subsidiary to take the actions described in clauses (a) through (d) than the
agreement so extended, renewed or replaced, (iv) that are or were created by
virtue of any transfer of, agreement to transfer or option or right with respect
to any property, assets or Capital Stock not otherwise prohibited under this
Agreement, (v) that are of the type set forth in clause (d) above contained in
agreements relating to an asset sale permitted hereunder (or to which Requisite
Lenders have consented) (provided that such restrictions only apply to the
assets that are the subject of such a sale), (vi) that are of the type set forth
in clauses (a) through (d) above contained in agreements relating the sale or

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disposition of all of the equity interests of a Subsidiary permitted hereunder
(or to which the Requisite Lenders have consented) (provided that such
restrictions only apply to the Subsidiary being sold or disposed of and its
Subsidiaries), and (vii) by reason of provisions in any instrument, document or
agreement to which any Person acquired by Company or a Subsidiary in a Permitted
Acquisition is a party, provided that such restrictions (A) were not created in
contemplation of such acquisition and (B) are not applicable to any Person,
property or assets other than the Person (and such Person's Subsidiaries) so
acquired and their respective properties and assets. No Credit Party shall, nor
shall it permit any of its Subsidiaries, to enter into any immaterial
Contractual Obligation on or after the Closing Date which would prohibit a
Subsidiary of Company becoming a Credit Party.

      6.7. INVESTMENTS. Neither Company nor any Guarantor Subsidiary shall, nor
shall it permit any of its Subsidiaries to, directly or indirectly, make or own
any Investment in any Person, including without limitation any Joint Venture,
except:

            (a) Investments in Cash and Cash Equivalents and, to the extent made
in connection therewith, Investments permitted or imposed under the terms of any
cash collateral or debt service reserve agreement (including pursuant to the
terms of any Project bond indenture and the MSW Indentures) permitted hereunder;

            (b) equity Investments owned as of the Closing Date in any
Subsidiary and Investments made after the Closing Date in any wholly-owned
Guarantor Subsidiaries of Company;

            (c) Investments (i) in any Securities or instruments received in
satisfaction or partial satisfaction thereof from financially troubled account
debtors, (ii) received in settlement of disputes or as consideration in any
asset sale or other disposition permitted hereunder and (iii) constituting
deposits, prepayments and other credits to suppliers made in the ordinary course
of business consistent with the past practices of Company and its Subsidiaries;

            (d) intercompany loans and advances to the extent permitted under
Section 6.1(b), (c), (d), (e), (f) or (k);

            (e) Investments by a Subsidiary of Company constituting Capital
Expenditures by such Subsidiary expressly permitted under the First Lien Credit
Agreement;

            (f) Investments made in connection with Permitted Acquisitions
permitted pursuant to Section 6.9;

            (g) Investments described in Schedule 6.7;

            (h) Company and its Subsidiaries may become and remain liable with
respect to contingent obligations consisting of long-term or forward purchase
contracts and option contracts to buy, sell or exchange commodities and similar
agreements or arrangements, so long as such contracts, agreements or
arrangements do not constitute Commodities Agreements;

            (i) Foreign Subsidiaries may make equity Investments in other
Foreign Subsidiaries (including without limitation, Investments made in
connection with the Foreign

                                       85

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<PAGE>

Subsidiary restructuring as expressly set forth in Schedule 6.9-B) and Excluded
Subsidiaries may make equity Investments in other Excluded Subsidiaries which
are their direct or indirect Subsidiaries;

            (j) to the extent no Default or Event of Default shall have occurred
and be continuing at the time the same are made or shall be caused thereby,
equity Investments in Foreign Subsidiaries and Excluded Subsidiaries by Company
or any Guarantor Subsidiary to provide such Subsidiary with equity
capitalization necessary or advisable in connection with an Expansion of a
Project of such Subsidiary in an amount not to exceed 35% of the amount of
Limited Recourse Debt that such Subsidiary is permitted to incur under (or has
already incurred in reliance on) Section 6.1(p);

            (k) Investments of Persons acquired in a Permitted Acquisition that
existed at the time of such acquisition;

            (l) (i) for so long as the Covanta Warren Entities remain Affected
Entities, loans and advances by Company to the Covanta Warren Entities in an
aggregate principal amount not to exceed $3,500,000 pursuant to
debtor-in-possession financing provided to the Covanta Warren Entities by
Company; and (ii) Investments made by Company in the Covanta Warren Entities, in
an amount not exceed $18,000,000 when aggregated with payments permitted under
Section 6.5(h), on or after the effective date of the confirmation of a plan of
reorganization of the Covanta Warren Entities in connection with such
reorganization;

            (m) equity investments arising from or as a part of (i) the Foreign
Subsidiary Restructuring as expressly set forth in Schedule 6.9-B and (ii) the
cancellation of intercompany indebtedness described in clause (b) of the second
proviso to Section 6.1(e)(v);

            (n) equity Investments in MSW I and/or MSW II; provided that such
Investments shall be made from

                  (i) the proceeds of the Put-Related Equity Offering (less the
            amount of any intercompany loans made pursuant to Section
            6.1(e)(i)(B)),

                  (ii) Cash and Cash Equivalents from Company's operations;
            provided that after giving effect to such Investment and any
            Indebtedness incurred pursuant to Section 6.1(e)(i)(C) unrestricted
            Cash and Cash Equivalents of Company and the Acquired Businesses
            shall not be less than $50,000,000 (provided further that for the
            purposes of calculating such amount, no more than $5,000,000 of
            Marketable Securities shall be included in such calculation), and

                  (iii) the proceeds of an equity contribution from Holdings to
            Company to occur with 120 days of the Closing Date in an aggregate
            amount not to exceed $25,000,000 (less the amount of any
            intercompany loans made pursuant to Section 6.1(e)(i)(D));

provided further that Investments in MSW I and/or MSW II pursuant to clauses (i)
through (iii) immediately above shall be used to solely pay MSW Put-Related
Costs and when added to

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Indebtedness on-lent pursuant to Section 6.1(e)(i) shall not exceed in the
aggregate the amount set forth on the certificate delivered pursuant to Section
5.1(k);

            (o) a one-time Investment in American Ref-Fuel Holdings Corp in an
aggregate amount not to exceed the difference between (x) $740,000,000 and (y)
the amount paid in Cash by Company to purchase the Acquired Business; provided
that such Investment will be used solely to pay transition costs of the type set
out on Schedule 1.1(d) incurred in connection with integration of the Acquired
Business; and

            (p) other Investments in an aggregate amount not to exceed at any
time $6,000,000.

      Notwithstanding the foregoing, in no event shall any of Company or any of
its Subsidiaries make any Investment which results in or facilitates in any
manner any Restricted Junior Payment not otherwise permitted under the terms of
Section 6.5.

      To the extent that the making of any Investment could be deemed a use of
more than one subsection of this Section 6.7, Company may select the subsection
to which such Investment will be deemed a use and in no event shall the same
portion of an Investment be deemed a use of more than one subsection.

      6.8. FINANCIAL COVENANT.

            (a) Company Leverage Ratio. Company shall not permit the Company
Leverage Ratio as of the last day of any Fiscal Quarter, beginning with the
Fiscal Quarter ending September 30, 2005, to exceed the correlative ratio
indicated:

<TABLE>
<CAPTION>
  FISCAL QUARTER                 COMPANY LEVERAGE RATIO
  --------------                 ----------------------
<S>                              <C>
September 30, 2005                     6.50:1.00

December 31, 2005                      6.50:1.00

  March 31, 2006                       6.50:1.00

  June 30, 2006                        6.50:1.00

September 30, 2006                     6.50:1.00

December 31, 2006                      6.50:1.00
</TABLE>

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<PAGE>

<TABLE>
<CAPTION>
  FISCAL QUARTER                 COMPANY LEVERAGE RATIO
  --------------                 ----------------------
<S>                              <C>
  March 31, 2007                       6.00:1.00

  June 30, 2007                        6.00:1.00

September 30, 2007                     6.00:1.00

December 31, 2007                      6.00:1.00

  March 31, 2008                       5.75:1.00

  June 30, 2008                        5.75:1.00

September 30, 2008                     5.75:1.00

December 31, 2008                      5.75:1.00

  March 31, 2009                       5.50:1.00

  June 30, 2009                        5.50:1.00

September 30, 2009                     5.50:1.00

December 31, 2009                      5.50:1.00

  March 31, 2010                       5.25:1.00

  June 30, 2010                        5.25:1.00

September 30, 2010                     5.25:1.00

December 31, 2010                      5.25:1.00
</TABLE>

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<PAGE>

<TABLE>
<CAPTION>
  FISCAL QUARTER                 COMPANY LEVERAGE RATIO
  --------------                 ----------------------
<S>                              <C>
  March 31, 2011                       5.25:1.00

  June 30, 2011                        5.25:1.00

September 30, 2011                     5.25:1.00

December 31, 2011                      5.25:1.00

  March 31, 2012                       4.50:1.00

  June 30, 2012                        4.50:1.00

September 30, 2012                     4.50:1.00

December 31, 2012                      4.50:1.00

    Thereafter                         4.50:1.00
</TABLE>

      6.9. FUNDAMENTAL CHANGES; DISPOSITION OF ASSETS; ACQUISITIONS. Neither
Company nor any Guarantor Subsidiary shall, nor shall it permit any of its
Subsidiaries to, enter into any transaction of merger or consolidation, or
liquidate, wind-up or dissolve itself (or suffer any liquidation or
dissolution), or convey, sell, lease or sub-lease (as lessor or sublessor),
exchange, transfer or otherwise dispose of, in one transaction or a series of
transactions, all or any part of its business, assets or property of any kind
whatsoever, whether real, personal or mixed and whether tangible or intangible,
whether now owned or hereafter acquired, or acquire by purchase or otherwise
(other than purchases or other acquisitions of inventory, materials and
equipment and Capital Expenditures in the ordinary course of business) the
business, property or fixed assets of, or stock or other evidence of beneficial
ownership of, any Person or any division or line of business or other business
unit of any Person, except:

            (a) any Subsidiary of Company may be merged with or into Company or
any Guarantor Subsidiary, or be liquidated, wound up or dissolved, or all or any
part of its business, property or assets may be conveyed, sold, leased,
transferred or otherwise disposed of, in one transaction or a series of
transactions, to Company or any Guarantor Subsidiary; provided, in the case of
such a merger, Company or such Guarantor Subsidiary, as applicable shall be the

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continuing or surviving Person. In addition, any Subsidiary of Company that is
not a Guarantor may be merged with or into any other Subsidiary of Company that
is not a Guarantor which is its direct parent or Subsidiary, or all or any part
of its business, property or assets may be conveyed, sold, leased, transferred
or otherwise disposed of, in one transaction or a series of transactions, to any
other Subsidiary of Company that is not a Guarantor and which is its direct
parent or Subsidiary;

            (b) sales or other dispositions of assets that do not constitute
Asset Sales;

            (c) Asset Sales, the Net Asset Sale Proceeds of which when
aggregated with the proceeds of all other Asset Sales made within the same
Fiscal Year, do not exceed $9,000,000 and the sale or other dispositions of
those assets identified on Schedule 6.9-A; provided (1) the consideration
received for such assets shall be in an amount at least equal to the fair market
value thereof (determined in good faith by the board of directors of Company or
the relevant Subsidiary (or similar governing body)), (2) no less than 80%
thereof shall be paid in Cash (which limitation shall not apply to the sale or
offer disposition of assets identified on Schedule 6.9-A), and (3) the Net Asset
Sale Proceeds thereof shall be applied as required by Section 2.14(a) to the
extent required thereby;

            (d) Excluded Asset Sales;

            (e) (i) Permitted Acquisitions to the extent, the consideration for
which constitutes less than $17,500,000 in the aggregate from the Closing Date
to the date of determination and (ii) acquisitions by Company of assets
contributed to it by Holdings as equity capital contributions;

            (f) acquisitions of real property that is contiguous to real
property owned by Company or its Subsidiaries at such time; so long as such
acquisition is either (i) by Company or any Guarantor Subsidiary, or (ii) if not
within clause (i) of this provision, is either (A) financed with the proceeds of
Limited Recourse Debt and/or the proceeds of an Investment pursuant to Section
6.7(j) or (B) consummated for consideration in an aggregate amount (together
with any other acquisitions made in reliance on this Section 6.9(f)(ii)(B)
following the Closing Date) not to exceed $3,000,000;

            (g) acquisitions and the Foreign Subsidiary restructuring in each
case to the extent expressly identified on Schedule 6.9-B; and

            (h) Investments permitted under Section 6.7.

      6.10. DISPOSAL OF SUBSIDIARY INTERESTS. Except for any sale of all of its
interests in the Capital Stock of any of its Subsidiaries in compliance with the
provisions of Section 6.9, and except as provided in the First Lien Credit
Agreement or the Second Lien Notes Indenture and related documentation
(including permitted refinancings thereof), neither Company nor any Guarantor
Subsidiary shall, nor shall it permit any of its Subsidiaries to, (a) directly
or indirectly sell, assign, pledge or otherwise encumber or dispose of any
Capital Stock of any of its Guarantor Subsidiaries, except to qualify directors
if required by applicable law; or (b) directly or indirectly to sell or
otherwise dispose of any Capital Stock of any of its Subsidiaries, except to
Company or Guarantor Subsidiary (subject to the restrictions on such disposition
otherwise

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imposed hereunder), or to qualify directors if required by applicable law.
Notwithstanding the foregoing, (a) Excluded Subsidiaries may transfer Capital
Stock in any of its Subsidiaries to other wholly-owned Excluded Subsidiaries,
(b) Foreign Subsidiaries may transfer Capital Stock in any of its Subsidiaries
to other wholly-owned Foreign Subsidiaries and (c) Company and its Subsidiaries
may consummate the Foreign Subsidiary restructuring identified on Schedule
6.9-B.

      6.11. PROHIBITION ON SALES AND LEASE-BACKS. Neither Company nor any
Guarantor Subsidiary shall, nor shall it permit any of its Subsidiaries to,
directly or indirectly, become or remain liable as lessee or as a guarantor or
other surety with respect to any lease of any property (whether real, personal
or mixed), whether now owned or hereafter acquired, which any of Company or its
Subsidiaries has sold or transferred or is to sell or to transfer to any other
Person (other than Company or any of its Subsidiaries).

      6.12. TRANSACTIONS WITH SHAREHOLDERS AND AFFILIATES. Neither Company nor
any Guarantor Subsidiary shall, nor shall it permit any of its Subsidiaries to,
directly or indirectly, enter into or permit to exist any transaction (including
the purchase, sale, lease or exchange of any property or the rendering of any
service) with any Affiliate, on terms that are less favorable to Company or that
Subsidiary, as the case may be, than those that might be obtained at the time
from a Person who is not an Affiliate; provided, the foregoing restriction shall
not apply to (a) any transaction between Company and any Guarantor Subsidiary;
(b) reasonable and customary fees paid to members of the board of directors (or
similar governing body) of Company and its Subsidiaries; (c) compensation
arrangements for officers and other employees of Company and its Subsidiaries
entered into in the ordinary course of business; (d) payments (and other
transactions) made in accordance with the terms of the DHC Tax Sharing
Agreement, and the Corporate Services Reimbursement Agreement; (e) the Rights
Offering; (f) the Put-Related Equity Offering; (g) transactions described in
Schedule 6.12; (h) the Foreign Subsidiary restructuring identified on Schedule
6.9-B and any Indebtedness, Investments, dispositions of assets and other
transactions permitted hereunder among Company and its Subsidiaries or among
Subsidiaries of Company and (i) reasonable and customary indemnifications and
insurance arrangements for the benefit of Persons that are officers or members
of the boards of directors (or similar governing bodies) of Company and its
Subsidiaries, whether such Persons are current or former officers or members at
the time such indemnifications or arrangements are entered into, provided that
such indemnifications and arrangements are entered into at arms' length and on
terms that are no less favorable to Company or that Subsidiary, as the case may
be, than those that would have been obtained at the relevant time from Persons
who are not Affiliates.

      6.13. CONDUCT OF BUSINESS. From and after the Closing Date, neither
Company nor any Guarantor Subsidiary shall, nor shall it permit any of its
Subsidiaries to, engage in any business other than (i) the businesses engaged in
by Company or such Subsidiary on the Closing Date and similar or related
businesses (including the establishment, construction, acquisition and operation
of Projects and ash recycling, scrap metal processing, waste haulings collection
and landfills in connection therewith) and (ii) such other lines of business as
may be consented to by Requisite Lenders.

      6.14. AMENDMENTS OR WAIVERS OF CERTAIN RELATED AGREEMENTS. Except as set
forth in Section 6.15 and Section 6.16, neither Company nor any Guarantor
Subsidiary shall, nor shall it permit any of its Subsidiaries to, agree to any
material amendment, restatement, supplement or

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other modification to, or waiver of, any of its material rights under any (i)
Related Agreement or (ii) the principal documents relating to Limited Recourse
Debt with respect to a Project after the Closing Date if such amendment,
restatement, modification or waiver under clauses (i) or (ii), together with all
other amendments, restatements, modifications and waivers made, would reasonably
be expected to have a Material Adverse Effect; without in each case obtaining
the prior written consent of Requisite Lenders to such amendment, restatement,
supplement or other modification or waiver.

      6.15. AMENDMENTS OR WAIVERS WITH RESPECT TO MSW NOTES, MSW REFINANCING
NOTES, ARC NOTES, ARC REFINANCING NOTES, NEW MSW NOTES AND NEW ARC NOTES.
Company and its Subsidiaries shall not, and shall not permit any of their
Subsidiaries to, amend or otherwise change the terms of any MSW Notes, MSW
Refinancing Notes, ARC Notes, ARC Refinancing Notes, New MSW Notes or New ARC
Notes, or make any payment consistent with an amendment thereof or change
thereto, if the effect of such amendment or change is to increase the interest
rate on such MSW Notes, MSW Refinancing Notes, ARC Notes, ARC Refinancing Notes,
New MSW Notes or New ARC Notes, change (to earlier dates) any dates upon which
payments of principal or interest are due thereon, change any event of default
or condition to an event of default with respect thereto (other than to
eliminate any such event of default or increase any grace period related
thereto), change the redemption, prepayment or defeasance provisions thereof or
otherwise make such event of default or condition less restrictive or burdensome
on Company, or if the effect of such amendment or change, together with all
other amendments or changes made, is to increase materially the obligations of
the obligor thereunder or to confer any additional rights on the holders of such
MSW Notes, MSW Refinancing Notes, ARC Notes, ARC Refinancing Notes, New MSW
Notes or New ARC Notes (or a trustee or other representative on their behalf)
which would be adverse to any Credit Party or Lenders; provided however, that
for the avoidance of doubt this Section 6.15 shall not prohibit the initial
issuance of any of the MSW Refinancing Notes, ARC Refinancing Notes, New MSW
Notes or New ARC Notes, each in accordance with the terms and conditions of
Section 6.1(n).

      6.16. AMENDMENTS OR WAIVERS OF THE FIRST LIEN CREDIT AGREEMENT AND SECOND
LIEN NOTES INDENTURE. Company and its Subsidiaries shall not, and shall not
permit any of their Subsidiaries to, amend or otherwise change the terms of the
First Lien Credit Agreement or Second Lien Notes Indenture or make any payment
consistent with an amendment thereof or change thereto, if the effect of such
amendment or change is to increase the interest rate applicable thereto, change
(to earlier dates) any dates upon which payments of principal or interest are
due thereon, change any event of default or condition to an event of default
with respect thereto (other than to eliminate any such event of default or
increase any grace period related thereto or otherwise make such event of
default or condition less restrictive or burdensome on Company), change the
prepayment provisions thereof, or change any collateral therefor (other than to
release such collateral), or if the effect of such amendment or change, together
with all other amendments or changes made, is to increase materially the
obligations of the obligor thereunder or to confer any additional rights on the
lenders under the First Lien Credit Agreement or Second Lien Notes Indenture, as
applicable, (or a representative on their behalf) which would be adverse to any
Credit Party or Lenders, in each case except as otherwise expressly permitted by
the Intercreditor Agreement.

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      6.17. FISCAL YEAR. No Credit Party shall, nor shall it permit any of its
Subsidiaries to change its Fiscal Year-end from December 31.

SECTION 7. GUARANTY

      7.1. GUARANTY OF THE OBLIGATIONS. Subject to the provisions of Section
7.2, Guarantors jointly and severally hereby irrevocably and unconditionally
guaranty to Administrative Agent for the ratable benefit of the Beneficiaries
the due and punctual payment in full of all Obligations when the same shall
become due, whether at stated maturity, by required prepayment, declaration,
acceleration, demand or otherwise (including amounts that would become due but
for the operation of the automatic stay under Section 362(a) of the Bankruptcy
Code, 11 U.S.C. Section 362(a)) (collectively, the "Guaranteed OBLIGATIONS").

      7.2. CONTRIBUTION BY GUARANTORS. All Guarantors desire to allocate among
themselves (collectively, the "CONTRIBUTING GUARANTORS"), in a fair and
equitable manner, their obligations arising under this Guaranty. Accordingly, in
the event any payment or distribution is made on any date by a Guarantor (a
"FUNDING GUARANTOR") under this Guaranty such that its Aggregate Payments
exceeds its Fair Share as of such date, such Funding Guarantor shall be entitled
to a contribution from each of the other Contributing Guarantors in an amount
sufficient to cause each Contributing Guarantor's Aggregate Payments to equal
its Fair Share as of such date. "FAIR SHARE" means, with respect to a
Contributing Guarantor as of any date of determination, an amount equal to (a)
the ratio of (i) the Fair Share Contribution Amount with respect to such
Contributing Guarantor to (ii) the aggregate of the Fair Share Contribution
Amounts with respect to all Contributing Guarantors multiplied by (b) the
aggregate amount paid or distributed on or before such date by all Funding
Guarantors under this Guaranty in respect of the obligations Guaranteed. "FAIR
SHARE CONTRIBUTION AMOUNT" means, with respect to a Contributing Guarantor as of
any date of determination, the maximum aggregate amount of the obligations of
such Contributing Guarantor under this Guaranty that would not render its
obligations hereunder or thereunder subject to avoidance as a fraudulent
transfer or conveyance under Section 548 of Title 11 of the United States Code
or any comparable applicable provisions of state law; provided, solely for
purposes of calculating the "FAIR SHARE CONTRIBUTION AMOUNT" with respect to any
Contributing Guarantor for purposes of this Section 7.2, any assets or
liabilities of such Contributing Guarantor arising by virtue of any rights to
subrogation, reimbursement or indemnification or any rights to or obligations of
contribution hereunder shall not be considered as assets or liabilities of such
Contributing Guarantor. "AGGREGATE PAYMENTS" means, with respect to a
Contributing Guarantor as of any date of determination, an amount equal to (1)
the aggregate amount of all payments and distributions made on or before such
date by such Contributing Guarantor in respect of this Guaranty (including,
without limitation, in respect of this Section 7.2), minus (2) the aggregate
amount of all payments received on or before such date by such Contributing
Guarantor from the other Contributing Guarantors as contributions under this
Section 7.2. The amounts payable as contributions hereunder shall be determined
as of the date on which the related payment or distribution is made by the
applicable Funding Guarantor. The allocation among Contributing Guarantors of
their obligations as set forth in this Section 7.2 shall not be construed in any
way to limit the liability of any Contributing Guarantor hereunder. Each
Guarantor is a third party beneficiary to the contribution agreement set forth
in this Section 7.2.

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      7.3. PAYMENT BY GUARANTORS. Subject to Section 7.2, Guarantors hereby
jointly and severally agree, in furtherance of the foregoing and not in
limitation of any other right which any Beneficiary may have at law or in equity
against any Guarantor by virtue hereof, that upon the failure of Company to pay
any of the Guaranteed Obligations when and as the same shall become due, whether
at stated maturity, by required prepayment, declaration, acceleration, demand or
otherwise (including amounts that would become due but for the operation of the
automatic stay under Section 362(a) of the Bankruptcy Code, 11 U.S.C. Section
362(a)), Guarantors will upon demand pay, or cause to be paid, in Cash, to
Administrative Agent for the ratable benefit of Beneficiaries, an amount equal
to the sum of the unpaid principal amount of all Guaranteed Obligations then due
as aforesaid, accrued and unpaid interest on such Guaranteed Obligations
(including interest which, but for Company's becoming the subject of a case
under the Bankruptcy Code, would have accrued on such Guaranteed Obligations,
whether or not a claim is allowed against Company for such interest in the
related bankruptcy case) and all other Guaranteed Obligations then owed to
Beneficiaries as aforesaid.

      7.4. LIABILITY OF GUARANTORS ABSOLUTE. Each Guarantor 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 the
Guaranteed Obligations. In furtherance of the foregoing and without limiting the
generality thereof, each Guarantor agrees as follows:

            (a) this Guaranty is a guaranty of payment when due and not of
collectibility. This Guaranty is a primary obligation of each Guarantor and not
merely a contract of surety;

            (b) Administrative Agent may enforce this Guaranty upon the
occurrence and during the continuance of an Event of Default notwithstanding the
existence of any dispute between Company and any Beneficiary with respect to the
existence of such Event of Default;

            (c) the obligations of each Guarantor hereunder are independent of
the obligations of Company and the obligations of any other guarantor (including
any other Guarantor) of the obligations of Company, and a separate action or
actions may be brought and prosecuted against such Guarantor whether or not any
action is brought against Company or any of such other guarantors and whether or
not Company is joined in any such action or actions;

            (d) payment by any Guarantor of a portion, but not all, of the
Guaranteed Obligations shall in no way limit, affect, modify or abridge any
Guarantor's liability for any portion of the Guaranteed Obligations which has
not been paid. Without limiting the generality of the foregoing, if
Administrative Agent is awarded a judgment in any suit brought to enforce any
Guarantor's covenant to pay a portion of the Guaranteed Obligations, such
judgment shall not be deemed to release such Guarantor from its covenant to pay
the portion of the Guaranteed Obligations that is not the subject of such suit,
and such judgment shall not, except to the extent satisfied by such Guarantor,
limit, affect, modify or abridge any other Guarantor's liability hereunder in
respect of the Guaranteed Obligations;

            (e) any Beneficiary, upon such terms as it deems appropriate,
without notice or demand and without affecting the validity or enforceability
hereof or giving rise to any reduction, limitation, impairment, discharge or
termination of any Guarantor's liability

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hereunder, from time to time may (i) renew, extend, accelerate, increase the
rate of interest on, or otherwise change the time, place, manner or terms of
payment of the Guaranteed Obligations; (ii) settle, compromise, release or
discharge, or accept or refuse any offer of performance with respect to, or
substitutions for, the Guaranteed Obligations or any agreement relating thereto
and/or subordinate the payment of the same to the payment of any other
obligations; (iii) request and accept other guaranties of the Guaranteed
Obligations and take and hold security for the payment hereof or the Guaranteed
Obligations; (iv) release, surrender, exchange, substitute, compromise, settle,
rescind, waive, alter, subordinate or modify, with or without consideration, any
security for payment of the Guaranteed Obligations, any other guaranties of the
Guaranteed Obligations, or any other obligation of any Person (including any
other Guarantor) with respect to the Guaranteed Obligations; (v) enforce and
apply any security now or hereafter held by or for the benefit of such
Beneficiary in respect hereof or the Guaranteed Obligations and direct the order
or manner of sale thereof, or exercise any other right or remedy that such
Beneficiary may have against any such security, in each case as such Beneficiary
in its discretion may determine consistent herewith or the applicable Hedge
Agreement 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 even though
such action operates to impair or extinguish any right of reimbursement or
subrogation or other right or remedy of any Guarantor against Company or any
security for the Guaranteed Obligations; and (vi) exercise any other rights
available to it under the Credit Documents or the Hedge Agreements; and

            (f) this Guaranty and the obligations of Guarantors hereunder shall
be valid and enforceable and shall not be subject to any reduction, limitation,
impairment, discharge or termination for any reason (other than payment in full
of the Guaranteed Obligations), including the occurrence of any of the
following, whether or not any Guarantor shall have had notice or knowledge of
any of them: (i) any failure or omission to assert or enforce or agreement or
election not to assert or enforce, or the stay or enjoining, by order of court,
by operation of law or otherwise, of the exercise or enforcement of, any claim
or demand or any right, power or remedy (whether arising under the Credit
Documents or the Hedge Agreements, at law, in equity or otherwise) with respect
to the Guaranteed Obligations or any agreement relating thereto, or with respect
to any other guaranty of or security for the payment of the Guaranteed
Obligations; (ii) any rescission, waiver, amendment or modification of, or any
consent to departure from, any of the terms or provisions (including provisions
relating to events of default) hereof, any of the other Credit Documents, any of
the Hedge Agreements or any agreement or instrument executed pursuant thereto,
or of any other guaranty or security for the Guaranteed Obligations, in each
case whether or not in accordance with the terms hereof or such Credit Document,
such Hedge Agreement or any agreement relating to such other guaranty or
security; (iii) the Guaranteed Obligations, or any agreement relating thereto,
at any time being found to be illegal, invalid or unenforceable in any respect;
(iv) the application of payments received from any source (other than payments
received pursuant to the Credit Documents or any of the Hedge Agreements or from
the proceeds of any security for the Guaranteed Obligations, except to the
extent such security also serves as collateral for Indebtedness other than the
Guaranteed Obligations) to the payment of Indebtedness other than the Guaranteed
Obligations, even though any Beneficiary might have elected to apply such
payment to any part or all of the Guaranteed Obligations; (v) any Beneficiary's
consent to the change, reorganization or termination of the corporate structure
or existence of Holdings or any of its Subsidiaries and to any corresponding

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restructuring of the Guaranteed Obligations; (vi) any failure to perfect or
continue perfection of a security interest in any collateral which secures any
of the Guaranteed Obligations; (vii) any defenses, set-offs or counterclaims
which Company may allege or assert against any Beneficiary in respect of the
Guaranteed Obligations, including failure of consideration, breach of warranty,
payment, statute of frauds, statute of limitations, accord and satisfaction and
usury; and (viii) 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
any Guarantor as an obligor in respect of the Guaranteed Obligations.

      7.5. WAIVERS BY GUARANTORS. Each Guarantor hereby waives, for the benefit
of Beneficiaries: (a) any right to require any Beneficiary, as a condition of
payment or performance by such Guarantor, to (i) proceed against Company, any
other guarantor (including any other Guarantor) of the Guaranteed Obligations or
any other Person, (ii) proceed against or exhaust any security held from
Company, any such other guarantor or any other Person, (iii) proceed against or
have resort to any balance of any Deposit Account or credit on the books of any
Beneficiary in favor of Company or any other Person, or (iv) pursue any other
remedy in the power of any Beneficiary whatsoever; (b) any defense arising by
reason of the incapacity, lack of authority or any disability or other defense
of Company or any other Guarantor including any defense based on or arising out
of the lack of validity or the unenforceability of the Guaranteed Obligations or
any agreement or instrument relating thereto or by reason of the cessation of
the liability of Company or any other Guarantor from any cause other than
payment in full of the Guaranteed Obligations; (c) 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; (d) any defense based upon any Beneficiary's errors or omissions in
the administration of the Guaranteed Obligations, except behavior which amounts
to bad faith; (e) (i) any principles or provisions of law, statutory or
otherwise, which are or might be in conflict with the terms hereof and any legal
or equitable discharge of such Guarantor's obligations hereunder, (ii) the
benefit of any statute of limitations affecting such Guarantor's liability
hereunder or the enforcement hereof, (iii) any rights to set-offs, recoupments
and counterclaims, and (iv) promptness, diligence and any requirement that any
Beneficiary protect, secure, perfect or insure any security interest or lien or
any property subject thereto; (f) notices, demands, presentments, protests,
notices of protest, notices of dishonor and notices of any action or inaction,
including acceptance hereof, notices of default hereunder, the Hedge Agreements
or any agreement or instrument related thereto, notices of any renewal,
extension or modification of the Guaranteed Obligations or any agreement related
thereto, notices of any extension of credit to Company and notices of any of the
matters referred to in Section 7.4 and any right to consent to any thereof; and
(g) 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 hereof.

      7.6. GUARANTORS' RIGHTS OF SUBROGATION, CONTRIBUTION, ETC. Until the
Guaranteed Obligations shall have been indefeasibly paid in full, each Guarantor
hereby waives any claim, right or remedy, direct or indirect, that such
Guarantor now has or may hereafter have against Company or any other Guarantor
or any of its assets in connection with this Guaranty or the performance by such
Guarantor 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

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such Guarantor now has or may hereafter have against Company with respect to the
Guaranteed Obligations, (b) any right to enforce, or to participate in, any
claim, right or remedy that any Beneficiary now has or may hereafter have
against Company, and (c) any benefit of, and any right to participate in, any
collateral or security now or hereafter held by any Beneficiary. In addition,
until the Guaranteed Obligations shall have been indefeasibly paid in full, each
Guarantor shall withhold exercise of any right of contribution such Guarantor
may have against any other guarantor (including any other Guarantor) of the
Guaranteed Obligations, including, without limitation, any such right of
contribution as contemplated by Section 7.2. Each Guarantor further agrees that,
to the extent the waiver or agreement to withhold the 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 such
Guarantor may have against Company or against any collateral or security, and
any rights of contribution such Guarantor may have against any such other
guarantor, shall be junior and subordinate to any rights any Beneficiary may
have against Company, to all right, title and interest any Beneficiary may have
in any such collateral or security, and to any right any Beneficiary may have
against such other guarantor. If any amount shall be paid to any Guarantor on
account of any such subrogation, reimbursement, indemnification or contribution
rights at any time when all Guaranteed Obligations shall not have been finally
and indefeasibly paid in full, such amount shall be held in trust for
Administrative Agent on behalf of Beneficiaries and shall forthwith be paid over
to Administrative Agent for the benefit of Beneficiaries to be credited and
applied against the Guaranteed Obligations, whether matured or unmatured, in
accordance with the terms hereof.

      7.7. SUBORDINATION OF OTHER OBLIGATIONS. Any Indebtedness of Company or
any Guarantor now or hereafter held by any Guarantor (the "OBLIGEE GUARANTOR")
is hereby subordinated in right of payment to the Guaranteed Obligations, and
any such Indebtedness collected or received by the Obligee Guarantor after
receipt of notice of an Event of Default (which has occurred and is continuing)
by Administrative Agent shall be held in trust for Administrative Agent on
behalf of Beneficiaries and shall forthwith be paid over to Administrative Agent
for the benefit of Beneficiaries to be credited and applied against the
Guaranteed Obligations but without affecting, impairing or limiting in any
manner the liability of the Obligee Guarantor under any other provision hereof.

      7.8. CONTINUING GUARANTY. This Guaranty is a continuing guaranty and shall
remain in effect until all of the Guaranteed Obligations shall have been paid in
full. Each Guarantor hereby irrevocably waives any right to revoke this Guaranty
as to future transactions giving rise to any Guaranteed Obligations.

      7.9. AUTHORITY OF GUARANTORS OR COMPANY. It is not necessary for any
Beneficiary to inquire into the capacity or powers of any Guarantor or Company
or the officers, directors or any agents acting or purporting to act on behalf
of any of them.

      7.10. FINANCIAL CONDITION OF COMPANY. Any Credit Extension may be made to
Company or continued from time to time, and any Hedge Agreements may be entered
into from time to time, in each case without notice to or authorization from any
Guarantor regardless of the financial or other condition of Company at the time
of any such grant or continuation or at the time such Hedge Agreement is entered
into, as the case may be. No Beneficiary shall have any

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obligation to disclose or discuss with any Guarantor its assessment, or any
Guarantor's assessment, of the financial condition of Company. Each Guarantor
has adequate means to obtain information from Company on a continuing basis
concerning the financial condition of Company and its ability to perform its
obligations under the Credit Documents and the Hedge Agreements, and each
Guarantor assumes the responsibility for being and keeping informed of the
financial condition of Company and of all circumstances bearing upon the risk of
nonpayment of the Guaranteed Obligations. Each Guarantor hereby waives and
relinquishes any duty on the part of any Beneficiary to disclose any matter,
fact or thing relating to the business, operations or conditions of Company now
known or hereafter known by any Beneficiary.

      7.11. BANKRUPTCY, ETC.

            (a) So long as any Guaranteed Obligations remain outstanding, no
Guarantor shall, without the prior written consent of Administrative Agent
acting pursuant to the instructions of Requisite Lenders, commence or join with
any other Person in commencing any involuntary bankruptcy, reorganization or
insolvency case or proceeding of or against Company or any other Guarantor. The
obligations of Guarantors hereunder shall not be reduced, limited, impaired,
discharged, deferred, suspended or terminated by any case or proceeding,
voluntary or involuntary, involving the bankruptcy, insolvency, receivership,
reorganization, liquidation or arrangement of Company or any other Guarantor or
by any defense which Company or any other Guarantor may have by reason of the
order, decree or decision of any court or administrative body resulting from any
such proceeding.

            (b) Each Guarantor acknowledges and agrees that any interest on any
portion of the Guaranteed Obligations which accrues after the commencement of
any case or proceeding referred to in clause (a) above against Company (or, if
interest on any portion of the Guaranteed Obligations ceases to accrue by
operation of law by reason of the commencement of such case or proceeding, such
interest as would have accrued on such portion of the Guaranteed Obligations if
such case or proceeding had not been commenced) shall be included in the
Guaranteed Obligations because it is the intention of Guarantors and
Beneficiaries that the Guaranteed Obligations which are guaranteed by Guarantors
pursuant hereto should be determined without regard to any rule of law or order
which may relieve Company of any portion of such Guaranteed Obligations.
Guarantors will permit any trustee in bankruptcy, receiver, debtor in
possession, assignee for the benefit of creditors or similar person to pay
Administrative Agent, or allow the claim of Administrative Agent in respect of,
any such interest accruing after the date on which such case or proceeding is
commenced.

            (c) In the event that all or any portion of the Guaranteed
Obligations are paid by Company, the obligations of Guarantors hereunder shall
continue and remain in full force and effect or be reinstated, as the case may
be, in the event that all or any part of such payment(s) are rescinded or
recovered directly or indirectly from any Beneficiary as a preference,
fraudulent transfer or otherwise, and any such payments which are so rescinded
or recovered shall constitute Guaranteed Obligations for all purposes hereunder.

      7.12. DISCHARGE OF GUARANTY UPON SALE OF GUARANTOR. If all of the Capital
Stock of any Guarantor or any of its successors in interest hereunder shall be
sold or otherwise disposed of (including by merger or consolidation) in
accordance with the terms and conditions hereof, the

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Guaranty of such Guarantor or such successor in interest, as the case may be,
hereunder shall automatically be discharged and released without any further
action by any Beneficiary or any other Person effective as of the time of such
sale or disposition.

SECTION 8. EVENTS OF DEFAULT

      8.1. EVENTS OF DEFAULT. If any one or more of the following conditions or
events shall occur:

            (a) Failure to Make Payments When Due. Failure by Company to pay (i)
when due any installment of principal of any Loan, whether at stated maturity,
by acceleration, by notice of voluntary prepayment, by mandatory prepayment or
otherwise; or (ii) any interest on any Loan or any fee or any other amount due
hereunder within five days after the date due; or

            (b) Default in Other Agreements. (i) Failure of any of Company or
its Subsidiaries or Holdings to pay when due any principal of or interest on or
any other amount payable in respect of one or more items of Indebtedness (other
than Indebtedness referred to in Section 8.1(a) and other than Limited Recourse
Debt permitted to be incurred hereunder and incurred in connection with one or
more Projects to which less than $6,000,000 in the aggregate of the operating
income of Company and its Subsidiaries (on a consolidated basis) is attributable
for the 12-month period immediately preceding the failure to pay such interest,
principal or other amounts) in an individual principal amount of $11,500,000 or
more or with an aggregate principal amount of $11,500,000 or more, in each case
beyond the grace period, if any, provided therefor; or (ii) breach or default by
any of Company or its Subsidiaries or Holdings with respect to any other
material term of (1) one or more items of Indebtedness in the individual or
aggregate principal amounts referred to in clause (i) above or (2) any loan
agreement, mortgage, indenture or other agreement relating to such item(s) of
Indebtedness, in each case beyond the grace period, if any, provided therefor,
if the effect of such breach or default is to cause, or to permit the holder or
holders of that Indebtedness (or a trustee on behalf of such holder or holders),
to cause, that Indebtedness to become or be declared due and payable (or
redeemable), or to require the prepayment, redemption, repurchase or defeasance
of, or to cause Company or any of its Subsidiaries or Holdings to make any offer
to prepay, redeem, repurchase or defease that Indebtedness (other than an offer
under the MSW Notes, MSW Refinancing Notes, the New MSW Notes or as required
under the ARC Indenture, the ARC Refinancing Indenture or the New ARC Indenture
with the proceeds of asset sales, debt and equity insurances and insurance
casualty and condemnation and to the extent required in connection with changes
in control directly resulting from the Acquisition), prior to its stated
maturity or the stated maturity of any underlying obligation, as the case may
be; or (iii) any Event of Default (under and as defined in the First Lien Credit
Agreement, MSW I Indenture, MSW II Indenture, MSW Refinancing Indentures, New
MSW I Indenture, New MSW II Indenture, ARC Indenture, ARC Refinancing Indenture
or the New ARC Indenture), shall occur; provided, however, with respect to any
breach under the First Lien Credit Agreement (other than a payment default under
or an acceleration of the First Lien Credit Agreement which such cross-default
shall be immediate), such event shall only constitute an Event of Default
hereunder if such event occurs and is not cured or waived with forty-five (45)
days after the occurrence of such event; or

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            (c) Breach of Certain Covenants. Failure of any Credit Party to
perform or comply with any term or condition contained in Section 2.6, Section
5.2, Section 5.15, Section 5.16 or Section 6; or

            (d) Breach of Representations, etc. Any representation, warranty,
certification or other statement made or deemed made by any Credit Party in any
Credit Document or in any statement or certificate at any time given by any
Credit Party or any of its Subsidiaries in writing pursuant hereto or thereto or
in connection herewith or therewith shall be false in any material respect as of
the date made or deemed made; or

            (e) Other Defaults Under Credit Documents. Any Credit Party shall
default in the performance of or compliance with any term contained herein or
any of the other Credit Documents, other than any such term referred to in any
other provision of this Section 8.1, and such default shall not have been
remedied or waived within thirty days after the earlier of (i) an Authorized
Officer becoming aware of such default or (ii) receipt by Company of notice from
Administrative Agent or any Lender of such default; or

            (f) Involuntary Bankruptcy; Appointment of Receiver, etc. (i) A
court of competent jurisdiction shall enter a decree or order for relief in
respect of Holdings, Company or any of its Material Subsidiaries in an
involuntary case under the Bankruptcy Code or under any other applicable
bankruptcy, insolvency or similar law now or hereafter in effect, which decree
or order is not stayed; or any other similar relief shall be granted under any
applicable federal or state law; or (ii) an involuntary case shall be commenced
against Holdings, Company or any of its Material Subsidiaries under the
Bankruptcy Code or under any other applicable bankruptcy, insolvency or similar
law now or hereafter in effect; or a decree or order of a court having
jurisdiction in the premises for the appointment of a receiver, liquidator,
sequestrator, trustee, custodian or other officer having similar powers over
Holdings, Company or any of its Material Subsidiaries, or over all or a
substantial part of its property, shall have been entered; or there shall have
occurred the involuntary appointment of an interim receiver, trustee or other
custodian of Holdings, Company or any of its Material Subsidiaries for all or a
substantial part of its property; or a warrant of attachment, execution or
similar process shall have been issued against any substantial part of the
property of Holdings, Company or any of its Material Subsidiaries, and any such
event described in this clause (ii) shall continue for sixty days without having
been dismissed, bonded or discharged; or

            (g) Voluntary Bankruptcy; Appointment of Receiver, etc.. (i)
Holdings, any Company or any of its Material Subsidiaries shall have an order
for relief entered with respect to it or shall commence a voluntary case under
the Bankruptcy Code or under any other applicable bankruptcy, insolvency or
similar law now or hereafter in effect, or shall consent to the entry of an
order for relief in an involuntary case, or to the conversion of an involuntary
case to a voluntary case, under any such law, or shall consent to the
appointment of or taking possession by a receiver, trustee or other custodian
for all or a substantial part of its property; or Holdings, Company or any of
its Material Subsidiaries shall make any assignment for the benefit of
creditors; or (ii) Holdings, Company or any of its Material Subsidiaries shall
be unable, or shall fail generally, or shall admit in writing its inability, to
pay its debts as such debts become due; or the board of directors (or similar
governing body of Holdings, Company or any of its Material

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Subsidiaries (or any committee thereof) shall adopt any resolution or otherwise
authorize any action to approve any of the actions referred to herein or in
Section 8.1(f); or

            (h) Judgments and Attachments. Any money judgment, writ or warrant
of attachment or similar process involving (i) in any individual case an amount
in excess of $11,500,000 or (ii) in the aggregate at any time an amount in
excess of $11,500,000 (in either case to the extent not adequately covered by
insurance as to which a solvent and unaffiliated insurance company has not
denied coverage) shall be entered or filed against Company or any of its
Subsidiaries or any of their respective assets and shall remain undischarged,
unvacated, unbonded or unstayed for a period of sixty days (or in any event
later than five days prior to the date of any proposed sale thereunder); or

            (i) Dissolution. Any order, judgment or decree shall be entered
against any Material Subsidiary of Company decreeing the dissolution or split up
of such Material Subsidiary and such order shall remain undischarged or unstayed
for a period in excess of thirty days; or

            (j) Employee Benefit Plans. (i) There shall occur one or more ERISA
Events which individually or in the aggregate results in or might reasonably be
expected to result in liability of Company, any of its Subsidiaries or any of
their respective ERISA Affiliates in excess of $11,500,000 during the term
hereof; or

            (k) Change of Control. A Change of Control shall occur; or

            (l) Net Operating Losses. If, based on (A) a final, non-appealable
determination by a court, (B) a closing agreement between Holdings and/or any of
its Subsidiaries and the Internal Revenue Service or (C) a transaction or event
occurring after the Closing Date (e.g., ownership change or deconsolidation),
the net operating losses available to Holdings or Company to offset taxable
income are less than $315,000,000 (which amount shall be reduced by net
operating losses used by Holdings to reduce taxable income of Holdings or
Company after December 31, 2004); provided, that in determining the amount of
net operating losses available or used for purposes of this default, the
principles applied in any final determination or closing agreement shall be
applied to any similar items in other open tax years that were not the subject
of such determination or closing agreement solely as a result of not being
included in the tax years at issue; or

            (m) Guaranties, Collateral Documents and other Credit Documents. At
any time after the execution and delivery thereof, (i) the Guaranty for any
reason, other than the satisfaction in full of all Obligations, shall cease to
be in full force and effect (other than in accordance with its terms) or shall
be declared to be null and void or any Guarantor shall repudiate its obligations
thereunder, (ii) this Agreement or any Collateral Document ceases to be in full
force and effect (other than by reason of a release of Collateral in accordance
with the terms hereof or thereof or the satisfaction in full of the Obligations
in accordance with the terms hereof) or shall be declared null and void, or
Collateral Agent shall not have or shall cease to have a valid and perfected
Lien in any de minimis portion of the Collateral purported to be covered by the
Collateral Documents with the priority required by the relevant Collateral
Document, in each case for any reason other than the failure of Collateral Agent
or any Secured

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Party to take any action within its control, or (iii) any Credit Party shall
contest the validity or enforceability of any Credit Document in writing or deny
in writing that it has any further liability, including with respect to future
advances by Lenders, under any Credit Document to which it is a party.

THEN, (1) upon the occurrence of any Event of Default described in Section
8.1(f) or 8.1(g), automatically, and (2) upon the occurrence and continuance of
any other Event of Default, at the request of (or with the consent of) Requisite
Lenders, upon notice to Company by Administrative Agent, (A) each of the
following shall immediately become due and payable, in each case without
presentment, demand, protest or other requirements of any kind, all of which are
hereby expressly waived by each Credit Party: (I) the unpaid principal amount of
and accrued interest on the Loans, and (II) all other Obligations; and (B)
Administrative Agent may, subject to the Intercreditor Agreement, cause
Collateral Agent to enforce any and all Liens and security interests created
pursuant to Collateral Documents.

SECTION 9. AGENTS

      9.1. APPOINTMENT OF AGENTS. GSCP and Credit Suisse are hereby appointed
Co-Syndication Agents hereunder, and each Lender hereby authorizes
Co-Syndication Agents to act as its agent in accordance with the terms hereof
and the other Credit Documents. Credit Suisse is hereby appointed Administrative
Agent hereunder and under the other Credit Documents and each Lender hereby
authorizes Administrative Agent to act as its agent in accordance with the terms
hereof and the other Credit Documents. Credit Suisse is hereby appointed
Collateral Agent hereunder and under the other Credit Documents and each Lender
hereby authorizes Collateral Agent to act as its agent in accordance with the
terms hereof and the other Credit Documents. Each Agent hereby agrees to act
upon the express conditions contained herein and the other Credit Documents, as
applicable. The provisions of this Section 9 are solely for the benefit of
Agents and Lenders and no Credit Party shall have any rights as a third party
beneficiary of any of the provisions thereof. In performing its functions and
duties hereunder, each Agent shall act solely as an agent of Lenders and does
not assume and shall not be deemed to have assumed any obligation towards or
relationship of agency or trust with or for the Credit Parties. Each of the
Co-Syndication Agents without consent of or notice to any party hereto, may
assign any and all of its rights or obligations hereunder to any of its
Affiliates. As of the Closing Date, neither GSCP nor Credit Suisse, each in its
capacity as a Co-Syndication Agent shall have any obligations but shall be
entitled to all benefits of this Section 9.

      9.2. POWERS AND DUTIES. Each Lender irrevocably authorizes each Agent to
take such action on such Lender's behalf and to exercise such powers, rights and
remedies hereunder and under the other Credit Documents as are specifically
delegated or granted to such Agent by the terms hereof and thereof, together
with such powers, rights and remedies as are reasonably incidental thereto. Each
Agent shall have only those duties and responsibilities that are expressly
specified herein and the other Credit Documents. Each Agent may exercise such
powers, rights and remedies and perform such duties by or through its agents or
employees. No Agent shall have, by reason hereof or any of the other Credit
Documents, a fiduciary relationship in respect of any Lender; and nothing herein
or any of the other Credit Documents, expressed or implied, is

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intended to or shall be so construed as to impose upon any Agent any obligations
in respect hereof or any of the other Credit Documents except as expressly set
forth herein or therein.

      9.3. GENERAL IMMUNITY.

            (a) No Responsibility for Certain Matters. No Agent shall be
responsible to any Lender for the execution, effectiveness, genuineness,
validity, enforceability, collectibility or sufficiency hereof or any other
Credit Document or for any representations, warranties, recitals or statements
made herein or therein or made in any written or oral statements or in any
financial or other statements, instruments, reports or certificates or any other
documents furnished or made by any Agent to Lenders or by or on behalf of any
Credit Party to any Agent or any Lender in connection with the Credit Documents
and the transactions contemplated thereby or for the financial condition or
business affairs of any Credit Party or any other Person liable for the payment
of any Obligations, nor shall any Agent be required to ascertain or inquire as
to the performance or observance of any of the terms, conditions, provisions,
covenants or agreements contained in any of the Credit Documents or as to the
use of the proceeds of the Loans or as to the existence or possible existence of
any Event of Default or Default or to make any disclosures with respect to the
foregoing. Anything contained herein to the contrary notwithstanding,
Administrative Agent shall not have any liability arising from confirmations of
the amount of outstanding Loans or the component amounts thereof.

            (b) Exculpatory Provisions. No Agent nor any of its officers,
partners, directors, employees or agents shall be liable to Lenders for any
action taken or omitted by any Agent under or in connection with any of the
Credit Documents except to the extent caused by such Agent's gross negligence or
willful misconduct. Each Agent shall be entitled to refrain from any act or the
taking of any action (including the failure to take an action) in connection
herewith or any of the other Credit Documents or from the exercise of any power,
discretion or authority vested in it hereunder or thereunder unless and until
such Agent, in the case of any Agent other than Collateral Agent, shall have
received instructions in respect thereof from Requisite Lenders (or such other
Lenders as may be required to give such instructions under Section 10.5) or, in
the case of Collateral Agent, in accordance with the Pledge and Security
Agreement, Intercreditor Agreement or other applicable Collateral Document, and,
upon receipt of such instructions from Requisite Lenders (or such other Lenders,
as the case may be), or in accordance with the Pledge and Security Agreement,
Intercreditor Agreement or other applicable Collateral Document, as the case may
be, such Agent shall be entitled to act or (where so instructed) refrain from
acting, or to exercise such power, discretion or authority, in accordance with
such instructions. Without prejudice to the generality of the foregoing, (i)
each Agent shall be entitled to rely, and shall be fully protected in relying,
upon any communication, instrument or document believed by it to be genuine and
correct and to have been signed or sent by the proper Person or Persons, and
shall be entitled to rely and shall be protected in relying on opinions and
judgments of attorneys (who may be attorneys for the Credit Parties),
accountants, experts and other professional advisors selected by it; and (ii) no
Lender shall have any right of action whatsoever against any Agent as a result
of such Agent acting or (where so instructed) refraining from acting hereunder
or any of the other Credit Documents, in the case of any Agent other than
Collateral Agent, in accordance with the instructions of Requisite Lenders (or
such other Lenders as may be required to give such instructions under Section
10.5) or, in the case of the Collateral Agent, in accordance with the

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Pledge and Security Agreement, Intercreditor Agreement or other applicable
Collateral Document.

            (c) Delegation of Duties. Administrative Agent may perform any and
all of its duties and exercise its rights and powers under this Agreement or
under any other Credit Document by or through any one or more sub-agents
appointed by Administrative Agent. Administrative Agent and any such sub-agent
may perform any and all of its duties and exercise its rights and powers by or
through their respective Affiliates. The exculpatory, indemnification and other
provisions of this Section 9.3 and of Section 9.6 shall apply to any the
Affiliates of Administrative Agent and shall apply to their respective
activities in connection with the syndication of the credit facilities provided
for herein as well as activities as Administrative Agent. All of the rights,
benefits, and privileges (including the exculpatory and indemnification
provisions) of this Section 9.3 and of Section 9.6 shall apply to any such
sub-agent and to the Affiliates of any such sub-agent, and shall apply to their
respective activities as sub-agent as if such sub-agent and Affiliates were
named herein. Notwithstanding anything herein to the contrary, with respect to
each sub-agent appointed by Administrative Agent, (i) such sub-agent shall be a
third party beneficiary under this Agreement with respect to all such rights,
benefits and privileges (including exculpatory rights and rights to
indemnification) and shall have all of the rights and benefits of a third party
beneficiary, including an independent right of action to enforce such rights,
benefits and privileges (including exculpatory rights and rights to
indemnification) directly, without the consent or joinder of any other Person,
against any or all of the Credit Parties and the Lenders, (ii) such rights,
benefits and privileges (including exculpatory rights and rights to
indemnification) shall not be modified or amended without the consent of such
sub-agent, and (iii) such sub-agent shall only have obligations to
Administrative Agent and not to any Credit Party, Lender or any other Person and
no Credit Party, Lender or any other Person shall have any rights, directly or
indirectly, as a third party beneficiary or otherwise, against such sub-agent.

      9.4. AGENTS ENTITLED TO ACT AS LENDER. The agency hereby created shall in
no way impair or affect any of the rights and powers of, or impose any duties or
obligations upon, any Agent in its individual capacity as a Lender hereunder.
With respect to its participation in the Loans, each Agent shall have the same
rights and powers hereunder as any other Lender and may exercise the same as if
it were not performing the duties and functions delegated to it hereunder, and
the term "Lender" shall, unless the context clearly otherwise indicates, include
each Agent in its individual capacity. Any Agent and its Affiliates may accept
deposits from, lend money to, own securities of, and generally engage in any
kind of banking, trust, financial advisory or other business with the Credit
Parties or any of their Affiliates as if it were not performing the duties
specified herein, and may accept fees and other consideration from Company for
services in connection herewith and otherwise without having to account for the
same to Lenders.

      9.5. LENDERS' REPRESENTATIONS, WARRANTIES AND ACKNOWLEDGMENT.

            (a) Each Lender represents and warrants that it has made its own
independent investigation of the financial condition and affairs of the Credit
Parties in connection with the Credit Extension hereunder and that it has made
and shall continue to make its own appraisal of the creditworthiness of the
Credit Parties. No Agent shall have any duty or responsibility, either initially
or on a continuing basis, to make any such investigation or any such appraisal
on behalf

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of Lenders or to provide any Lender with any credit or other information with
respect thereto, whether coming into its possession before the making of the
Loans or at any time or times thereafter, and no Agent shall have any
responsibility with respect to the accuracy of or the completeness of any
information provided to Lenders.

            (b) Each Lender, by delivering its signature page to this Agreement
(and funding its Loan on the Closing Date,) shall be deemed to have acknowledged
receipt of, and consented to and approved, each Credit Document and each other
document required to be approved by any Agent, Requisite Lenders or Lenders, as
applicable on the Closing Date. Notwithstanding anything herein to the contrary,
each Lender also acknowledges that the lien and security interest granted to the
Collateral Agent pursuant to the Pledge and Security Agreement and the exercise
of any right or remedy by the Collateral Agent thereunder or under any other
Collateral Document are subject to the provisions of the Intercreditor
Agreement. In the event of a conflict between the terms of the Intercreditor
Agreement (on the one hand), and this Agreement or any Collateral Documents (on
the other hand), the terms of the Intercreditor Agreement shall govern and
control.

      9.6. RIGHT TO INDEMNITY. Each Lender, in proportion to its Pro Rata Share,
severally agrees to indemnify each Agent, to the extent that such Agent shall
not have been reimbursed by any Credit Party, for and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses (including counsel fees and disbursements) or disbursements of
any kind or nature whatsoever which may be imposed on, incurred by or asserted
against such Agent in exercising its powers, rights and remedies or performing
its duties hereunder or under the other Credit Documents or otherwise in its
capacity as such Agent in any way relating to or arising out of this Agreement
or the other Credit Documents; provided, no Lender shall be liable for any
portion of such liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements resulting from such Agent's
gross negligence or willful misconduct. If any indemnity furnished to any Agent
for any purpose shall, in the opinion of such Agent, be insufficient or become
impaired, such Agent may call for additional indemnity and cease, or not
commence, to do the acts indemnified against until such additional indemnity is
furnished; provided, in no event shall this sentence require any Lender to
indemnify any Agent against any liability, obligation, loss, damage, penalty,
action, judgment, suit, cost, expense or disbursement in excess of such Lender's
Pro Rata Share thereof; and provided further, this sentence shall not be deemed
to require any Lender to indemnify any Agent against any liability, obligation,
loss, damage, penalty, action, judgment, suit, cost, expense or disbursement
described in the proviso in the immediately preceding sentence.

      9.7. SUCCESSOR ADMINISTRATIVE AGENT Administrative Agent may resign at any
time by giving thirty days' prior written notice thereof to Lenders and Company,
and Administrative Agent may be removed at any time with or without cause by an
instrument or concurrent instruments in writing delivered to Company and
Administrative Agent and signed by Requisite Lenders. Upon any such notice of
resignation or any such removal, Requisite Lenders shall have the right, upon
five Business Days' notice to Company; provided that Company shall have the
right to approve (such approval not to be unreasonably withheld) any such
successor Administrative Agent unless an Event of Default then exists, to
appoint a successor Administrative Agent. Upon the acceptance of any appointment
as Administrative Agent hereunder by a successor Administrative Agent, that
successor Administrative Agent shall

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thereupon succeed to and become vested with all the rights, powers, privileges
and duties of the retiring or removed Administrative Agent and the retiring or
removed Administrative Agent shall promptly (i) transfer to such successor
Administrative Agent all sums, Securities and other items of Collateral held
under the Collateral Documents, together with all records and other documents
necessary or appropriate in connection with the performance of the duties of the
successor Administrative Agent under the Credit Documents, and (ii) execute and
deliver to such successor Administrative 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 Administrative Agent of the
security interests created under the Collateral Documents, whereupon such
retiring or removed Administrative Agent shall be discharged from its duties and
obligations hereunder. After any retiring or removed Administrative Agent's
resignation or removal hereunder as Administrative Agent, the provisions of this
Section 9 shall inure to its benefit as to any actions taken or omitted to be
taken by it while it was Administrative Agent hereunder.

      9.8. COLLATERAL DOCUMENTS AND GUARANTY.

            (a) Agents under Collateral Documents and Guaranty. Each Lender
hereby further authorizes Administrative Agent or Collateral Agent, as
applicable, on behalf of and for the benefit of Lenders, to (i) be the agent for
and representative of Lenders with respect to the Guaranty, the Collateral and
the Collateral Documents and (ii) enter into the Intercreditor Agreement, and
each Lender agrees to be bound by the terms of the Intercreditor Agreement.
Subject to Section 10.5, without further written consent or authorization from
Lenders, Administrative Agent or Collateral Agent, as applicable may execute any
documents or instruments necessary to (i) release any Lien encumbering any item
of Collateral that is the subject of a sale or other disposition of assets
permitted hereby or to which Requisite Lenders (or such other Lenders as may be
required to give such consent under Section 10.5) have otherwise consented or
(ii) release any Guarantor from the Guaranty pursuant to Section 7.12 or with
respect to which Requisite Lenders (or such other Lenders as may be required to
give such consent under Section 10.5) have otherwise consented.

            (b) Right to Realize on Collateral and Enforce Guaranty. Anything
contained in any of the Credit Documents to the contrary notwithstanding,
Company, Administrative Agent, Collateral Agent and each Lender hereby agree
that (i) no Lender shall have any right individually to realize upon any of the
Collateral or to enforce the Guaranty, it being understood and agreed that all
powers, rights and remedies hereunder may be exercised solely by Administrative
Agent, on behalf of Lenders in accordance with the terms hereof and all powers,
rights and remedies under the Collateral Documents may be exercised solely by
Collateral Agent, and (ii) in the event of a foreclosure by Collateral Agent on
any of the Collateral pursuant to a public or private sale, Collateral Agent or
any Lender may be the purchaser of any or all of such Collateral at any such
sale and Collateral Agent, as agent for and representative of Secured Parties
(but not any Lender or Lenders in its or their respective individual capacities
unless Requisite Lenders 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 Obligations as a credit on account of the purchase
price for any collateral payable by Collateral Agent at such sale.

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      9.9. APPOINTMENT AND AUTHORITY OF PAYING AGENT. Each of the Lenders hereby
irrevocably appoints Credit Suisse to act on its behalf as the Paying Agent
hereunder and under the other Credit Documents and authorizes the Paying Agent
to take such actions on its behalf and to exercise such powers as are delegated
to the Paying Agent by the terms hereof or thereof, together with such actions
and powers as are reasonably incidental thereto.

      9.10. EXCULPATORY PROVISIONS RELATING TO PAYING AGENT. The Paying Agent
shall not have any duties or obligations except those expressly set forth herein
and in the other Credit Documents. Without limiting the generality of the
foregoing, the Paying Agent:

            (a) shall not be subject to any fiduciary or other implied duties,
regardless of whether a Default has occurred and is continuing;

            (b) shall not have any duty to take any discretionary action or
exercise any discretionary powers, except discretionary rights and powers
expressly contemplated hereby or by the other Credit Documents that the Paying
Agent is required to exercise as directed in writing by the Requisite Lenders
(or such other number or percentage of the Lenders as shall be expressly
provided for herein or in the other Credit Documents), provided that the Paying
Agent shall not be required to take any action that, in its opinion or the
opinion of its counsel, may expose the Paying Agent to liability or that is
contrary to any Credit Document or applicable law;

            (c) shall not, except as expressly set forth herein and in the other
Credit Documents, have any duty to disclose, and shall not be liable for the
failure to disclose, any information relating to Company or any of its
Affiliates that is communicated to or obtained by the Person serving as the
Paying Agent or any of its Affiliates in any capacity;

            (d) the Paying Agent shall not be liable for any action taken or not
taken by it (i) with the consent or at the request of the Requisite Lenders (or
such other number or percentage of the Lenders as shall be necessary, or as the
Paying Agent shall believe in good faith shall be necessary, under the
circumstances as provided in Section 10.9) or (ii) in the absence of its own
gross negligence or willful misconduct. The Paying Agent shall be deemed not to
have knowledge of any Default unless and until notice describing such Default is
given to the Paying Agent by Company or a Lender; and

            (e) the Paying Agent shall not be responsible for or have any duty
to ascertain or inquire into (i) any statement, warranty or representation made
in or in connection with this Agreement or any other Credit Document, (ii) the
contents of any certificate, report or other document delivered hereunder or
thereunder or in connection herewith or therewith, (iii) the performance or
observance of any of the covenants, agreements or other terms or conditions set
forth herein or therein or the occurrence of any Default, (iv) the validity,
enforceability, effectiveness or genuineness of this Agreement, any other Credit
Document or any other agreement, instrument or document or (v) the satisfaction
of any condition set forth in Article III or elsewhere herein, other than to
confirm receipt of items expressly required to be delivered to the Paying Agent.

      9.11. RELIANCE BY PAYING AGENT. The Paying Agent shall be entitled to rely
upon, and shall not incur any liability for relying upon, any notice, request,
certificate, consent, statement,

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instrument, document or other writing (including any electronic message,
Internet or intranet website posting or other distribution) believed by it to be
genuine and to have been signed, sent or otherwise authenticated by the proper
Person. The Paying Agent also may rely upon any statement made to it orally or
by telephone and believed by it to have been made by the proper Person, and
shall not incur any liability for relying thereon. In determining compliance
with any condition hereunder to the making of a Loan that by its terms must be
fulfilled to the satisfaction of a Lender, the Paying Agent may presume that
such condition is satisfactory to such Lender unless the Paying Agent shall have
received notice to the contrary from such Lender prior to the making of such
Loan. The Paying Agent may consult with legal counsel (who may be counsel for
Company), independent accountants and other experts selected by it, and shall
not be liable for any action taken or not taken by it in accordance with the
advice of any such counsel, accountants or experts.

      9.12. DELEGATION OF DUTIES BY PAYING AGENT. The Paying Agent may perform
any and all of its duties and exercise its rights and powers hereunder or under
any other Credit Document by or through any one or more sub-agents appointed by
the Paying Agent. The Paying Agent and any such sub-agent may perform any and
all of its duties and exercise its rights and powers by or through their
respective Related Parties. The exculpatory provisions of this Article shall
apply to any such sub-agent and to the Related Parties of the Paying Agent and
any such sub-agent, and shall apply to their respective activities in connection
with the syndication of the credit facilities provided for herein as well as
activities as Paying Agent.

      9.13. RESIGNATION OF PAYING AGENT. The Paying Agent may at any time give
notice of its resignation to the Administrative Agent, the Lenders and Company.
Upon receipt of any such notice of resignation, the Requisite Lenders shall have
the right, in consultation with Company (and, if no Event of Default is then
continuing, with the consent of Company (not to be unreasonably withheld)), to
appoint a successor, which shall be a bank with an office in New York, New York,
or an Affiliate of any such bank with an office in New York, New York. If no
such successor shall have been so appointed by the Requisite Lenders and shall
have accepted such appointment within 30 days after the retiring Paying Agent
gives notice of its resignation, then the retiring Administrative Agent may, on
behalf of the Lenders (and, if no Event of Default is then continuing, with the
consent of Company (not to be unreasonably withheld)), appoint a successor
Paying Agent meeting the qualifications set forth above. Upon the resignation of
the Paying Agent, (1) the retiring Paying Agent shall be discharged from its
duties and obligations hereunder and under the other Credit Documents and (2)
all payments, communications and determinations provided to be made by, to or
through the Paying Agent shall instead be made by or to the Administrative Agent
for distribution to each Lender, until such time as the Requisite Lenders
appoint a successor Paying Agent as provided for above in this paragraph. Upon
the acceptance of a successor's appointment as Paying Agent hereunder, such
successor shall succeed to and become vested with all of the rights, powers,
privileges and duties of the retiring (or retired) Paying Agent, and the
retiring Paying Agent shall be discharged from all of its duties and obligations
hereunder or under the other Credit Documents (if not already discharged
therefrom as provided above in this paragraph). The fees payable by Company to a
successor Paying Agent shall be the same as those payable to its predecessor
unless otherwise agreed between Company and such successor. After the retiring
Paying Agent's resignation hereunder and under the other Credit Documents, the
provisions of this Article and Section 9.13 shall continue in effect for the
benefit of such retiring Paying Agent, its sub-agents and their

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respective Related Parties in respect of any actions taken or omitted to be
taken by any of them while the retiring Paying Agent was acting as Paying Agent.

SECTION 10. MISCELLANEOUS

      10.1. NOTICES. Unless otherwise specifically provided herein, any notice
or other communication herein required or permitted to be given to a Credit
Party, either Co-Syndication Agent, Collateral Agent, Paying Agent or
Administrative Agent, shall be sent to such Person's address as set forth on
Appendix B or in the other relevant Credit Document, and in the case of any
Lender, the address as indicated on Appendix B or otherwise indicated to
Administrative Agent in writing. Each notice hereunder shall be in writing
(which, in the case of any Notice, shall include notice by electronic mail or
other electronic means agreed to between Company and Administrative Agent) and
may be personally served, telexed 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 and signed for against receipt thereof, upon
receipt of telefacsimile or telex, or three Business Days after depositing it in
the United States mail with postage prepaid and properly addressed; provided, no
notice to any Agent shall be effective until received by such Agent; provided
further, any such notice or other communication shall at the request of
Administrative Agent be provided to any sub-agent appointed pursuant to Section
9.3(c) hereto as designated by Administrative Agent from time to time.

      10.2. EXPENSES. Whether or not the transactions contemplated hereby shall
be consummated, Company agrees to pay promptly (a) all the actual and reasonable
costs and expenses incurred by each Agent of preparation of the Credit Documents
and any consents, amendments, waivers or other modifications thereto; (b) all
the costs of furnishing all opinions by counsel for Company and the other Credit
Parties; (c) the reasonable fees, expenses and disbursements of counsel to
Administrative Agent, Paying Agent and Collateral Agent in connection with the
negotiation, preparation, execution and administration of the Credit Documents
and any consents, amendments, waivers or other modifications thereto and any
other documents or matters requested by Company; (d) all the actual costs and
reasonable expenses of creating and perfecting Liens in favor of Collateral
Agent, for the benefit of Secured Parties, including filing and recording fees,
expenses and taxes, stamp or documentary taxes, search fees, title insurance
premiums and reasonable fees, expenses and disbursements of counsel to each
Agent and of counsel providing any opinions required hereunder; (e) all the
actual costs and reasonable fees, expenses and disbursements of any auditors,
accountants, consultants or appraisers (prior to any Default or Event of Default
subject to the consent of Company); (f) all the actual costs and reasonable
expenses (including the reasonable fees, expenses and disbursements of any
appraisers, consultants, advisors and agents employed or retained by Collateral
Agent and its counsel) in connection with the custody or preservation of any of
the Collateral; (g) all other actual and reasonable costs and expenses incurred
by each Agent in connection with the syndication of the Loans and Commitments;
and (h) after the occurrence of an Event of Default and during its continuance,
all costs and expenses, including reasonable attorneys' fees costs of
settlement, incurred by any Agent and Lenders in enforcing any Obligations of or
in collecting any payments due from any Credit Party hereunder or under the
other Credit Documents by reason of such Event of Default (including in
connection with the sale of, collection from, or other realization upon any of
the Collateral or the enforcement of the Guaranty) or in connection

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with any refinancing or restructuring of the credit arrangements provided
hereunder in the nature of a "work-out" or pursuant to any insolvency or
bankruptcy cases or proceedings. The agreements in this Section 10.2 shall
survive repayment of the Loans and all other amounts payable hereunder.

      10.3. INDEMNITY.

            (a) In addition to the payment of expenses pursuant to Section 10.2,
whether or not the transactions contemplated hereby shall be consummated, each
Credit Party agrees to defend (subject to Indemnitees' selection of counsel),
indemnify, pay and hold harmless, each Agent and Lender and the officers,
partners, directors, trustees, employees, agents, sub-agents and Affiliates of
each Agent and each Lender (each, an "INDEMNITEE"), from and against any and all
Indemnified Liabilities; provided, no Credit Party shall have any obligation to
any Indemnitee hereunder with respect to any Indemnified Liabilities to the
extent such Indemnified Liabilities arise from the gross negligence, bad faith
or willful misconduct of that Indemnitee and, provided further, that neither
Credit Suisse nor any of its officers, partners, directors, trustees, employees,
agents, sub-Agents or Affiliates shall be entitled to any indemnification or
contribution hereunder except to the extent of losses, claims, damages or
liabilities suffered as a result of Credit Suisse acting as Joint Lead Arranger,
a Lender or an Agent hereunder. To the extent that the undertakings to defend,
indemnify, pay and hold harmless set forth in this Section 10.3 may be
unenforceable in whole or in part because they are violative of any law or
public policy, the applicable Credit Party shall contribute the maximum portion
that it is permitted to pay and satisfy under applicable law to the payment and
satisfaction of all Indemnified Liabilities incurred by Indemnitees or any of
them.

            (b) To the extent permitted by applicable law, no Credit Party shall
assert, and each Credit Party hereby waives, any claim against Lenders, Agents
and their respective Affiliates, directors, employees, attorneys, agents or
sub-agents, on any theory of liability, for special, indirect, consequential or
punitive damages (as opposed to direct or actual damages) (whether or not the
claim therefor is based on contract, tort or duty imposed by any applicable
legal requirement) arising out of, in connection with, arising out of, as a
result of, or in any way related to, this Agreement or any Credit Document or
any agreement or instrument contemplated hereby or thereby or referred to herein
or therein, the transactions contemplated hereby or thereby, any Loan or the use
of the proceeds thereof or any act or omission or event occurring in connection
therewith, and each Credit Party hereby waives, releases and agrees not to sue
upon any such claim or any such damages, whether or not accrued and whether or
not known or suspected to exist in its favor provided, that Credit Suisse and it
officers, partners, directors, trustees, employees, agents, sub-agents and
Affiliates shall be entitled to the benefits of this paragraph for claims
arising out of the Credit Documents or its acting as Joint Lead Arranger, a
Lender or an Agent hereunder.

            The agreements in this Section 10.3 shall survive repayment of the
Loans and all other amounts payable hereunder.

      10.4.SET-OFF. Subject to the terms of the Intercreditor Agreement, in
addition to any rights now or hereafter granted under applicable law and not by
way of limitation of any such rights, upon the occurrence and during the
continuance of any Event of Default each Lender is

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hereby authorized by each Credit Party at any time or from time to time subject
to the consent of Administrative Agent (such consent not to be unreasonably
withheld or delayed), without notice to any Credit Party or to any other Person
(other than Administrative Agent), any such notice being hereby expressly
waived, to set off and to appropriate and to apply any and all deposits (general
or special, including Indebtedness evidenced by certificates of deposit, whether
matured or unmatured, but not including trust accounts) and any other
Indebtedness at any time held or owing by such Lender to or for the credit or
the account of any Credit Party (other than Holdings) against and on account of
the obligations and liabilities of any Credit Party to such Lender hereunder and
under the other Credit Documents, including all claims of any nature or
description arising out of or connected hereto or with any other Credit
Document, irrespective of whether or not (a) such Lender shall have made any
demand hereunder or (b) the principal of or the interest on the Loans or any
other amounts due hereunder shall have become due and payable pursuant to
Section 2 and although such obligations and liabilities, or any of them, may be
contingent or unmatured.

      10.5. AMENDMENTS AND WAIVERS.

            (a) Requisite Lenders' Consent. Subject to Section 10.5(b) and
10.5(c), no amendment, modification, termination or waiver of any provision of
the Credit Documents, or consent to any departure by any Credit Party therefrom,
shall in any event be effective without the written concurrence of the Requisite
Lenders.

            (b) Affected Lenders' Consent. Without the written consent of each
Lender that would be directly affected thereby, no amendment, modification,
termination, or consent shall be effective if the effect thereof would:

                (i) extend the scheduled final maturity of any Loan or Note of
   such Lender;

                (ii) waive, reduce or postpone any scheduled repayment of
   principal on the Loans under Section 2.12 due such Lender (but not
   prepayment);

                (iii)reduce the rate of interest or premium on any Loan of such
   Lender (other than any waiver of any increase in the interest rate applicable
   to any Loan pursuant to Section 2.10) or any fee payable hereunder to such
   Lender;

                (iv) extend the time for payment of any such interest, premium
   or fees to such Lender;

                (v) amend, modify, terminate or waive any provision of this
   Section 10.5(b) or Section 10.5(c);

                (vi) amend the definition of "REQUISITE LENDERS" or "PRO RATA
   SHARE";

                (vii)release all or substantially all of the Collateral or all
   or substantially all of the Guarantors from the Guaranty except as expressly
   provided in the Credit Documents; or

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                (viii) consent to the assignment or transfer by any Credit Party
   of any of its rights and obligations under any Credit Document.

            (c) Other Consents. No amendment, modification, termination or
waiver of any provision of the Credit Documents, or consent to any departure by
any Credit Party therefrom, shall amend, modify, terminate or waive any
provision of Section 9 as the same applies to any Agent, or any other provision
hereof as the same applies to the rights or obligations of any Agent, in each
case without the consent of such Agent.

            (d) Execution of Amendments, etc. Administrative Agent may, but
shall have no obligation to, with the concurrence of any Lender, execute
amendments, modifications, waivers or consents on behalf of such Lender. Any
waiver or consent shall be effective only in the specific instance and for the
specific purpose for which it was given. No notice to or demand on any Credit
Party in any case shall entitle any Credit Party to any other or further notice
or demand in similar or other circumstances. Any amendment, modification,
termination, waiver or consent effected in accordance with this Section 10.5
shall be binding upon each Lender at the time outstanding, each future Lender
and, if signed by a Credit Party, on such Credit Party.

      10.6. SUCCESSORS AND ASSIGNS; PARTICIPATIONS.

            (a) Generally. This Agreement shall be binding upon the parties
hereto and their respective successors and assigns and shall inure to the
benefit of the parties hereto and the successors and assigns of Lenders. No
Credit Party's rights or obligations hereunder nor any interest therein may be
assigned or delegated by any Credit Party without the prior written consent of
all Lenders. No Lender may assign, sell, participate or otherwise transfer any
of its rights under the Credit Documents except as set forth in this Section
10.6 and the penultimate sentence of Section 2.23. Nothing in this Agreement,
expressed or implied, shall be construed to confer upon any Person (other than
the parties hereto, their respective successors and assigns permitted hereby
and, to the extent expressly contemplated hereby, Affiliates of each of the
Agents and Lenders) any legal or equitable right, remedy or claim under or by
reason of this Agreement.

            (b) Register. Company, Administrative Agent, Paying Agent and
Lenders shall deem and treat the Persons listed as Lenders in the Register as
the holders and owners of the corresponding Commitments and Loans listed therein
for all purposes hereof, and no assignment or transfer of any such Commitment or
Loan shall be effective, in each case, unless and until recorded in the Register
following receipt of an Assignment Agreement effecting the assignment or
transfer thereof, in each case, as provided in Section 10.6(d). Each assignment
shall be recorded in the Register on the Business Day the Assignment Agreement
is received by Paying Agent, if received by 12:00 noon New York City time, and
on the following Business Day if received after such time, prompt notice thereof
shall be provided to Company and a copy of such Assignment Agreement shall be
maintained, as applicable. The date of such recordation of a transfer shall be
referred to herein as the "ASSIGNMENT EFFECTIVE DATE." Any request, authority or
consent of any Person who, at the time of making such request or giving such
authority or consent, is listed in the Register as a Lender shall be conclusive
and binding on any subsequent holder, assignee or transferee of the
corresponding Commitments or Loans.

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            (c) Right to Assign. Each Lender shall have the right at any time to
sell, assign or transfer all or a portion of its rights and obligations under
this Agreement, including, without limitation, all or a portion of its
Commitment or Loans owing to it or other Obligation (provided, however, that
each such assignment shall be of a uniform, and not varying, percentage of all
rights and obligations under and in respect of any Loan and any related
Commitments ):

                (i) to any Person meeting the criteria of clause (i) of the
   definition of the term of "Eligible Assignee" upon the giving of notice to
   Company and Paying Agent; and

                (ii) to any Person meeting the criteria of clause (ii) of the
   definition of the term of "Eligible Assignee", consented to by each of
   Company and Paying Agent (such consent not to be (x) unreasonably withheld or
   delayed or, (y) in the case of Company, required at any time an Event of
   Default shall have occurred and then be continuing); provided, further each
   such assignment pursuant to this Section 10.6(c)(ii) shall be in an aggregate
   amount of not less than $1,000,000 (or such lesser amount as may be agreed to
   by Company and Paying Agent or as shall constitute the aggregate amount of
   the Loan of the assigning Lender) with respect to the assignment of Loans.

            (d) Mechanics. The parties to each assignment shall (A)
electronically execute and deliver to Paying Agent an Assignment Agreement via
an electronic settlement system acceptable to the Paying Agent (which initially
shall be ClearPar, LLC) or (B) if no such system shall be acceptable to the
Paying Agent, manually execute and deliver to the Paying Agent an Assignment
Agreement, together with a processing and recordation fee of $3,500. In
connection with all assignments there shall be delivered to Paying Agent and
Company such forms, certificates or other evidence, if any, with respect to
United States federal income tax withholding matters as the assignee under such
Assignment Agreement may be required to deliver pursuant to Section 2.20(c).

            (e) Representations and Warranties of Assignee. Each Lender, upon
execution and delivery hereof or upon succeeding to an interest in the
Commitments and Loans, as the case may be, represents and warrants as of the
Closing Date or as of the Assignment Effective Date that (i) it is an Eligible
Assignee; (ii) it has experience and expertise in the making of or investing in
commitments or loans such as the applicable Commitments or Loans, as the case
may be; and (iii) it will make or invest in, as the case may be, its Commitments
or Loans for its own account in the ordinary course of its business and without
a view to distribution of such Commitments or Loans within the meaning of the
Securities Act or the Exchange Act or other federal securities laws (it being
understood that, subject to the provisions of this Section 10.6, the disposition
of such Loans or any interests therein shall at all times remain within its
exclusive control).

            (f) Effect of Assignment. Subject to the terms and conditions of
this Section 10.6, as of the "Assignment Effective Date" (i) the assignee
thereunder shall have the rights and obligations of a "Lender" hereunder to the
extent of its interest in the Loans and Commitments as reflected in the Register
and shall thereafter be a party hereto and a "Lender" for all purposes hereof;
(ii) the assigning Lender thereunder shall, to the extent that rights and
obligations hereunder have been assigned to the assignee, relinquish its rights
(other than any rights which survive the termination hereof under Section 10.8)
and be released from its obligations hereunder

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(and, in the case of an assignment covering all or the remaining portion of an
assigning Lender's rights and obligations hereunder, such Lender shall cease to
be a party hereto on the Assignment Effective Date; provided, anything contained
in any of the Credit Documents to the contrary notwithstanding, such assigning
Lender shall continue to be entitled to the benefit of all indemnities hereunder
as specified herein with respect to matters arising out of the prior involvement
of such assigning Lender as a Lender hereunder to the extent provided
hereunder); (iii) the Commitments shall be modified to reflect the Commitment of
such assignee; and (iv) if any such assignment occurs after the issuance of any
Note hereunder, the assigning Lender shall, upon the effectiveness of such
assignment or as promptly thereafter as practicable, surrender its applicable
Notes to Paying Agent for cancellation, and thereupon Company shall issue and
deliver new Notes, if so requested by the assignee and/or assigning Lender, to
such assignee and/or to such assigning Lender, with appropriate insertions, to
reflect the outstanding Loans of the assignee and/or the assigning Lender.

            (g) Participations. Each Lender shall have the right at any time to
sell one or more participations to any Person (other than Holdings, any of its
Subsidiaries or any of its Affiliates) in all or any part of its Commitments or
Loans or in any other Obligation. The holder of any such participation, other
than an Affiliate of the Lender granting such participation, shall not be
entitled to require such Lender to take or omit to take any action hereunder
except with respect to any amendment, modification or waiver that would (i)
extend the final scheduled maturity of any Loan or Note in which such
participant is participating, or reduce the rate or extend the time of payment
of interest, premium or fees thereon (except in connection with a waiver of
applicability of any post-default increase in interest rates) or reduce the
principal amount thereof, or increase the amount of the participant's
participation over the amount thereof then in effect (it being understood that a
waiver of any Default or Event of Default or of a mandatory reduction in the
Commitment shall not constitute a change in the terms of such participation, and
that an increase in any Commitment or Loan shall be permitted without the
consent of any participant if the participant's participation is not increased
as a result thereof), (ii) consent to the assignment or transfer by any Credit
Party of any of its rights and obligations under this Agreement or (iii) release
all or substantially all of the Collateral under the Collateral Documents
(except as expressly provided in the Credit Documents) supporting the Loans
hereunder in which such participant is participating. Company agrees that each
participant shall be entitled to the benefits of Sections 2.18(c), 2.19 and 2.20
to the same extent as if it were a Lender and had acquired its interest by
assignment pursuant to paragraph (c) of this Section; provided, (i) a
participant shall not be entitled to receive any greater payment under Sections
2.18(c), 2.19 or 2.20 than the applicable Lender would have been entitled to
receive with respect to the participation sold to such participant, unless the
sale of the participation to such participant is made with Company's prior
written consent and (ii) a participant that would be a Non-US Lender (or that
would otherwise be required to deliver a form referred to in Section 2.20(c) to
avoid deduction or withholding of United States federal income tax with respect
to payments made by a Credit Party under any of the Credit Documents) if it were
a Lender shall not be entitled to the benefits of Section 2.20 unless Company is
notified of the participation sold to such participant and such participant
agrees, for the benefit of Company, to be subject to Section 2.20 as though it
were a Lender. To the extent permitted by law, each participant also shall be
entitled to the benefits of Section 10.4 as though it were a Lender, provided
such Participant agrees to be subject to Section 2.17 as though it were a
Lender.

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            (i) Certain Other Assignments. In addition to any other assignment
permitted pursuant to this Section 10.6, any Lender may assign and/or pledge all
or any portion of its Loans, the other Obligations owed by or to such Lender,
and its Notes, if any, to secure obligations of such Lender including, without
limitation, any Federal Reserve Bank or any pledge or assignment to any holders
of obligations owed, or securities issued, by such Lender as collateral security
for such obligations or securities, or to any trustee for, or any other
representative of, such holders as collateral security pursuant to Regulation A
of the Board of Governors of the Federal Reserve System and any operating
circular issued by such Federal Reserve Bank; provided, no Lender, as between
Company and such Lender, shall be relieved of any of its obligations hereunder
as a result of any such assignment and pledge, and provided further, in no event
shall the applicable Federal Reserve Bank, pledgee or trustee be considered to
be a "Lender" or be entitled to require the assigning Lender to take or omit to
take any action hereunder.

      10.7. INDEPENDENCE OF COVENANTS. All covenants hereunder shall be given
independent effect so that if a particular action or condition is not permitted
by any of such covenants, the fact that it would be permitted by an exception
to, or would otherwise be within the limitations of, another covenant shall not
avoid the occurrence of a Default or an Event of Default if such action is taken
or condition exists.

      10.8. SURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS. All
representations, warranties and agreements made herein shall survive the
execution and delivery hereof and the making of the Credit Extension.
Notwithstanding anything herein or implied by law to the contrary, the
agreements of each Credit Party set forth in Sections 2.18(c), 2.19, 2.20, 10.2,
10.3 and 10.4 and the agreements of Lenders set forth in Sections 2.17, 9.3(b)
and 9.6 shall survive the payment of the Loans, and the termination hereof.

      10.9. NO WAIVER; REMEDIES CUMULATIVE. No failure or delay on the part of
any Agent or any Lender in the exercise of any power, right or privilege
hereunder or under any other Credit Document 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 other or further exercise thereof or of any other power, right or
privilege. The rights, powers and remedies given to each Agent and each Lender
hereby are cumulative and shall be in addition to and independent of all rights,
powers and remedies existing by virtue of any statute or rule of law or in any
of the other Credit Documents. Any forbearance or failure to exercise, and any
delay in exercising, any right, power or remedy hereunder shall not impair any
such right, power or remedy or be construed to be a waiver thereof, nor shall it
preclude the further exercise of any such right, power or remedy.

      10.10. MARSHALLING; PAYMENTS SET ASIDE. Neither any Agent nor any Lender
shall be under any obligation to marshal any assets in favor of any Credit Party
or any other Person or against or in payment of any or all of the Obligations.
To the extent that any Credit Party makes a payment or payments to Paying Agent
or Lenders (or to Paying Agent, on behalf of Lenders), or Paying Agent or
Lenders enforce any security interests or exercise their rights of setoff, and
such payment or payments or the proceeds of such enforcement or setoff or any
part thereof are subsequently invalidated, declared to be fraudulent or
preferential, set aside and/or required to be repaid to a trustee, receiver or
any other party under any bankruptcy law, any other state or

                                       115

                                                                  EXECUTION COPY
<PAGE>

federal law, common law or any equitable cause, then, to the extent of such
recovery, the obligation or part thereof originally intended to be satisfied,
and all Liens, rights and remedies therefor or related thereto, shall be revived
and continued in full force and effect as if such payment or payments had not
been made or such enforcement or setoff had not occurred.

      10.11. SEVERABILITY. In case any provision in or obligation hereunder or
any Note 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.

      10.12. OBLIGATIONS SEVERAL; INDEPENDENT NATURE OF LENDERS' RIGHTS. The
obligations of Lenders hereunder are several and no Lender shall be responsible
for the obligations or Commitment of any other Lender hereunder. Nothing
contained herein or in any other Credit Document, and no action taken by Lenders
pursuant hereto or thereto, shall be deemed to constitute Lenders as a
partnership, an association, a joint venture or any other kind of entity. The
amounts payable at any time hereunder to each Lender shall be a separate and
independent debt, and, subject to Section 9.8(b), each Lender shall be entitled
to protect and enforce its rights arising out hereof and it shall not be
necessary for any other Lender to be joined as an additional party in any
proceeding for such purpose.

      10.13. HEADINGS. Section headings herein are included herein for
convenience of reference only and shall not constitute a part hereof for any
other purpose or be given any substantive effect.

      10.14. APPLICABLE LAW. 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 LAWS OF THE STATE OF NEW YORK.

      10.15. CONSENT TO JURISDICTION. ALL JUDICIAL PROCEEDINGS BROUGHT AGAINST
ANY CREDIT PARTY ARISING OUT OF OR RELATING HERETO OR ANY OTHER CREDIT DOCUMENT,
OR ANY OF THE OBLIGATIONS, 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 CREDIT PARTY, FOR ITSELF AND IN CONNECTION
WITH ITS PROPERTIES, IRREVOCABLY (A) ACCEPTS GENERALLY AND UNCONDITIONALLY THE
NONEXCLUSIVE JURISDICTION AND VENUE OF SUCH COURTS; (B) WAIVES ANY DEFENSE OF
FORUM NON CONVENIENS; (C) 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 THE APPLICABLE CREDIT PARTY AT ITS ADDRESS PROVIDED IN
ACCORDANCE WITH SECTION 10.1; (D) AGREES THAT SERVICE AS PROVIDED IN CLAUSE (C)
ABOVE IS SUFFICIENT TO CONFER PERSONAL JURISDICTION OVER THE APPLICABLE CREDIT
PARTY IN ANY SUCH PROCEEDING IN ANY SUCH COURT, AND OTHERWISE CONSTITUTES
EFFECTIVE AND BINDING SERVICE IN EVERY RESPECT; AND (E) AGREES AGENTS AND
LENDERS RETAIN THE RIGHT TO

                                       116

                                                                  EXECUTION COPY
<PAGE>

SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO BRING PROCEEDINGS
AGAINST ANY CREDIT PARTY IN THE COURTS OF ANY OTHER JURISDICTION.

      10.16. WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO HEREBY AGREES TO
WAIVE ITS RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION
BASED UPON OR ARISING HEREUNDER OR UNDER ANY OF THE OTHER CREDIT DOCUMENTS OR
ANY DEALINGS BETWEEN THEM RELATING TO THE SUBJECT MATTER OF THIS LOAN
TRANSACTION OR THE LENDER/COMPANY RELATIONSHIP THAT IS BEING ESTABLISHED. THE
SCOPE OF THIS WAIVER IS INTENDED TO BE ALL-ENCOMPASSING OF ANY AND ALL DISPUTES
THAT MAY BE FILED IN ANY COURT AND THAT RELATE TO THE SUBJECT MATTER OF THIS
TRANSACTION, INCLUDING CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS AND
ALL OTHER COMMON LAW AND STATUTORY CLAIMS. EACH PARTY HERETO ACKNOWLEDGES THAT
THIS WAIVER IS A MATERIAL INDUCEMENT TO ENTER INTO A BUSINESS RELATIONSHIP, THAT
EACH HAS ALREADY RELIED ON THIS WAIVER IN ENTERING INTO THIS AGREEMENT, AND THAT
EACH WILL CONTINUE TO RELY ON THIS WAIVER IN ITS RELATED FUTURE DEALINGS. EACH
PARTY HERETO FURTHER WARRANTS AND REPRESENTS THAT IT HAS REVIEWED THIS WAIVER
WITH ITS LEGAL COUNSEL AND THAT IT 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
10.16 AND EXECUTED BY THE PARTY AGAINST WHICH ENFORCEMENT IS SOUGHT), AND THIS
WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR
MODIFICATIONS HERETO OR ANY OF THE OTHER CREDIT DOCUMENTS OR TO ANY OTHER
DOCUMENTS OR AGREEMENTS RELATING TO THE LOANS MADE HEREUNDER. IN THE EVENT OF
LITIGATION, THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE
COURT.

      10.17. CONFIDENTIALITY. Each Lender shall hold all non-public information
regarding Company and its Subsidiaries and their businesses identified as such
by Company and obtained by such Lender pursuant to the requirements hereof in
accordance with such Lender's customary procedures for handling confidential
information of such nature and in accordance with sound industry practice, it
being understood and agreed by Company that, in any event, a Lender may make (i)
disclosures of such information to Affiliates of such Lender and to their
agents, employees, officers, directors, trustees, attorneys, accountants and
advisors (and to other persons authorized by a Lender or Agent to organize,
present or disseminate such information in connection with disclosures otherwise
made in accordance with this Section 10.17), (ii) disclosures of such
information reasonably required by any bona fide or potential assignee,
transferee or participant in connection with the contemplated assignment,
transfer or participation by such Lender of any Loans or any participations
therein or by any direct or indirect contractual counterparties (or the
professional advisors thereto) in Hedge Agreements

                                       117

                                                                  EXECUTION COPY
<PAGE>

(provided, such bona fide or potential assignee, transferee or Participant and
counterparties and advisors are advised of and agree to be bound by the
provisions of this Section 10.17), (iii) disclosure to any rating agency when
required by it, provided that, prior to any disclosure, such rating agency shall
undertake in writing to preserve the confidentiality of any confidential
information relating to the Credit Parties received by it from any of the Agents
or any Lender, and (iv) disclosures required or requested by any governmental
agency or representative thereof or by the NAIC or pursuant to legal or judicial
process; provided, unless specifically prohibited by applicable law or court
order, each Lender shall make reasonable efforts to notify Company of any
request by any governmental agency or representative thereof (other than any
such request in connection with any examination of the financial condition or
other routine examination of such Lender by such governmental agency) for
disclosure of any such non-public information prior to disclosure of such
information. Notwithstanding anything to the contrary set forth herein, each
party (and each of their respective employees, representatives or other agents)
may disclose to any and all persons, without limitations of any kind, the tax
treatment and tax structure of the transactions contemplated by this Agreement
and all materials of any kind (including opinions and other tax analyses) that
are provided to any such party relating to such tax treatment and tax structure.
However, any information relating to the tax treatment or tax structure shall
remain subject to the confidentiality provisions hereof (and the foregoing
sentence shall not apply) to the extent reasonably necessary to enable the
parties hereto, their respective Affiliates, and their and their respective
Affiliates' directors and employees to comply with applicable securities laws.
For this purpose, "tax structure" means any facts relevant to the federal income
tax treatment of the transactions contemplated by this Agreement but does not
include information relating to the identity of any of the parties hereto or any
of their respective Affiliates.

      10.18. USURY SAVINGS CLAUSE. Notwithstanding any other provision herein,
the aggregate interest rate charged with respect to any of the Obligations,
including all charges or fees in connection therewith deemed in the nature of
interest under applicable law shall not exceed the Highest Lawful Rate. If the
rate of interest (determined without regard to the preceding sentence) under
this Agreement at any time exceeds the Highest Lawful Rate, the outstanding
amount of the Loans made hereunder shall bear interest at the Highest Lawful
Rate until the total amount of interest due hereunder equals the amount of
interest which would have been due hereunder if the stated rates of interest set
forth in this Agreement had at all times been in effect. In addition, if when
the Loans made hereunder are repaid in full the total interest due hereunder
(taking into account the increase provided for above) is less than the total
amount of interest which would have been due hereunder if the stated rates of
interest set forth in this Agreement had at all times been in effect, then to
the extent permitted by law, Company shall pay to Paying Agent an amount equal
to the difference between the amount of interest paid and the amount of interest
which would have been paid if the Highest Lawful Rate had at all times been in
effect. Notwithstanding the foregoing, it is the intention of Lenders and
Company to conform strictly to any applicable usury laws. Accordingly, if any
Lender contracts for, charges, or receives any consideration which constitutes
interest in excess of the Highest Lawful Rate, then any such excess shall be
cancelled automatically and, if previously paid, shall at such Lender's option
be applied to the outstanding amount of the Loans made hereunder or be refunded
to Company.

                                       118

                                                                  EXECUTION COPY
<PAGE>

      10.19. COUNTERPARTS. This Agreement may be executed in any number of
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.

      10.20. EFFECTIVENESS. This Agreement shall become effective upon the
execution of a counterpart hereof by each of the parties hereto and receipt by
Company and Paying Agent of written, electronic or telephonic notification of
such execution and authorization of delivery thereof.

      10.21. PATRIOT ACT. Each Lender, Paying Agent and Administrative Agent
(for itself and not on behalf of any Lender) hereby notifies Company that
pursuant to the requirements of the Act, it is REQUIRED to obtain, verify and
record information that identifies Company, which information includes the name
and address of Company and other information that will allow such Lender, Paying
Agent or Administrative Agent, as applicable, to identify Company in accordance
with the Act.

      10.22. ELECTRONIC EXECUTION OF ASSIGNMENTS. The words "execution,"
"signed," "signature," and words of like import in any Assignment Agreement
shall be deemed to include electronic signatures or the keeping of records in
electronic form, each of which shall be of the same legal effect, validity or
enforceability as a manually executed signature or the use of a paper-based
recordkeeping system, as the case may be, to the extent and as provided for in
any applicable law, including the Federal Electronic Signatures in Global and
National Commerce Act, the New York State Electronic Signatures and Records Act,
or any other similar state laws based on the Uniform Electronic Transactions
Act.

                  [Remainder of page intentionally left blank]

                                       119

                                                                  EXECUTION COPY
<PAGE>

            IN WITNESS WHEREOF, the parties hereto 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 CORPORATION, A DELAWARE
                                   CORPORATION, AND EACH OF ITS SUBSIDIARIES
                                   LISTED ON ANNEX A HERETO

                                   By: /s/ ANTHONY ORLANDO
                                       -------------------------------------
                                   Name:  Anthony Orlando
                                   Title: President

                                   DANIELSON HOLDING CORPORATION, A
                                   DELAWARE CORPORATION

                                   By: /s/ ANTHONY ORLANDO
                                       -------------------------------------
                                   Name:  Anthony Orlando
                                   Title: Chief Financial Officer and President

                                       120

                                                                  EXECUTION COPY
<PAGE>

                                   CREDIT SUISSE, Cayman Islands Branch as Joint
                                   Lead Arranger, Co-Syndication Agent,
                                   Administrative Agent, Collateral Agent and as
                                   Paying Agent

                                   By: /s/
                                       -------------------------------------
                                       Name:
                                       Title:

                                   By: /s/
                                       -------------------------------------
                                       Name:
                                       Title:

                                       121

                                                                  EXECUTION COPY
<PAGE>

                                   GOLDMAN SACHS CREDIT PARTNERS L.P., as Joint
                                   Lead Arranger, Co-Syndication Agent and as a
                                   Lender

                                   By: /s/
                                       -------------------------------------
                                                  Authorized Signatory

                                       122

                                                                  EXECUTION COPY
<PAGE>

                                                                         ANNEX A
                                TO THE SECOND LIEN CREDIT AND GUARANTY AGREEMENT

                            ANNEX A TO SIGNATURE PAGE

                                  SUBSIDIARIES

<TABLE>
<CAPTION>
                Name
                ----
<S>             <C>
2.              8309 Tujunga Avenue Corp., a California corporation

3.              Amor 14 Corporation, a Delaware corporation

4.              Burney Mountain Power, a California corporation

5.              Covanta Acquisition, Inc., a Delaware corporation

6.              Covanta Bessemer, Inc.,a Delaware corporation

7.              Covanta Cunningham Environmental Support, Inc., a New York corporation

8.              Covanta Energy Americas, Inc., a Delaware corporation

9.              Covanta Energy Construction, Inc.,a Delaware corporation

10.             Covanta Energy Group, Inc., a Delaware corporation

11.             Covanta Energy International, Inc.,a Delaware corporation

12.             Covanta Energy Resource Corp., a Delaware corporation

13.             Covanta Energy Services, Inc., a Delaware corporation

14.             Covanta Energy West, Inc., a Delaware corporation

15.             Covanta Engineering Services, Inc., a New Jersey corporation

16.             Covanta Geothermal Operations Holdings, Inc., a Delaware corporation

17.             Covanta Geothermal Operations, Inc., a Delaware corporation

18.             Covanta Haverhill Properties, Inc., a Massachusetts corporation

19.             Covanta Heber Field Energy, Inc., a Delaware corporation
</TABLE>

                                   Annex A-1

                                                                  EXECUTION COPY
<PAGE>

<TABLE>
<CAPTION>
                Name
                ----
<S>             <C>
20.             Covanta Hennepin Energy Resource Co., Limited Partnership,
                a Delaware limited partnership
                     By: Covanta Energy Resource Corp., its General
                         Partner

21.             Covanta Hillsborough, Inc., a Florida corporation

22.             Covanta Honolulu Resource Recovery Venture, a Hawaii
                General Partnership
                     By: Covanta Oahu Waste Energy Recovery, Inc.,
                         its General Partner
                     By: Covanta Projects of Hawaii, Inc., its General Partner

23.             Covanta Huntsville, Inc., an Alabama corporation

24.             Covanta Hydro Energy, Inc., a Delaware corporation

25.             Covanta Hydro Operations West, Inc., Delaware corporation

26.             Covanta Hydro Operations, Inc., a Tennessee corporation

27.             Covanta Imperial Power Services, Inc., a California corporation

28.             Covanta Kent, Inc.,a Michigan corporation

29.             Covanta Lancaster, Inc., a Pennsylvania corporation

30.             Covanta Lee, Inc., a Florida corporation

31.             Covanta Long Island, Inc., a Delaware corporation

32.             Covanta Marion Land Corp., an Oregon corporation

33.             Covanta Marion, Inc., an Oregon corporation

34.             Covanta Mid-Conn, Inc., a Connecticut corporation

35.             Covanta Montgomery, Inc., Maryland corporation

36.             Covanta New Martinsville Hydroelectric Corporation, a Delaware corporation

37.             Covanta New Martinsville Hydro-Operations Corporation, a West Virginia corporation

38.             Covanta Oahu Waste Energy Recovery, Inc., a California corporation

39.             Covanta Onondaga Operations, Inc., a Delaware corporation
</TABLE>

                                   Annex A-2

                                                                  EXECUTION COPY
<PAGE>

<TABLE>
<CAPTION>
                Name
                ----
<S>             <C>
40.             Covanta Operations of Union, LLC, a New Jersey limited liability company

41.             Covanta OPW Associates, Inc., a  Connecticut corporation

42.             Covanta OPWH, Inc., a Delaware corporation

43.             Covanta Otay 3 Company, a California corporation

44.             Covanta Pasco, Inc., a Florida corporation

45.             Covanta Plant Services of New Jersey, Inc., a New Jersey corporation

46.             Covanta Power Equity Corporation, a Delaware corporation

47.             Covanta Power International Holdings, Inc., a Delaware corporation

48.             Covanta Power Pacific, Inc., a California corporation

49.             Covanta Power Plant Operations, a California corporation

50.             Covanta Projects of Hawaii, Inc., a Hawaii corporation

51.             Covanta Projects, Inc., a Delaware corporation

52.             Covanta RRS Holdings, Inc., a Delaware corporation

53.             Covanta Secure Services, Inc., a Delaware corporation

54.             Covanta SIGC Energy II, Inc., a California corporation

55.             Covanta SIGC Energy, Inc., a Delaware corporation

56.             Covanta SIGC Geothermal Operations, Inc., a California corporation

57.             Covanta Systems, LLC, a Delaware limited liability company

58.             Covanta Tampa Bay, Inc., a Florida corporation

59.             Covanta Tampa Construction, Inc., a Delaware corporation

60.             Covanta Wallingford Associates, Inc., a Connecticut corporation

61.             Covanta Waste to Energy, LLC, a  Delaware limited liability company

62.             Covanta Water Holdings, Inc., a Delaware corporation
</TABLE>

                                   Annex A-3

                                                                  EXECUTION COPY
<PAGE>

<TABLE>
<CAPTION>
                Name
                ----
<S>             <C>
63.             Covanta Water Systems, Inc., a Delaware corporation

64.             Covanta Water Treatment Services, Inc., a Delaware corporation

65.             DSS Environmental, Inc., a New York corporation

66.             ERC Energy II, Inc., a Delaware corporation

67.             ERC Energy, Inc., a Delaware corporation

68.             Heber Field Energy II, Inc., a Delaware corporation

69.             Heber Loan  Partners, a California general partnership
                     By: ERC Energy, Inc., its General Partner
                     By: ERC Energy II, Inc., its General Partner

70.             LMI, Inc., a Massachusetts corporation

71.             Mammoth Geothermal Company, a California corporation

72.             Mammoth Power Company, a California corporation

73.             Michigan Waste Energy, Inc., a Delaware corporation

74.             Mt. Lassen Power, a California corporation

75.             Pacific Geothermal Company, a California corporation

76.             Pacific Oroville Power, Inc., a California corporation

77.             Pacific Recovery Corporation, a California corporation

78.             Pacific Wood Fuels Company, a California corporation

79.             Three Mountain Operations, Inc., a Delaware corporation

80.             Three Mountain Power, LLC, a Delaware corporation

81.             American Ref-Fuel Holdings Corp., a Delaware corporation

82.             Ref-Fuel Corp., a Delaware corporation

83.             Ref-Fuel LLC, a Delaware limited liability company

84.             UAH Management Corp., a New York corporation
</TABLE>

                                   Annex A-4

                                                                  EXECUTION COPY
<PAGE>

                                                                      APPENDIX A
                                TO THE SECOND LIEN CREDIT AND GUARANTY AGREEMENT

                                   COMMITMENTS

<TABLE>
<CAPTION>
              LENDER                         COMMITMENT      PRO RATA SHARE
              ------                      ---------------    --------------
<S>                                       <C>                <C>
Goldman Sachs Credit Partners L.P.        $400,000,000.00       100.0%
                                          ---------------       ------
             TOTAL                        $400,000,000.00       100.0%
                                          ===============       ======
</TABLE>

                                  Appendix A-1

                                                                  EXECUTION COPY
<PAGE>

                                                                      APPENDIX B
                                TO THE SECOND LIEN CREDIT AND GUARANTY AGREEMENT

                                NOTICE ADDRESSES

COVANTA ENERGY CORPORATION
         40 Lane Road
         Fairfield, New Jersey  07004
         Attention: Chief Financial Officer
         CC: General Counsel
         Telecopier: (973) 882-7357

DANIELSON HOLDING CORPORATION
         40 Lane Road
         Fairfield, New Jersey  07004
         Attention: Chief Financial Officer
         CC: General Counsel
         Telecopier: (973) 882-7357

CERTAIN SUBSIDIARIES OF COVANTA ENERGY
CORPORATION, AS GUARANTORS:
         Care of: Covanta Energy Corporation
         40 Lane Road
         Fairfield, New Jersey  07004
         Attention: Chief Financial Officer
         CC: General Counsel
         Telecopier: (973) 882-7357

CREDIT SUISSE, CAYMAN ISLANDS BRANCH
as Joint Lead Arranger, Co-Syndication Agent,
Administrative Agent, Collateral Agent,
Paying Agent and a Lender

Administrative Agent's Principal Office:
         Credit Suisse
         Eleven Madison Avenue
         New York, NY  10010
         Attention: Ronald Davis
         Telecopier: (212) 325-8320

                                  Appendix B-1

                                                                  EXECUTION COPY
<PAGE>

GOLDMAN SACHS CREDIT PARTNERS L.P.,
as Joint Lead Arranger, Co-Syndication Agent
and a Lender
         Goldman Sachs Credit Partners L.P.
         85 Broad Street
         New York, New York  10004
         Attention: Pedro Ramirez
         Telecopier: (917) 343-8319

Administrative Agent's Principal Office:
         Goldman Sachs Credit Partners L.P.
         85 Broad Street
         New York, New York  10004
         Attention: Lawrence Writer
         Telecopier: (212) 902-7862

                                  Appendix B-2

                                                                  EXECUTION COPY
<PAGE>
                                 SCHEDULE 1.1(a)

              CERTAIN ADJUSTMENTS TO FINANCIAL COVENANT DEFINITIONS

In determining the Cash Flow Coverage Ratio, the Company Leverage Ratio and
Consolidated Adjusted EBITDA with respect to any calculation period ending prior
to the first anniversary of the Closing Date, Consolidated Adjusted EBITDA,
Adjusted Company Operating Cash Flow and Company Cash Interest Expense for each
Fiscal Quarter ending on the dates set forth below shall be the amounts
identified under such period:

<Table>
<Caption>
                                   Fiscal Quarter            Fiscal Quarter             Fiscal Quarter
                                    ending on on               ending on                   ending on
                                 December 31, 2004            March 31, 2005             June 30, 2005
---------------------------- -------------------------- -------------------------- --------------------------
<S>                          <C>                        <C>                        <C>
Consolidated Adjusted              $143,831,000                $92,587,000               $126,953,000
EBITDA

Adjusted Company Operating          $33,456,000                $50,193,000                $24,881,000
Cash Flow

Company Cash Interest               $16,717,000                $16,717,000                $16,717,000
Expense
</Table>

<PAGE>

                                 SCHEDULE 1.1(b)

                       CLOSING DATE EXCLUDED SUBSIDIARIES

                  Schedule 1.1(b) - 1:

<Table>
<S>                      <C>
                         OPI Quezon, Inc.
                         Pacific Energy Resources Incorporated
                         Pacific Hydropower Company
                         Penstock Power Company
                         UAH Groveville Hydro Associates
</Table>

                  Schedule 1.1(b) - 2:

<Table>
<S>                      <C>
                         American Ref-Fuel Company LLC
                         ARC Ref-Fuel Management LLC
                         ARC Ref-Fuel Management II, Inc.
                         American Ref-Fuel Company (a general partnership)
                         ARC Hempstead LLC
                         ARC Hempstead II, Inc.
                         American Ref-Fuel Company of Hempstead
                         ARC Essex LLC
                         ARC Essex II, Inc.
                         American Ref-Fuel Company of Essex County
                         ARC SECONN LLC
                         ARC of Connecticut (S.E.), Inc.
                         ARC of Southeastern Connecticut, L.P.
                         American Ref-Fuel Company of Southeastern Connecticut
                         ARC Niagara LLC
                         ARC Niagara II, Inc.
                         American Ref-Fuel Company of Niagara, L.P.
                         ARC Operations of SEMASS LLC
                         ARC Operations of SEMASS II, Inc.
                         American Ref-Fuel Operations of SEMASS, L.P.
                         American Ref-Fuel Company of SEMASS, L.P.
                         ARC SEMASS LLC
                         ARC SEMASS II, Inc.
                         SEMASS Partnership
                         ARC Delaware Valley LLC
                         ARC Delaware Valley II, Inc.
                         American Ref-Fuel Company of Delaware Valley, L.P.
                         ARC TransRiver LLC
                         ARC TransRiver II, Inc.
                         TransRiver Marketing Company, L.P.
                         ARC Transfer Systems LLC
                         ARC Waste LLC
                         ARC Capital District LLC
</Table>

<PAGE>

<Table>
<S>                      <C>
                         ARC Capital District II LLC
                         American Ref-Fuel Company of the Capital District, L.P.
                         ARC II Corp.
                         Ref-Fuel Holdings LLC
                         MSW Energy Holdings LLC
                         MSW Energy Holdings II LLC
                         MSW Energy Finance Co., Inc.
                         MSW Energy Finance Co. II, Inc.
                         MSW Energy Hudson LLC
                         MSW I Sub, Inc.
                         American Ref-Fuel Company of Camden LLC
                         Covanta Alexandria/Arlington, Inc.
                         Covanta Babylon, Inc.
                         Covanta Bristol, Inc.
                         Covanta Fairfax, Inc.
                         Covanta Haverhill, Inc.
                         Covanta Haverhill Associates
                         Covanta Huntington Limited Partnership
                         Covanta Huntington Resource Recovery One Corp.
                         Covanta Huntington Resource Recovery Seven Corp.
                         Covanta Indianapolis, Inc.
                         Covanta Lake II, Inc.
                         Covanta Omega Lease, Inc.
                         Covanta Onondaga Five Corp.
                         Covanta Onondaga Four Corp.
                         Covanta Onondaga Three Corp.
                         Covanta Onondaga Two Corp.
                         Covanta Onondaga, Inc.
                         Covanta Onondaga, LP
                         Covanta Power Development of Bolivia, Inc.
                         Covanta Power Development, Inc.
                         Covanta Projects of Wallingford, LP
                         Covanta SBR Associates
                         Covanta Stanislaus, Inc.
                         Covanta Union, Inc.
                         Covanta Warren Energy Resource Co., Limited Partnership
                         Covanta Warren Holdings I, Inc.
                         Covanta Warren Holdings II, Inc.
                         Covanta Waste to Energy of Italy, Inc.
                         Haverhill Power, LLC.
                         Ogden HCI Services(1)
                         Pacific Energy Operating Group, L.P.
                         Generating Resource Recovery Partners L.P.
</Table>
----------
(1) Entity is inactive and is believed to be dissolved.
<PAGE>

                                 SCHEDULE 1.1(c)

                           EXISTING LETTERS OF CREDIT

<Table>
<Caption>
                                                                                                    Req'd Extension
   Project             Type                    Amount          Maturity            Issuing Bank          Date
 -------------      -----------            --------------      --------            ------------     ---------------
<S>                 <C>                    <C>                 <C>                 <C>              <C>
   Hennepin           Standby              $17,000,000.00      03/31/06              Bank One              01/30/06
 Quezon DSRF          Standby              $11,773,298.00      03/31/06              Bank One              03/01/06
   Fairfax          Performance               $900,000.00      03/31/06              Bank One              03/01/06
   Haripur            Standby                 $676,500.00      03/31/06              Bank One              03/31/06
  Montgomery          Standby               35,000,000.00      03/31/06              Bank One              03/31/06
   Workers            Standby               $3,000,000.00      03/31/06              Bank One              01/30/06
 Compensation
    (ACE)
   Workers
 Compensation         Standby               $2,600,000.00      03/31/06              Bank One               03/01/06
    (AIG)
 Detroit (PMCC)       Standby              $76,151,141.46       7/01/09                UBS AG                3/10/07
 Detroit (GECC)       Standby              $32,637,502.36       7/01/09                UBS AG                3/10/07
</Table>

<PAGE>

                               SCHEDULE 1.1(c)(1)

                          JPMC FUNDED LETTERS OF CREDIT

<Table>
<Caption>
            Applicant/Type                      Amount        Maturity                   Beneficiary
-----------------------------------------     -----------     ---------     -----------------------------------
<S>                                           <C>             <C>           <C>
American Ref-Fuel Company                     $   200,000     6/24/2006        National Union Fire Insurance
LLC/Performance Bond                                                        Company of Pittsburgh, PA (AIG) and
Collateral                                                                       certain of its affiliates

American Ref-Fuel Company                     $   650,000     6/24/2006      Zurich American Insurance Company
LLC/Workers' Comp Collateral

American Ref-Fuel Company LLC                 $700,000.00     6/24/2006      Liberty Mutual Insurance Company
Workers' Comp Collateral

American Ref-Fuel Company                     $25,000,000     6/24/2006                Viacom, Inc.
LLC/Credit Support

American Ref-Fuel Company                     $ 8,011,770     7/2/2006             Bank of America, N.A.
LLC/Master Letter of Credit

MSW Energy Holdings LLC                       $50,000,000.00  6/24/06         American Ref-Fuel Company, LLC

Ref-Fuel Corp.                                $50,000,000.00  6/24/06         American Ref-Fuel Company, LLC
</Table>

<PAGE>

                               SCHEDULE 1.1(c)(2)

                          UBS FUNDED LETTERS OF CREDIT

<Table>
<Caption>
                                                                                                               Req'd Extension
       Project             Type                    Amount           Maturity            Issuing Bank                Date
    --------------        -------              --------------       --------            ------------           ---------------
<S>                       <C>                  <C>                  <C>                 <C>                    <C>
    Detroit (PMCC)        Standby              $76,151,141.46       7/01/09                UBS AG                3/10/07

    Detroit (GECC)        Standby              $32,637,502.36       7/01/09                UBS AG                3/10/07
</Table>

<PAGE>

                                 SCHEDULE 1.1(d)

                        CLOSING DATE FOREIGN SUBSIDIARIES

1.       Edison (Bataan) Cogeneration Corporation (Philippines)

2.       Hidro Operaciones Don Pedro S.A. (Costa Rica)

3.       Covanta Energy India (Balaji) Limited (Mauritius)

4.       Covanta Energy India Investments, Ltd.(Mauritius)

5.       Covanta Energy India (Samalpatti) Ltd.(Mauritius)

6.       Covanta Energy Philippine Holdings, Inc.(Philippines)

7.       Ogden Power Development-Cayman, Inc.(Cayman Islands)

8.       Covanta Philippines Operating, Inc.(Cayman Islands)

9.       Madurai Power Corporation Pvt. Ltd. (India)

10.      Covanta Bangladesh Operating Ltd. (Bangladesh)

11.      Covanta Chinese Investments Ltd. (Mauritius)

12.      Covanta Energy China (Alpha) Ltd. (Mauritius)

13.      Linan Ogden-Jinjiang Cogeneration Co. Ltd. (China)

14.      Covanta Energy China (Beta) Ltd. (Mautitius)

15.      Zibo Ogden Bohui Cogeneration Co. Ltd. (China)

16.      Covanta Energy China (Delta) Ltd. (Mauritius)

17.      Ogden-Yanjiang Cogeneration Co. Ltd. (China)

18.      Covanta Energy China (Gamma) Ltd. (Mauritius)

19.      Covanta One Ltd. (Mauritius)

20.      Covanta Five Ltd. (Mauritius)

21.      Covanta Samalpatti Operating Pvt. Ltd. (India)

22.      Covanta Madurai Operating Pvt. Ltd. (India)

<PAGE>

23.      Goa Holdings Ltd.(Mauritius)

24.      Magellan Cogeneration, Inc. (Philippines)

25.      El Gorguel Energia S.L. (Spain)

26.      Covanta Operaciones LICA S.L. (Spain)

27.      Ogden Energy of Bongaigon Pvt. Ltd. (India)

28.      Enereurope Holdings III, B.V. (Netherlands)

29.      Ogden Energy (Gulf) Limited (Mauritius)

30.      Ogden Energy India (Bakreshwar) Ltd. (Mauritius)

31.      Bal-Sam India Holdings, Ltd. (Mauritius)

32.      Covanta Energy India (CBM) Ltd. (Mauritius)

33.      Covanta Two Ltd. (Mauritius)

34.      Covanta Cayman (Sahacogen) Ltd. (Cayman Islands)

35.      Covanta Three Ltd. (Mauritius)

36.      Covanta Cayman (Rojana) Ltd. (Cayman Islands)

37.      Covanta Four Ltd. (Mauritius)

38.      Power Operations and Maintenance Ltd. (Bermuda)

39.      Covanta India Operating Pvt. Ltd. (India)

40.      Ogden Taiwan Investments Ltd. (Mauritius)

41.      OPDB, Ltd. (Cayman Islands)

42.      Covanta Energy India Pvt. Ltd. (India)

43.      Covanta Energy (Thailand) Ltd. (Thailand)

44.      Covanta Energy Asia Pacific Ltd. (Hong Kong)

45.      Covanta Waste to Energy Asia Investments (Mauritius)

46.      Olmec Insurance Ltd. (Bermuda)

<PAGE>

47.      OPI Carmona Limited (Cayman Islands)

48.      OPI Carmona One Limited (Cayman Islands)

49.      Covanta Energy Europe Limited (UK)

<PAGE>

                                 SCHEDULE 3.1(d)

                    CERTAIN CLOSING DATE INDEBTEDNESS EVENTS

o   Madurai Project (India): Madurai Power Corporation Pvt. Ltd., a Subsidiary,
    is currently in technical default on its limited recourse project debt due
    to the failure of the project power purchase agreement off-taker to fund a
    required escrow account and post a required letter of credit.

<PAGE>

                                 SCHEDULE 3.1(h)

                        CLOSING DATE MORTGAGED PROPERTIES

FEE INTERESTS IN REAL PROPERTY ASSETS

    o   Parcel of approximately 5.6 acres located at 40 Lane Road, Township of
        Fairfield, Essex County, New Jersey, owned by Covanta Projects, Inc.

    o   Parcel of approximately 43.29 acres situated in the City of Oroville,
        County of Butte, California, owned by Pacific Oroville Power, Inc.

    o   Parcel of approximately 59 acres situated in County of Lassen,
        California, owned by Mt. Lassen Power.

<PAGE>

                                  SCHEDULE 4.1

                          JURISDICTIONS OF ORGANIZATION

<Table>
<Caption>
                COMPANY NAME                                                             JURISDICTION OF
                                                                                         INCORPORATION
<S>             <C>                                                                      <C>
                8309 Tujunga Avenue Corp.                                                California
                Amor 14 Corporation                                                      Delaware
                Burney Mountain Power                                                    California
                Covanta Acquisition, Inc.                                                Delaware
                Covanta Alexandria /Arlington, Inc.                                      Virginia
                Covanta Babylon, Inc.                                                    New York
                Covanta Bessemer, Inc.                                                   Delaware
                Covanta Bristol, Inc.                                                    Connecticut
                Covanta Cunningham Environmental Support, Inc.                           New York
                Covanta Energy Americas, Inc.                                            Delaware
                Covanta Energy Construction, Inc                                         Delaware
                Covanta Energy Corporation                                               Delaware
                Covanta Energy Group, Inc.                                               Delaware
                Covanta Energy International, Inc.                                       Delaware
                Covanta Energy Resource Corp.                                            Delaware
                Covanta Energy Services, Inc.                                            Delaware
                Covanta Energy West, Inc.                                                Delaware
                Covanta Engineering Services, Inc.                                       New Jersey
                Covanta Fairfax, Inc.                                                    Virginia
                Covanta Geothermal Operations Holdings, Inc.                             Delaware
                Covanta Geothermal Operations, Inc.                                      Delaware
                Covanta Haverhill Associates                                             Massachusetts
                Covanta Haverhill Properties, Inc.                                       Massachusetts
                Covanta Haverhill, Inc.                                                  Massachusetts
                Covanta Heber Field Energy, Inc.                                         Delaware
                Covanta Hennepin Energy Resource Co., Limited Partnership                Delaware
                Covanta Hillsborough, Inc.                                               Florida
                Covanta Honolulu Resource Recovery Venture                               Hawaii
                Covanta Huntington Limited Partnership                                   Delaware
                Covanta Huntington Resource Recovery One Corp.                           Delaware
                Covanta Huntington Resource Recovery Seven Corp.                         Delaware
                Covanta Huntsville, Inc.                                                 Alabama
                Covanta Hydro Energy, Inc.                                               Delaware
                Covanta Hydro Operations West, Inc.                                      Delaware
                Covanta Hydro Operations, Inc.                                           Tennessee
                Covanta Imperial Power Services, Inc.                                    California
                Covanta Indianapolis, Inc.                                               Indiana
                Covanta Kent, Inc.                                                       Michigan
</Table>

<PAGE>

<Table>
<Caption>
                COMPANY NAME                                                             JURISDICTION OF
                                                                                         INCORPORATION
<S>             <C>                                                                      <C>
                Covanta Lake II, Inc.                                                    Florida
                Covanta Lancaster, Inc.                                                  Pennsylvania
                Covanta Lee, Inc.                                                        Florida
                Covanta Long Island, Inc.                                                Delaware
                Covanta Marion Land Corp.                                                Oregon
                Covanta Marion, Inc.                                                     Oregon
                Covanta Mid-Conn, Inc.                                                   Connecticut
                Covanta Montgomery, Inc.                                                 Maryland
                Covanta New Martinsville Hydroelectric Corporation                       Delaware
                Covanta New Martinsville Hydro-Operations Corporation                    West Virginia
                Covanta Oahu Waste Energy Recovery, Inc.                                 California
                Covanta Omega Lease, Inc.                                                Delaware
                Covanta Onondaga Five Corp.                                              Delaware
                Covanta Onondaga Four Corp.                                              Delaware
                Covanta Onondaga, Limited Partnership                                    Delaware
                Covanta Onondaga Operations, Inc.                                        Delaware
                Covanta Onondaga Three Corp.                                             Delaware
                Covanta Onondaga Two Corp.                                               Delaware
                Covanta Onondaga, Inc.                                                   New York
                Covanta Operations of Union, LLC                                         New Jersey
                Covanta OPW Associates, Inc.                                             Connecticut
                Covanta OPWH, Inc.                                                       Delaware
                Covanta Pasco, Inc.                                                      Florida
                Covanta Plant Services of New Jersey, Inc.                               New Jersey
                Covanta Power Development of Bolivia, Inc.                               Delaware
                Covanta Power Development, Inc.                                          Delaware
                Covanta Power Equity Corporation                                         Delaware
                Covanta Power International Holdings, Inc.                               Delaware
                Covanta Power Pacific, Inc.                                              California
                Covanta Power Plant Operations                                           California
                Covanta Projects of Hawaii, Inc.                                         Hawaii
                Covanta Projects of Wallingford, L.P.                                    Delaware
                Covanta Projects, Inc.                                                   Delaware
                Covanta RRS Holdings, Inc.                                               Delaware
                Covanta SBR Associates                                                   Massachusetts
                Covanta Secure Services, Inc.                                            Delaware
                Covanta SIGC Energy II, Inc.                                             California
                Covanta SIGC Energy, Inc.                                                Delaware
                Covanta SIGC Geothermal Operations, Inc.                                 California
                Covanta Stanislaus, Inc.                                                 California
                Covanta Systems, LLC                                                     Delaware
                Covanta Tampa Bay, Inc.                                                  Florida
</Table>

<PAGE>

<Table>
<Caption>
                COMPANY NAME                                                             JURISDICTION OF
                                                                                         INCORPORATION
<S>             <C>                                                                      <C>
                Covanta Tampa Construction, Inc.                                         Delaware
                Covanta Union, Inc.                                                      New Jersey
                Covanta Wallingford Associates, Inc.                                     Connecticut
                Covanta Warren Energy Resource Co., Limited Partnership                  Delaware
                Covanta Warren Holdings I, Inc.                                          Virginia
                Covanta Warren Holdings II, Inc.                                         California
                Covanta Waste to Energy of Italy, Inc.                                   Delaware
                Covanta Waste to Energy, LLC                                             Delaware
                Covanta Water Holdings, Inc.                                             Delaware
                Covanta Water Systems, Inc.                                              Delaware
                Covanta Water Treatment Services, Inc.                                   Delaware
                DSS Environmental, Inc.                                                  New York
                ERC Energy II, Inc.                                                      Delaware
                ERC Energy, Inc.                                                         Delaware
                Generating Resource Recovery Partners L.P.                               California
                Great River Insurance Company                                            California
                Haverhill Power, LLC                                                     Massachusetts
                Heber Field Energy II, Inc.                                              Delaware
                Heber Loan Partners                                                      California
                LMI, Inc.                                                                Massachusetts
                Mammoth Geothermal Company                                               California
                Mammoth Power Company                                                    California
                Michigan Waste Energy, Inc.                                              Delaware
                Mt. Lassen Power                                                         California
                OPI Quezon, Inc.                                                         Delaware
                Pacific Energy Operating Group, L.P.                                     California
                Pacific Energy Resources Incorporated                                    California
                Pacific Geothermal Company                                               California
                Pacific Hydropower Company                                               California
                Pacific Oroville Power, Inc.                                             California
                Pacific Recovery Corporation                                             California
                Pacific Wood Fuels Company                                               California
                Covanta Otay 3 Company                                                   California
                Penstock Power Company                                                   California
                Three Mountain Operations, Inc.                                          Delaware
                Three Mountain Power, LLC                                                Delaware
                American Ref-Fuel Holdings Corp.                                         Delaware
                American Ref-Fuel Company LLC                                            Delaware
                ARC Ref-Fuel Management LLC                                              Delaware
                ARC Ref-Fuel Management II, Inc.                                         Delaware
                American Ref-Fuel Company (a general partnership)                        Delaware
</Table>

<PAGE>

<Table>
<Caption>
                COMPANY NAME                                                             JURISDICTION OF
                                                                                         INCORPORATION
<S>             <C>                                                                      <C>
                ARC Hempstead LLC                                                        Delaware
                ARC Hempstead II, Inc.                                                   Delaware
                American Ref-Fuel Company of Hempstead                                   New York
                ARC Essex LLC                                                            Delaware
                ARC Essex II, Inc.                                                       Delaware
                American Ref-Fuel Company of Essex County                                New Jersey
                ARC SECONN LLC                                                           Delaware
                ARC of Connecticut (S.E.), Inc.                                          Delaware
                ARC of Southeastern Connecticut, L.P.                                    Delaware
                American Ref-Fuel Company of Southeastern Connecticut                    Connecticut
                ARC Niagara LLC                                                          Delaware
                ARC Niagara II, Inc.                                                     Delaware
                American Ref-Fuel Company of Niagara, L.P.                               Delaware
                ARC Operations of SEMASS LLC                                             Delaware
                ARC Operations of SEMASS II, Inc.                                        Delaware
                American Ref-Fuel Operations of SEMASS, L.P.                             Delaware
                American Ref-Fuel Company of SEMASS, L.P.                                Delaware
                ARC SEMASS LLC                                                           Delaware
                ARC SEMASS II, Inc.                                                      Delaware
                SEMASS Partnership                                                       Massachusetts
                ARC Delaware Valley LLC                                                  Delaware
                ARC Delaware Valley II, Inc.                                             Delaware
                American Ref-Fuel Company of Delaware Valley, L.P.                       Delaware
                ARC TransRiver LLC                                                       Delaware
                ARC TransRiver II, Inc.                                                  Delaware
                TransRiver Marketing Company, L.P.                                       Delaware
                ARC Transfer Systems LLC                                                 Delaware
                ARC Waste LLC                                                            Delaware
                ARC Capital District LLC                                                 Delaware
                ARC Capital District II LLC                                              Delaware
                American Ref-Fuel Company of the Capital District, L.P.                  Delaware
                Ref-Fuel Corp.                                                           Delaware
                UAH-Groveville Hydro Associates                                          New York
                UAH Management Corp.                                                     New York
                Ref-Fuel LLC                                                             Delaware
                ARC II Corp.                                                             Delaware
                Ref-Fuel Holdings LLC                                                    Delaware
                MSW Energy Holdings LLC                                                  Delaware
                MSW Energy Holdings II LLC                                               Delaware
                MSW Energy Finance Co., Inc.                                             Delaware
                MSW Energy Finance Co. II, Inc.                                          Delaware
                MSW Energy Hudson LLC                                                    Delaware
</Table>

<PAGE>

<Table>
<Caption>
                COMPANY NAME                                                             JURISDICTION OF
                                                                                         INCORPORATION
<S>             <C>                                                                      <C>
                MSW I Sub, Inc.                                                          Delaware
                American Ref-Fuel Company of Camden LLC                                  Delaware
                Ogden HCI Services                                                       N/A(1)
                Edison (Bataan) Cogeneration Corporation                                 Philippines
                Hidro Operaciones Don Pedro S.A.                                         Costa Rica
                Covanta Energy India (Balaji) Limited                                    Mauritius
                Covanta Energy India Investments, Ltd.                                   Mauritius
                Covanta Energy India (Samalpatti) Ltd.                                   Mauritius
                Covanta Energy Philippine Holdings, Inc.                                 Philippines
                Ogden Power Development-Cayman, Inc.                                     Cayman Islands
                Covanta Philippines Operating, Inc.                                      Cayman Islands
                Madurai Power Corporation Pvt. Ltd.                                      India
                Covanta Bangladesh Operating Ltd.                                        Bangladesh
                Covanta Chinese Investments Ltd.                                         Mauritius
                Covanta Energy China (Alpha) Ltd.                                        Mauritius
                Linan Ogden-Jinjiang Cogeneration Co. Ltd.                               China
                Covanta Energy China (Beta) Ltd.                                         Mauritius
                Zibo Ogden Bohui Cogeneration Co. Ltd.                                   China
                Covanta Energy China (Delta) Ltd.                                        Mauritius
                Taixing Ogden-Yanjiang Cogeneration Co. Ltd.                             China
                Covanta Energy China (Gamma) Ltd.                                        Mauritius
                Covanta One Ltd.                                                         Mauritius
                Covanta Five Ltd.                                                        Mauritius
                Covanta Samalpatti Operating Pvt. Ltd.                                   India
                Covanta Madurai Operating Pvt. Ltd.                                      India
                Goa Holdings Ltd.                                                        Mauritius
                Magellan Cogeneration, Inc.                                              Philippines
                El Gorguel Energia S.L.                                                  Spain
                Covanta Operaciones LICA S.L.                                            Spain
                Ogden Energy of Bongaigon Pvt. Ltd.                                      India
                Enereurope Holdings III, B.V.                                            Netherlands
                Ogden Energy (Gulf) Limited                                              Mauritius
                Ogden Energy India (Bakreshwar) Ltd.                                     Mauritius
                Bal-Sam India Holdings, Ltd.                                             Mauritius
                Covanta Energy India (CBM) Ltd.                                          Mauritius
                Covanta Two Ltd.                                                         Mauritius
                Covanta Cayman (Sahacogen) Ltd.                                          Cayman Islands
                Covanta Three Ltd.                                                       Mauritius
                Covanta Cayman (Rojana) Ltd.                                             Cayman Islands
                Covanta Four Ltd.                                                        Mauritius
</Table>
-----------
(1) Entity inactive and jurisdiction of formation is not determinable
<PAGE>

<Table>
<Caption>
                COMPANY NAME                                                             JURISDICTION OF
                                                                                         INCORPORATION
<S>             <C>                                                                      <C>
                Power Operations and Maintenance Ltd.                                    Bermuda
                Covanta India Operating Pvt. Ltd.                                        India
                Ogden Taiwan Investments Ltd.                                            Mauritius
                OPDB, Ltd.                                                               Cayman Islands
                Covanta Energy India Pvt. Ltd.                                           India
                Covanta Energy (Thailand) Ltd.                                           Thailand
                Covanta Energy Asia Pacific Ltd.                                         Hong Kong
                Covanta Waste to Energy Asia Investments                                 Mauritius
                Olmec Insurance Ltd.                                                     Bermuda
                OPI Carmona Limited                                                      Cayman Islands
                OPI Carmona One Limited                                                  Cayman Islands
                Covanta Energy Europe Limited                                            United Kingdom
</Table>

<PAGE>

                                  SCHEDULE 4.2

                           CAPITAL STOCK AND OWNERSHIP

(A) Covanta and Certain of its Domestic Subsidiaries

<Table>
<Caption>
                        NAME                                                                              DESCRIPTION OF
                                                                                                           ANTICIPATED
                   (JURISDICTION OF                                                                    OWNERSHIP AS OF THE
                     ORGANIZATION)                      CAPITAL STOCK OR EQUITY INTERESTS                  CLOSING DATE
          ----------------------------------- ------------------------------------------------- -------------------------------
<S>       <C>                                 <C>                                               <C>
1.         8309 Tujunga Avenue Corp.            Issued: 10 shares
           (California)                                                                           100% owned by Covanta Power
                                                                                                  Pacific, Inc.

2.         AMOR 14 Corporation (Delaware)       Issued:  5,000 shares
                                                                                                  100% owned by Covanta SIGC
                                                                                                  Energy Inc.

3.         Burney Mountain Power                Issued: 10 shares
           (California)                                                                           100% owned by Covanta Power
                                                                                                  Pacific, Inc.

4.         Covanta Acquisition, Inc.            Issued: 100 shares
           (Delaware)                                                                             100% owned by Covanta Water
                                                                                                  Systems, Inc.

5.         Covanta Alexandria/Arlington,        Issued: 1,000 shares
           Inc.                                                                                   100% owned by Covanta
           (Virginia)                                                                             Systems, LLC.

6.         Covanta Babylon, Inc.                Issued: 100 shares
           (New York)                                                                             100% owned by Covanta
                                                                                                  Systems, LLC

7.         Covanta Bessemer, Inc. (Delaware)    Issued: 100 shares
                                                                                                  100% owned by Covanta Water
                                                                                                  Systems, Inc.

8.         Covanta Bristol, Inc.                Issued: 100 shares
           (Connecticut)                                                                          100% owned by Covanta
                                                                                                  Systems, LLC

9.         Covanta Cunningham                   Issued: 10 shares issued; no par value
           Environmental Support                                                                  100% owned by Covanta
           Services, Inc.                                                                         Acquisition, Inc.
           (New York)

10.        Covanta Energy Americas, Inc.        Issued: 1,000 shares
           (Delaware)                                                                             100% owned by Covanta
                                                                                                  Energy West, Inc.
</Table>

<PAGE>

<Table>
<Caption>
                        NAME                                                                              DESCRIPTION OF
                                                                                                           ANTICIPATED
                   (JURISDICTION OF                                                                    OWNERSHIP AS OF THE
                     ORGANIZATION)                      CAPITAL STOCK OR EQUITY INTERESTS                  CLOSING DATE
          ----------------------------------- ------------------------------------------------- -------------------------------
<S>       <C>                                 <C>                                               <C>
11.        Covanta Energy Construction, Inc.    Issued: 100 shares
           (Delaware)                                                                             100% owned by Covanta
                                                                                                  Energy Americas, Inc.

12.        Covanta Energy Europe Limited        Issued: 1,000,000 shares
           (UK)
                                                                                                  100% owned by Covanta Energy
                                                                                                  West, Inc.

13.        Covanta Energy Group, Inc.           Issued: 100 shares
           (Delaware)                                                                             100% owned by Covanta
                                                                                                  Energy Corporation

14.        Covanta Energy International,        Issued: 100 shares
           Inc.                                                                                   100% owned by Covanta
           (Delaware)                                                                             Projects, Inc.

15.        Covanta Energy Resource Corp.        Issued: 1,000 shares
           (Delaware)                                                                             100% owned by Covanta Waste
                                                                                                  to Energy, LLC

16.        Covanta Energy Services, Inc.        Issued: 100 shares
           (Delaware)                                                                             100% owned by Covanta Waste
                                                                                                  to Energy, LLC

17.        Covanta Energy West, Inc.            Issued: 100 shares
           (Delaware)                                                                             100% owned by Covanta
                                                                                                  Energy International, Inc.

18.        Covanta Engineering Services,        Issued: 100 shares
           Inc.                                                                                   100% owned by Covanta
           (New Jersey)                                                                           Systems, LLC

19.        Covanta Warren Holdings, Inc.        Issued: 100 shares
           (f/k/a Covanta Equity of                                                               100% owned by Covanta
           Arlington/Alexandria, Inc.)                                                            Systems, LLC
           (Virginia)

20.        Covanta Warren Holdings II, Inc.     Issued: 100 shares
           (f/k/a Covanta Equity of                                                               100% owned by Covanta
           Stanislaus, Inc.)                                                                      Systems, LLC
           (California)

21.        Covanta Fairfax, Inc.                Issued: 100 shares
           (Virginia)                                                                             100% owned by Covanta
                                                                                                  Systems, LLC
</Table>

<PAGE>

<Table>
<Caption>
                        NAME                                                                              DESCRIPTION OF
                                                                                                           ANTICIPATED
                   (JURISDICTION OF                                                                    OWNERSHIP AS OF THE
                     ORGANIZATION)                      CAPITAL STOCK OR EQUITY INTERESTS                  CLOSING DATE
          ----------------------------------- ------------------------------------------------- -------------------------------
      <C>                                 <C>                                               <C>
22.        Covanta Geothermal Operations        Issued: 100 shares
           Holdings, Inc.                                                                         100% owned by Covanta
           (Delaware)                                                                             Energy Americas, Inc.

23.        Covanta Geothermal Operations,       Issued: 1,500 shares
           Inc.                                                                                   100% owned by Covanta
           (Delaware)                                                                             Energy Americas, Inc.

24.        Covanta Haverhill Properties,        Issued: 100 shares
           Inc.                                                                                   100% owned by Covanta
           (Massachusetts)                                                                        Systems, LLC

25.        Covanta Haverhill, Inc.              Issued: 100 shares
           (Massachusetts)                                                                        100% owned by Covanta
                                                                                                  Systems, LLC

26.        Covanta Heber Field Energy, Inc.     Issued: 1500 shares
           (Delaware)                                                                             100% owned by Covanta Power
                                                                                                  Equity Corporation

27.        Covanta Hillsborough, Inc.           Issued:  100 shares
           (Florida)                                                                              100% owned by Covanta
                                                                                                  Systems, LLC

28.        Covanta Huntington Resource          Issued:  1,000 shares
           Recovery One Corp.                                                                     100% owned by Covanta
           (Delaware)                                                                             Systems, LLC

29.        Covanta Huntington Resource          Issued: 100 shares
           Recovery Seven Corp.                                                                   100% owned by Covanta
           (Delaware)                                                                             Systems, LLC

30.        Covanta Huntsville, Inc.             Issued: 100 shares
           (Alabama)                                                                              100% owned by Covanta
                                                                                                  Systems, LLC

31.        Covanta Hydro Energy, Inc.           Issued: 1,500 shares
           (Delaware)                                                                             100% owned by Covanta Power
                                                                                                  Equity Corporation

32.        Covanta Hydro Operations             Issued: 100 shares
           West, Inc.                                                                             100% owned by Covanta
           (Delaware)                                                                             Energy Americas, Inc.
</Table>

<PAGE>

<Table>
<Caption>
                        NAME                                                                              DESCRIPTION OF
                                                                                                           ANTICIPATED
                   (JURISDICTION OF                                                                    OWNERSHIP AS OF THE
                     ORGANIZATION)                      CAPITAL STOCK OR EQUITY INTERESTS                  CLOSING DATE
          ----------------------------------- ------------------------------------------------- -------------------------------
      <C>                                 <C>                                               <C>
33.        Covanta Hydro Operations, Inc.       Issued: 100 shares
           (Tennessee)                                                                            100% owned by Covanta
                                                                                                  Energy Americas, Inc.

34.        Covanta Imperial Power               Issued: 1,000 shares
           Services, Inc.                                                                         100% owned by Covanta
           (California)                                                                           Energy Americas, Inc.

35.        Covanta Indianapolis, Inc.           Issued: 100 shares
           (Indiana)                                                                              100% owned by Covanta
                                                                                                  Systems, LLC

36.        Covanta Kent, Inc.                   Issued: 100 shares
           (Michigan)                                                                             100% owned by Covanta
                                                                                                  Systems, LLC

37.        Covanta Lake II, Inc.                Issued: 750 shares common
           (Florida)                                                                              75% owned by Covanta
                                                Issued: 250 shares preferred                      Systems, LLC

38.        Covanta Lancaster, Inc.              Issued: 100 shares
           (Pennsylvania)                                                                         100% owned by Covanta
                                                                                                  Systems, LLC

39.        Covanta Lee, Inc.                    Issued: 100 shares
           (Florida)                                                                              100% owned by Covanta
                                                                                                  Systems, LLC

40.        Covanta Long Island, Inc.            Issued: 100 shares
           (Delaware)                                                                             100% owned by Covanta
                                                                                                  Systems, LLC

41.        Covanta Marion Land Corp.            Issued to Covanta: 1000 common shares
           (Oregon)                                                                               76.923% owned by Covanta
                                                                                                  Systems, LLC

                                                                                                  23.177% owned by a third
                                                                                                  party

42.        Covanta Marion, Inc.                 Issued: 10 shares
           (Oregon)                                                                               100% owned by Covanta
                                                                                                  Systems, LLC

43.        Covanta Mid-Conn, Inc.               Issued: 1,000 shares
           (Connecticut)
                                                                                                  100% owned by Covanta RRS
                                                                                                  Holdings, Inc.
</Table>

<PAGE>

<Table>
<Caption>
                        NAME                                                                              DESCRIPTION OF
                                                                                                           ANTICIPATED
                   (JURISDICTION OF                                                                    OWNERSHIP AS OF THE
                     ORGANIZATION)                      CAPITAL STOCK OR EQUITY INTERESTS                  CLOSING DATE
          ----------------------------------- ------------------------------------------------- -------------------------------
      <C>                                 <C>                                               <C>
44.        Covanta Montgomery, Inc.             Issued: 100 shares
           (Maryland)                                                                             100% owned by Covanta
                                                                                                  Systems, LLC

45.        Covanta New Martinsville             Issued: 10 shares
           Hydroelectric Corporation                                                              100% owned by Covanta Power
           (Delaware)                                                                             Equity Corporation

46.        Covanta New Martinsville             Issued: 400 shares
           Hydro-Operations Corporation                                                           100% owned by Covanta
           (West Virginia)                                                                        Energy Americas, Inc.

47.        Covanta Oahu Waste Energy            Issued: 1,000 shares
           Recovery Inc.                                                                          100% owned by Covanta RRS
           (California)                                                                           Holdings, Inc.

48.        Covanta Omega Lease, Inc.
           (Delaware)                                                                             100% owned by Covanta
                                                Issued: 1,000 shares                              Haverhill, Inc.

49.        Covanta Onondaga Five Corp.          Issued: 100 shares
           (Delaware)                                                                             100% owned by Covanta
                                                                                                  Systems, LLC

50.        Covanta Onondaga Four Corp.          Issued: 100 shares
           (Delaware)                                                                             100% owned by Covanta
                                                                                                  Systems, LLC

51.        Covanta Onondaga Operations, Inc.    Issued: 100 shares
           (Delaware)                                                                             100% owned by Covanta
                                                                                                  Systems, LLC

52.        Covanta Onondaga Three Corp.         Issued: 100 shares
           (Delaware)                                                                             100% owned by Covanta
                                                                                                  Systems, LLC

53.        Covanta Onondaga Two Corp.           Issued: 100 shares
           (Delaware)                                                                             100% owned by Covanta
                                                                                                  Systems, LLC

54.        Covanta Onondaga, Inc.               Issued: 100 shares
           (New York)                                                                             100% owned by Covanta
                                                                                                  Systems, LLC

55.        Covanta OPW Associates, Inc.         Issued: 100 shares
           (Connecticut)                                                                          100% owned by Covanta Waste
                                                                                                  to Energy, LLC
</Table>

<PAGE>

<Table>
<Caption>
                        NAME                                                                              DESCRIPTION OF
                                                                                                           ANTICIPATED
                   (JURISDICTION OF                                                                    OWNERSHIP AS OF THE
                     ORGANIZATION)                      CAPITAL STOCK OR EQUITY INTERESTS                  CLOSING DATE
          ----------------------------------- ------------------------------------------------- -------------------------------
      <C>                                 <C>                                               <C>
56.        Covanta OPWH, Inc.                   Issued: 100 shares
           (Delaware)                                                                             100% owned by Covanta Waste
                                                                                                  to Energy, LLC

57.        Covanta Pasco, Inc.                  Issued: 100 shares
           (Florida)                                                                              100% owned by Covanta
                                                                                                  Systems, LLC

58.        Covanta Plant Services of New        Issued: 100 shares
           Jersey, Inc.                                                                           100% owned by Covanta
           (New Jersey)                                                                           Energy Services, Inc.

59.        Covanta Power Equity                 Issued: 1,000 shares of Common Class A
           Corporation                                                                            100% owned by Covanta
           (Delaware)                                                                             Energy Americas, Inc.

60.       Covanta Power International           Issued:  1,000 shares
          Holdings, Inc.                                                                          100% owned by Covanta
           (Delaware)                                                                             Energy Americas, Inc.

61.        Covanta Power Pacific, Inc.          Issued: 10 shares
           (California)                                                                           100% owned by Covanta
                                                                                                  Energy Americas, Inc.

62.        Covanta Power Plant                  Issued: 10 shares
           Operations                                                                             100% owned by Covanta Power
           (California)                                                                           Pacific, Inc.

63.        Covanta Projects of Hawaii, Inc.     Issued: 1,000 shares
           (Hawaii)
                                                                                                  100% owned by Covanta RRS
                                                                                                  Holdings, Inc.

64.        Covanta Projects, Inc.               Issued: 1,000 shares
           (Delaware)                                                                             100% owned by Covanta
                                                                                                  Energy Group, Inc.

65.        Covanta RRS Holdings Inc.            Issued: 100 shares
           (Delaware)                                                                             100% owned by Covanta Waste
                                                                                                  to Energy, LLC

66.        Covanta Secure Services, Inc         Issued: 100 shares
           (Delaware)                                                                             100% owned by Covanta Waste
                                                                                                  to Energy, LLC

67.        Covanta SIGC Energy, Inc.            Issued:  1,000 shares
           (California)                                                                           100% owned by Covanta
                                                                                                  Energy Americas, Inc.
</Table>

<PAGE>

<Table>
<Caption>
                        NAME                                                                              DESCRIPTION OF
                                                                                                           ANTICIPATED
                   (JURISDICTION OF                                                                    OWNERSHIP AS OF THE
                     ORGANIZATION)                      CAPITAL STOCK OR EQUITY INTERESTS                  CLOSING DATE
          ----------------------------------- ------------------------------------------------- -------------------------------
<S>      <C>                                 <C>                                               <C>

68.        Covanta SIGC Energy II, Inc.         Issued:  1,000 shares
           (California                                                                            100% owned by Covanta
                                                                                                  Energy Americas, Inc.

69.        Covanta SIGC Geothermal              Issued: 500 shares
           Operations, Inc.                                                                       100% owned by Covanta
           (Delaware)                                                                             Energy Americas, Inc.

70.        Covanta Stanislaus, Inc.             Issued: 100 shares
           (California)                                                                           100% owned by Covanta
                                                                                                  Systems, LLC

71.        Covanta Systems LLC                  Limited Liability Company
           (Delaware)                                                                             100% owned by Covanta Waste
                                                                                                  to Energy, LLC

72.        Covanta Tampa Bay, Inc.              Issued: 100 shares
           (Florida)                                                                              100% owned by Covanta Water
                                                                                                  Systems, Inc.

73.        Covanta Tampa Construction, Inc.     Issued: 100 shares
           (Delaware)                                                                             100% owned by Covanta Water
                                                                                                  Systems, Inc.

74.        Covanta Union, Inc.                  Issued: 100 shares
           (New Jersey)                                                                           100% owned by Covanta
                                                                                                  Systems, LLC.

75.        Covanta Wallingford Associates,      Issued: 100 shares
           Inc.                                                                                   100% owned by Covanta Waste
           (Connecticut)                                                                          to Energy, LLC

76.        Covanta Waste to Energy Asia         Issued: 2 shares issued at $1.00 par value
           Investments*                                                                           100% owned by Covanta Waste
           (Mauritius)                                                                            to Energy, LLC

77.        Covanta Waste to Energy LLC          Issued: 100 shares
           (Delaware)                                                                             100% owned by Covanta
                                                                                                  Projects, Inc.

78.        Covanta Water Holdings, Inc.         Issued: 100 shares
           (Delaware)                                                                             100% owned by Covanta
                                                                                                  Projects, Inc.

79.        Covanta Water Systems, Inc.          Issued: 100 shares
           (Delaware)                                                                             100% owned by Covanta Water
                                                                                                  Holdings, Inc.
</Table>

<PAGE>

<Table>
<Caption>
                        NAME                                                                              DESCRIPTION OF
                                                                                                           ANTICIPATED
                   (JURISDICTION OF                                                                    OWNERSHIP AS OF THE
                     ORGANIZATION)                      CAPITAL STOCK OR EQUITY INTERESTS                  CLOSING DATE
          ----------------------------------- ------------------------------------------------- -------------------------------
      <C>                                 <C>                                               <C>
80.        Covanta Water Treatment              Issued: 100 shares
           Services, Inc.                                                                         100% owned by Covanta Water
           (Delaware)                                                                             Holdings, Inc.

81.        ERC Energy II, Inc.                  Issued: 100 shares
           (Delaware)                                                                             100% owned by Covanta Power
                                                                                                  Equity Corporation

82.        ERC Energy, Inc.                     Issued: 1,000 shares
           (Delaware)                                                                             100% owned by Covanta Power
                                                                                                  Equity Corporation

83.        Haverhill Power LLC                  Issued: 10,000 shares
           (Delaware)                                                                             100% owned by Covanta
                                                                                                  Haverhill, Inc.

84.        Heber Field Energy II, Inc.          Issued: 100 shares
           (Delaware)                                                                             100% owned by Covanta Power
                                                                                                  Equity Corporation

85.        LMI, Inc.                            Issued:  10,000 shares
           (Massachusetts)                                                                        100% owned by Haverhill
                                                                                                  Power,LLC

86.        Mammoth Geothermal Company           Issued: 10 shares
           (California)                                                                           100% owned by Covanta Power
                                                                                                  Pacific, Inc.

87.        Mammoth Power Company                Issued: 10 shares
           (California)                                                                           100% owned by Covanta Power
                                                                                                  Pacific, Inc.

88.        Michigan Waste Energy, Inc.          Issued: 1,000 shares
                                                                                                  100% owned by Covanta RRS
                                                                                                  Holdings, Inc.

89.        Mt. Lassen Power                     Issued: 10 shares
           (California)                                                                           100% owed by Covanta
                                                                                                  Power Pacific, Inc.

90.        Olmec Insurance, Ltd. (Bermuda)      Issued: 1,000,000 common shares
                                                                                                  100% owned by Covanta
                                                                                                  Energy Group, Inc.

91.        OPI Carmona Limited                  Issued: 100 shares issued at $1.00 par value
           (Cayman Islands)                                                                       100% owned by Covanta Waste
           (To be dissolved)                                                                      to Energy, LLC
</Table>

<PAGE>

<Table>
<Caption>
                        NAME                                                                              DESCRIPTION OF
                                                                                                           ANTICIPATED
                   (JURISDICTION OF                                                                    OWNERSHIP AS OF THE
                     ORGANIZATION)                      CAPITAL STOCK OR EQUITY INTERESTS                  CLOSING DATE
          ----------------------------------- ------------------------------------------------- -------------------------------
<S>      <C>                                 <C>                                               <C>

92.        OPI Carmona One Limited              Issued: 100 shares issued $1.00 par value
           (Cayman Islands)                                                                       100% owned by Covanta Waste
           (To be dissolved)                                                                      to Energy, LLC

93.        Pacific Energy Resources             Issued: 10 shares
           Incorporated                                                                           100% owned by Covanta Power
           (California)                                                                           Pacific, Inc.

94.        Pacific Geothermal Company           Issued: 10 shares
           (California)                                                                           100% owned by Covanta Power
                                                                                                  Pacific, Inc.

95.        Pacific Hydropower Company           Issued: 10 shares
           (California)                                                                           100% owned by Covanta Power
                                                                                                  Pacific, Inc.

96.        Pacific Oroville Power, Inc.         Issued: 1,000 shares
           (California)                                                                           100% owned by Covanta Power
                                                                                                  Pacific, Inc.

97.        Pacific Recovery Corporation         Issued: 10 shares
           (California)                                                                           100% owned by Covanta Power
                                                                                                  Pacific, Inc.

98.        Pacific Wood Fuels Company           Issued: 10 shares
           (California)                                                                           100% owned by Covanta Power
                                                                                                  Pacific, Inc.

99.        Covanta Otay 3 Company (fka          Issued: 10 shares
           Pacific Wood Services                                                                  100% owned by Covanta Power
           Company)                                                                               Pacific, Inc.
           (California)

100.       Penstock Power Company               Issued: 10 shares
           (California)                                                                           100% owned by Covanta Power
                                                                                                  Pacific, Inc.

101.       Three Mountain Operations, Inc.      Issued: 100 shares
           (Delaware)                                                                             100% owned by Covanta
                                                                                                  Energy Americas, Inc.

102.       Three Mountain Power, LLC            Issued: 100 shares
           (Delaware)                                                                             100% owned by Covanta
                                                                                                  Energy Americas, Inc.

</Table>

<PAGE>
(B) Subsidiaries of American Ref-Fuel Holding Corp.

<Table>
<Caption>
                          NAME                                                                             DESCRIPTION OF
                                                                                                             ANTICIPATED
                    (JURISDICTION OF                                                                    OWNERSHIP AS OF THE
                      ORGANIZATION)                    CAPITAL STOCK OR EQUITY INTERESTS                   CLOSING DATE
          ----------------------------------- ------------------------------------------------- -------------------------------
<S>       <C>                                 <C>                                               <C>
1.        American Ref-Fuel Company of          General Partnership
          Hempstead (New York)                                                                    100% directly and/or
                                                                                                  indirectly owned by
                                                                                                  American Ref-Fuel Company
                                                                                                  LLC

2.        American Ref-Fuel Company of          General Partnership
          Essex County (New Jersey)                                                               100% directly and/or
                                                                                                  indirectly owned by
                                                                                                  American Ref-Fuel Company
                                                                                                  LLC

3.        American Ref-Fuel Company of          Limited Partnership
          Niagara, L.P. (Delaware)                                                                100% directly and/or
                                                                                                  indirectly owned by
                                                                                                  American Ref-Fuel Company
                                                                                                  LLC

4.        American Ref-Fuel Company of          General Partnership
          Southeastern Connecticut                                                                100% directly and/or
          (Connecticut)                                                                           indirectly owned by
                                                                                                  American Ref-Fuel Company
                                                                                                  LLC

5.        American Ref-Fuel Company of          Limited Partnership
          Delaware Valley, L.P. (Delaware)                                                        100% directly and/or
                                                                                                  indirectly owned by
                                                                                                  American Ref-Fuel Company
                                                                                                  LLC

6.        American Ref-Fuel Operations of       Limited Partnership
          SEMASS, L.P. (Delaware)                                                                 100% directly and/or
                                                                                                  indirectly owned by
                                                                                                  American Ref-Fuel Company
                                                                                                  LLC

7.        SEMASS Partnership                    Limited Partnership
          (Massachusetts)                                                                         90% directly and/or
                                                                                                  indirectly owned by
                                                                                                  American Ref-Fuel Company
                                                                                                  LLC

8.        American Ref-Fuel Company of          Limited Partnership
          SEMASS, L.P. (Delaware)                                                                 100% directly and/or
                                                                                                  indirectly owned by
                                                                                                  American Ref-Fuel Company
                                                                                                  LLC
</Table>

<PAGE>

<Table>
<Caption>
                          NAME                                                                             DESCRIPTION OF
                                                                                                             ANTICIPATED
                    (JURISDICTION OF                                                                    OWNERSHIP AS OF THE
                      ORGANIZATION)                    CAPITAL STOCK OR EQUITY INTERESTS                   CLOSING DATE
          ----------------------------------- ------------------------------------------------- -------------------------------
       <C>                                 <C>                                               <C>
9.        American Ref-Fuel Company of the      Limited Partnership
          Capital District, L.P.                                                                  100% directly and/or
          (Delaware)                                                                              indirectly owned by
                                                                                                  American Ref-Fuel Company
                                                                                                  LLC

10.       American Ref-Fuel Company             General Partnership
          (Delaware)                                                                              100% directly and/or
                                                                                                  indirectly owned by
                                                                                                  American Ref-Fuel Company
                                                                                                  LLC

11.       TransRiver Marketing Company,         Limited Partnership
          L.P.  (Delaware)                                                                        100% directly and/or
                                                                                                  indirectly owned by
                                                                                                  American Ref-Fuel Company
                                                                                                  LLC

12.       ARC Waste LLC                         Limited Liability Company
          (Delaware)                                                                              100% directly and/or
                                                                                                  indirectly owned by
                                                                                                  American Ref-Fuel Company
                                                                                                  LLC

13.       ARC Transfer Systems LLC              Limited Liability Company
          (Delaware)                                                                              100% directly and/or
                                                                                                  indirectly owned by
                                                                                                  American Ref-Fuel Company
                                                                                                  LLC

14.       ARC Hempstead LLC                     Limited Liability Company
          (Delaware)                                                                              100% directly and/or
                                                                                                  indirectly owned by
                                                                                                  American Ref-Fuel Company
                                                                                                  LLC

15.       ARC Hempstead II, Inc.                Issued:           100 Shares
          (Delaware)                                                                              100% directly and/or
                                                                                                  indirectly owned by
                                                                                                  American Ref-Fuel Company
                                                                                                  LLC

16.       ARC Essex LLC                         Limited Liability Company
          (Delaware)                                                                              100% directly and/or
                                                                                                  indirectly owned by
                                                                                                  American Ref-Fuel Company
                                                                                                  LLC
</Table>

<PAGE>

<Table>
<Caption>
                          NAME                                                                             DESCRIPTION OF
                                                                                                             ANTICIPATED
                    (JURISDICTION OF                                                                    OWNERSHIP AS OF THE
                      ORGANIZATION)                    CAPITAL STOCK OR EQUITY INTERESTS                   CLOSING DATE
          ----------------------------------- ------------------------------------------------- -------------------------------
       <C>                                 <C>                                               <C>
17.       ARC Essex II, Inc.                                  Issued: 100 Shares
          (Delaware)                                                                              100% directly and/or
                                                                                                  indirectly owned by
                                                                                                  American Ref-Fuel Company
                                                                                                  LLC

18.       ARC Niagara LLC                                 Limited Liability Company
          (Delaware)                                                                              100% directly and/or
                                                                                                  indirectly owned by
                                                                                                  American Ref-Fuel Company
                                                                                                  LLC

19.       ARC Niagara II, Inc. (Delaware)                     Issued: 100 Shares
                                                                                                  100% directly and/or
                                                                                                  indirectly owned by
                                                                                                  American Ref-Fuel Company
                                                                                                  LLC

20.       ARC SECONN LLC                                  Limited Liability Company
          (Delaware)                                                                              100% directly and/or
                                                                                                  indirectly owned by
                                                                                                  American Ref-Fuel Company
                                                                                                  LLC

21.       ARC of Connecticut (S.E.), Inc.                     Issued: 100 Shares
           (Delaware)                                                                             100% directly and/or
                                                                                                  indirectly owned by
                                                                                                  American Ref-Fuel Company
                                                                                                  LLC

22.       ARC of Southeastern Connecticut,                   Limited Partnership
          L.P. (Delaware)                                                                         100% directly and/or
                                                                                                  indirectly owned by
                                                                                                  American Ref-Fuel Company
                                                                                                  LLC

23.       ARC Delaware Valley LLC                         Limited Liability Company
          (Delaware)                                                                              100% directly and/or
                                                                                                  indirectly owned by
                                                                                                  American Ref-Fuel Company
                                                                                                  LLC

24.       ARC Delaware Valley II, Inc.                        Issued: 100 Shares
          (Delaware)                                                                              100% directly and/or
                                                                                                  indirectly owned by
                                                                                                  American Ref-Fuel Company
                                                                                                  LLC
</Table>

<PAGE>

<Table>
<Caption>
                          NAME                                                                             DESCRIPTION OF
                                                                                                             ANTICIPATED
                    (JURISDICTION OF                                                                    OWNERSHIP AS OF THE
                      ORGANIZATION)                    CAPITAL STOCK OR EQUITY INTERESTS                   CLOSING DATE
          ----------------------------------- ------------------------------------------------- -------------------------------
       <C>                                 <C>                                               <C>

25.       ARC Operations of SEMASS                        Limited Liability Company
          LLC (Delaware)                                                                          100% directly and/or
                                                                                                  indirectly owned by
                                                                                                  American Ref-Fuel Company
                                                                                                  LLC

26.       ARC SEMASS LLC                                  Limited Liability Company
          (Delaware)                                                                              100% directly and/or
                                                                                                  indirectly owned by
                                                                                                  American Ref-Fuel Company
                                                                                                  LLC

27.       ARC SEMASS II, Inc.                                 Issued: 100 Shares
          (Delaware)                                                                              100% directly and/or
                                                                                                  indirectly owned by
                                                                                                  American Ref-Fuel Company
                                                                                                  LLC

28.       ARC Operations of SEMASS II, Inc.                   Issued: 100 Shares
          (Delaware)                                                                              100% directly and/or
                                                                                                  indirectly owned by
                                                                                                  American Ref-Fuel Company
                                                                                                  LLC

29.       ARC Capital District LLC                        Limited Liability Company
          (Delaware)                                                                              100% directly and/or
                                                                                                  indirectly owned by
                                                                                                  American Ref-Fuel Company
                                                                                                  LLC

30.       ARC Capital District II LLC                     Limited Liability Company
          (Delaware)                                                                              100% directly and/or
                                                                                                  indirectly owned by
                                                                                                  American Ref-Fuel Company
                                                                                                  LLC

31.       ARC Ref-Fuel Management LLC                     Limited Liability Company
          (Delaware)                                                                              100% directly and/or
                                                                                                  indirectly owned by
                                                                                                  American Ref-Fuel Company
                                                                                                  LLC

32.       ARC Ref-Fuel Management II, Inc.                    Issued: 100 Shares
          (Delaware)                                                                              100% directly and/or
                                                                                                  indirectly owned by
                                                                                                  American Ref-Fuel Company
                                                                                                  LLC
</Table>

<PAGE>

<Table>
<Caption>
                          NAME                                                                             DESCRIPTION OF
                                                                                                             ANTICIPATED
                    (JURISDICTION OF                                                                    OWNERSHIP AS OF THE
                      ORGANIZATION)                    CAPITAL STOCK OR EQUITY INTERESTS                   CLOSING DATE
          ----------------------------------- ------------------------------------------------- -------------------------------
       <C>                                 <C>                                               <C>
33.       American Ref-Fuel Company LLC                   Limited Liability Company
          (Delaware)                                                                              100% directly or indirectly
                                                                                                  owned by American Ref-Fuel
                                                                                                  Holdings Corp.

34.       Ref-Fuel Holdings LLC                           Limited Liability Company
          (Delaware)                                                                              100% directly or indirectly
                                                                                                  owned by American Ref-Fuel
                                                                                                  Holdings Corp.

35.       MSW Energy Hudson LLC                           Limited Liability Company
          (Delaware)                                                                              100% directly or indirectly
                                                                                                  owned by American Ref-Fuel
                                                                                                  Holdings Corp.

36.       MSW Energy Holdings LLC                         Limited Liability Company
          (Delaware)                                                                              100% directly or indirectly
                                                                                                  owned by American Ref-Fuel
                                                                                                  Holdings Corp.

37.       MSW Energy Finance Co., Inc.                          Uncertificated
          (Delaware)                                                                              100% directly or indirectly
                                                                                                  owned by American Ref-Fuel
                                                                                                  Holdings Corp.

38.       ARC II Corp.                                       Issued: 1,000 Shares
          (Delaware)                                                                              100% directly or indirectly
                                                                                                  owned by American Ref-Fuel
                                                                                                  Holdings Corp.

39.       MSW Energy Holdings II LLC                      Limited Liability Company
          (Delaware)                                                                              100% directly or indirectly
                                                                                                  owned by American Ref-Fuel
                                                                                                  Holdings Corp.

40.       MSW Energy Finance Co. II, Inc.                       Uncertificated
          (Delaware)                                                                              100% directly or indirectly
                                                                                                  owned by American Ref-Fuel
                                                                                                  Holdings Corp.

41.       Ref-Fuel LLC                                    Limited Liability Company
          (Delaware)                                                                              100% directly or indirectly
                                                                                                  owned by American Ref-Fuel
                                                                                                  Holdings Corp.

42.       Ref-Fuel Corp.                                        Uncertificated
          (Delaware)                                                                              100% directly or indirectly
                                                                                                  owned by American Ref-Fuel
                                                                                                  Holdings Corp.
</Table>

<PAGE>

<Table>
<Caption>
                          NAME                                                                             DESCRIPTION OF
                                                                                                             ANTICIPATED
                    (JURISDICTION OF                                                                    OWNERSHIP AS OF THE
                      ORGANIZATION)                    CAPITAL STOCK OR EQUITY INTERESTS                   CLOSING DATE
          ----------------------------------- ------------------------------------------------- -------------------------------
<S>       <C>                                 <C>                                               <C>

43.       American Ref-Fuel Holdings Corp.
          (Delaware)                                                                                 Prior to closing: See
                                                                                                            Annex A

                                                                                                     After closing: Covanta
                                                                                                       Energy Corporation

44.       MSW I Sub, Inc.                                     Issued: 100 Shares
                                                                                                  100% directly and/or
                                                                                                  indirectly owned by
                                                                                                  American Ref-Fuel Holdings
                                                                                                  Corp.

45.       UAH Management Corp.                                  Uncertificated
                                                                                                  100% directly and/or
                                                                                                  indirectly owned by
                                                                                                  American Ref-Fuel Holdings
                                                                                                  Corp.

46.       ARC TransRiver (Delaware) II, Inc.                  Issued: 100 Shares
                                                                                                  100% directly and/or
                                                                                                  indirectly owned by
                                                                                                  American Ref-Fuel Holdings
                                                                                                  Corp.

47.       ARC TransRiver LLC                              Limited Liability Company
          (Delaware)                                                                              100% directly and/or indirectly
                                                                                                  owned by American Ref-Fuel
                                                                                                  Holdings Corp.

48.       American Ref-Fuel Company of                    Limited Liability Company
          Camden LLC                                                                              100% directly and/or
          (Delaware)                                                                              indirectly owned by
                                                                                                  American Ref-Fuel Holdings
                                                                                                  Corp.

49.       UAH Groveville                                    Limited Liability Company
          Hydro Associates                                                                        100% directly and/or indirectly
                                                                                                  owned by American Ref-Fuel
                                                                                                  Holdings Corp.
</Table>

<PAGE>

(C) Certain Partnerships, Limited Liability Companies and Joint Ventures

<Table>
<Caption>
                        NAME                                                                             DESCRIPTION OF
                                                                                                           ANTICIPATED
                  (JURISDICTION OF                                                                     OWNERSHIP AS OF THE
                    ORGANIZATION)                      CAPITAL STOCK OR EQUITY INTERESTS                  CLOSING DATE
         ------------------------------------ ------------------------------------------------- -------------------------------
       <C>                                 <C>                                               <C>
1.         Covanta Haverhill Associates         Covanta Haverhill, Inc., General Partner - 88%
           (Massachusetts)                                                                        Covanta Haverhill, Inc.
                                                Haverhill Power, LLC, General Partner - 12%       88% General Partner
                                                                                                  Interest; Haverhill Power,
                                                                                                  LLC, 12% Limited Partner
                                                                                                  Interest

2.         Covanta Hennepin Energy Resource     Covanta Energy Resource Corp., General
           Co., Limited Partnership             Partner - 99%                                     Covanta Energy Resource
           (Delaware)                                                                             Corp. 99% General Partner
                                                Covanta OPWH, Inc, Limited Partner - 1%           Interest; Covanta OPWH 1%
                                                                                                  Limited Partner Interest

3.         Covanta Honolulu Resource            Covanta Projects of Hawaii, Inc., General
           Recovery Venture                     Partner - 50%                                     Covanta Projects of
           (Hawaii)                                                                               Hawaii, Inc. 50% GP
                                                Covanta Oahu Waste Energy Recovery, Inc.,         Interest; Covanta Oahu
                                                General Partner - 50%                             Waste Energy Recovery,
                                                                                                  Inc. 50% GP Interest

4.         Covanta Huntington Limited           Covanta Huntington Resource Recovery One          Covanta Huntington Resource
           Partnership                          Corp., Managing General Partner; Covanta          Recovery One Corp. and
           (Delaware)                           Huntington Resource Recovery Seven Corp.,         Covanta Huntington Resource
                                                General Partner; Mission Funding Zeta,            Recovery Seven Corp.
                                                Limited Partner; Pitney Bowes Credit              collectively, General
                                                Corporation, Limited Partner; Allstate            Partners; Mission Funding
                                                Insurance Company, Limited Partner                Zeta, Limited Partner;
                                                                                                  Pitney Bowes Credit Corporation,
                                                                                                  Limited Partner; Allstate
                                                                                                  Insurance Company, Limited
                                                                                                  Partner. Interests of each
                                                                                                  partner varies from time to time
                                                                                                  depending upon type of interest.
</Table>

<PAGE>

<Table>
<Caption>
                        NAME                                                                             DESCRIPTION OF
                                                                                                           ANTICIPATED
                  (JURISDICTION OF                                                                     OWNERSHIP AS OF THE
                    ORGANIZATION)                      CAPITAL STOCK OR EQUITY INTERESTS                  CLOSING DATE
         ------------------------------------ ------------------------------------------------- -------------------------------
       <C>                                 <C>                                               <C>
5.         Covanta Onondaga Limited             Covanta Onondaga, Inc., General Partner;          Covanta Onondaga, Inc.
           Partnership                          Covanta Onondaga Two Corp., General Partner;      Covanta Onondaga Two Corp.;
           (Delaware)                           Covanta Onondaga Three Corp., General             Covanta Onondaga Three
                                                Partner; Covanta Onondaga Four Corp., General     Corp.; Covanta Onondaga
                                                Partner; Covanta Onondaga Five Corp., General     Four Corp.; and Covanta
                                                Partner; Ford Motor Credit Company, Limited       Onondaga Five collectively
                                                Partner; Mariner Investment Strategies, Inc.,     own all General Partnership
                                                Limited Partner; IEA-COV. LLC, a Limited          interests; Ford Motor
                                                Partner                                           Credit Company is a limited
                                                                                                  partner; Mariner Investment
                                                                                                  Strategies, Inc. is a
                                                                                                  Limited Partner; IEA-COV,
                                                                                                  LLC is a limited partner.
                                                                                                  Limited partners get
                                                                                                  certain tax, income, and
                                                                                                  residual interests but
                                                                                                  Covanta subsidiaries own
                                                                                                  100% of GP interest.

6.         Covanta Operations of Union LLC      Covanta Projects, Inc. owns 99%                   Covanta Projects, Inc.
           (New Jersey)                         Covanta Waste to Energy, LLC owns 1%              99% Covanta Waste to
                                                                                                  Energy, LLC, 1% Interest.

7.         Covanta Projects of Wallingford,     Covanta OPW Associates, Inc., 2% General          Covanta OPW Associates,
           L.P.                                 Partner interest                                  Inc. 2% General Partner
           (Delaware)                           Covanta Wallingford Associates, Inc., 98%         Interest; Covanta
                                                Limited Partner interest                          Wallingford Associates,
                                                                                                  Inc. 98% Limited Partner
                                                                                                  Interest

8.         Covanta SBR Associates               Covanta Haverhill, Inc., 35% General Partner      Covanta Haverhill, Inc.
           (Massachusetts)                      Covanta Omega Lease, Inc., 65% General Partner    34.7% General Partner
                                                                                                  Interest; Covanta Omega
                                                                                                  Lease, Inc. 65.3% General
                                                                                                  Partner Interest

9.         Covanta Warren Energy Resource       Covanta Equity of Alexandira/Arlington, Inc.,     Covanta Equity of
           Co., Limited Partnership             99% General Partner                               Alexandira/Arlington, Inc.,
           (Delaware)                           Covanta Covanta Equity of Stanislaus, Inc.,       99% General Partner
                                                1% Limited Partner                                Covanta Covanta Equity of
                                                                                                  Stanislaus, Inc., 1%
                                                                                                  Limited Partner
</Table>

<PAGE>

<Table>
<Caption>
                        NAME                                                                             DESCRIPTION OF
                                                                                                           ANTICIPATED
                  (JURISDICTION OF                                                                     OWNERSHIP AS OF THE
                    ORGANIZATION)                      CAPITAL STOCK OR EQUITY INTERESTS                  CLOSING DATE
         ------------------------------------ ------------------------------------------------- -------------------------------
       <C>                                 <C>                                               <C>
10.        DSS Environmental, Inc.              Issued: 100 shares                                90% owned by Covanta Water
           (New York)                                                                             Systems, Inc. and 10% owned
                                                                                                  by individual shareholders.

11.
           Generating Resource Recovery         Pacific Recovery Corporation (a California        Pacific Recovery
           Partners L.P.                        Corporation), General Partner - 50%               Corporation 50% General
           (California)                                                                           Partner Interest; Covanta
                                                                                                  Power Pacific, Inc., 50% LP
                                                Covanta Power Pacific, Inc., Limited Partner      Interest
                                                - 50%

12.        Heber Loan Partners                  ERC Energy, Inc. - 50%                            ERC Energy, Inc. has a 50%
           (California)                         ERC Energy II, Inc. - 50%                         GP interest;
                                                                                                  ERC Energy II, Inc. has a
                                                                                                  50% GP interest.

13.
           Pacific Energy Operating Group LP    Pacific Recovery Corporation, General Partner     Pacific Recovery
           (California)                         - 50%                                             Corporation - 50% General
                                                                                                  Partner Interest; Covanta
                                                                                                  Power Pacific, Inc., - 50%
                                                Covanta Power Pacific, Inc., Limited Partner      Limited Partner
                                                - 50%

14.
           Ogden HCI Services                                                                     60% directly or indirectly
           (jurisdiction not determinable;                                                        owned by Covanta Energy
           entity believed to be dissolved)                                                       Corporation

                                                                                                  40% owned by third
                                                                                                  party(ies)
</Table>

(D) Subsidiaries of Covanta Power International Holdings Inc.

<Table>
<Caption>
                                                                                                        DESCRIPTION OF
                         NAME                                                                             ANTICIPATED
                   (JURISDICTION OF                                                                    OWNERSHIP AS OF THE
                     ORGANIZATION)                    CAPITAL STOCK OR EQUITY INTERESTS                   CLOSING DATE
         ------------------------------------ ------------------------------------------------- -------------------------------
      <C>                                  <C>                                               <C>
1.       Bal-Sam India Holdings Limited       Issued: 2 shares                                  100% owned by Covanta
         (Mauritius)                                                                            Energy India Investments
                                                                                                Ltd.
</Table>

<PAGE>

<Table>
<Caption>
                                                                                                        DESCRIPTION OF
                         NAME                                                                             ANTICIPATED
                   (JURISDICTION OF                                                                    OWNERSHIP AS OF THE
                     ORGANIZATION)                    CAPITAL STOCK OR EQUITY INTERESTS                   CLOSING DATE
         ------------------------------------ ------------------------------------------------- -------------------------------
      <C>                                  <C>                                               <C>
2.       Covanta Bangladesh Operating         Issued:  96 shares                                100% owned by Covanta Energy
         Limited                                                                                India Investments, Ltd.*
         (Bangladesh)                                                                           (*per Bangladeshi law each
                                                                                                Covanta director holds 1
                                                                                                share)

3.       Covanta Two Ltd.                     Issued: 2 shares                                  100% owned by Covanta Energy
         (Mauritius)                                                                            India Investments, Ltd.

4.       Covanta Cayman (Rojana) Ltd.         Issued: 3 shares issued at $1.00 par value        100% owned by Covanta Three
         (Cayman Islands)                                                                       Ltd.

5.       Covanta Cayman (Sahacogen) Ltd.      Issued: 3 shares issued at $1.00 par value        100% owned by Covanta Two Ltd.
         (Cayman Islands)

6.       Covanta Chinese Investments          Issued: 42,822,195 shares at U.S. $1.00 par       100% owned by Covanta Energy
         Ltd.                                 value                                             India Investments, Ltd.
         (Mauritius)

7.       Covanta Energy (Thailand) Ltd.       Issued:                                           100%* owned by Covanta Power
         (Thailand)                           9,800 ordinary shares (100 Baht ea.)              International Holdings,
                                              10,200 preferred shares (100 Baht ea.)            Inc.(*per Thai law 7 Covanta
                                              (Per Thai law 7 Covanta employees hold 1 share    employees hold 1 share each)
                                              each)

8.       Covanta Energy Asia Pacific Limited  Issued: 100 shares each at HK $10.00 par value    50% owned by Covanta Power
         (Hong Kong)                                                                            Development Inc. and 50%
                                                                                                owned by Covanta Power
                                                                                                International Holdings, Inc.

9.       Covanta Energy China (Alpha) Ltd.    Issued: 9,460,002 shares at $1.00 par value       100% owned by Covanta Chinese
         (Mauritius)                                                                            Investments Ltd.

10.      Covanta Energy China (Beta)          Issued: 12,000,002 shares issued at $1.00 par     100% owned by Covanta Chinese
         Ltd.                                 value                                             Investments Ltd.
         (Mauritius)

11.      Covanta Energy China (Delta)         Issued: 12,150,002 shares issued at $1.00 par     100% owned by Covanta Chinese
         Ltd.                                 value                                             Investments Ltd.
         (Mauritius)

12.      Covanta Energy China                 Issued: 7,350,002 shares issued at $1.00 par      100% owned by Covanta Chinese
         (Gamma) Ltd.                         value                                             Investments Ltd.
         (Mauritius)
</Table>

<PAGE>

<Table>
<Caption>
                                                                                                        DESCRIPTION OF
                         NAME                                                                             ANTICIPATED
                   (JURISDICTION OF                                                                    OWNERSHIP AS OF THE
                     ORGANIZATION)                    CAPITAL STOCK OR EQUITY INTERESTS                   CLOSING DATE
         ------------------------------------ ------------------------------------------------- -------------------------------
      <C>                                  <C>                                               <C>
13.      Covanta Energy India (Balaji)        Issued: 100,000 shares.                           100% owned by Covanta
         Ltd.                                                                                   Power International
         (Mauritius)                                                                            Holdings, Inc.

14.      Covanta Energy India (CBM) Limited   Issued: 2 shares issued at U.S. $1.00 par value   100% owned by Covanta
         (Mauritius)                                                                            Energy India Investments
                                                                                                Ltd.

15.      Covanta Energy India Pvt. Ltd.       Issued:                                           99% owned by Covanta Five
         (India)                              Covanta Five Ltd. - 9,900 shares;                 Ltd., 1% owned by Covanta One
                                              Covanta One Ltd. - 100 shares                     Ltd.

16.      Covanta Energy India                 Issued: 15 shares                                 100% owned by Covanta
         (Samalpatti) Limited                                                                   Power International
         (Mauritius)                                                                            Holdings, Inc.

17.      Covanta Energy India                 Issued: 2 shares                                  100% owned by Covanta
         Investments Ltd.                                                                       Power International
         (Mauritius)                                                                            Holdings, Inc.

18.      Covanta Energy Philippines           Issued: 52,605 shares at Php 100 par value        100%* owned by Covanta
         Holdings, Inc.                       (Per Philippine law each Covanta director holds   Power International
         (Philippines)                        1 share)                                          Holdings, Inc. (*per
                                                                                                Philippine law each Covanta
                                                                                                director holds 1 share)

19.      Covanta Five Ltd.                    Issued: 2 shares                                  100% owned by Covanta
         (Mauritius)                                                                            Energy India Investments
                                                                                                Ltd.

20.      Covanta Four Ltd.                    Issued: 2 shares                                  100% owned by Covanta
         (Mauritius)                                                                            Energy India Investments
                                                                                                Ltd.

21.      Covanta India Operating Pvt. Ltd.    Issued:  Covanta Four Ltd.: 13,410 shares; Mr.    90% owned by Covanta Four
         (India)                              S. Ramesh (Covanta India employee) holds 1,480    Ltd., remainder held by
                                              shares and his wife, Mrs. Usha Ramesh, holds 10   Covanta Indian employee S.
                                              shares                                            Ramesh and wife, Usha Ramesh,
                                                                                                in their personal capacities

22.      Covanta Madurai Operating Pvt.       Issued:  Covanta Five Ltd.: 10,426 shares;        99.8085% owned by Covanta
         Ltd. (India)                         Covanta One Ltd.: 20 shares                       Five Ltd.;
                                                                                                0.1915% owned by Covanta One
                                                                                                Ltd.
</Table>

<PAGE>

<Table>
<Caption>
                                                                                                        DESCRIPTION OF
                         NAME                                                                             ANTICIPATED
                   (JURISDICTION OF                                                                    OWNERSHIP AS OF THE
                     ORGANIZATION)                    CAPITAL STOCK OR EQUITY INTERESTS                   CLOSING DATE
         ------------------------------------ ------------------------------------------------- -------------------------------
      <C>                                  <C>                                               <C>

23.      Covanta One Ltd.                                                                       100% owned by Covanta Energy
         (Mauritius)                          Issued:  2 shares issued at $11.00 par value      India Investments Ltd.

24.      Covanta Philippines Operating, Inc.  Issued:  2 shares                                 100% owned by Covanta Power
         (Cayman Islands)                                                                       International Holdings, Inc.

25.      Covanta Power Development of         Issued:  100 shares                               100% owned by Covanta Power
         Bolivia, Inc.                                                                          International Holdings, Inc.
         (Delaware)

26.      Covanta Power Development, Inc.      Issued:  100 shares                               100% owned by Covanta Power
                                                                                                International Holdings, Inc.
         (Delaware)

27.      Covanta Samalpatti                   Issued: Covanta Five Ltd.: 10,420 shares;         99.9808% owned by Covanta One
         Operating Pvt. Ltd.                  Covanta One Ltd.: 2 shares                        Ltd; 0.0192% held by Covanta
         (India)                                                                                One Ltd.

28.      Covanta Three Limited                Issued: 2 shares                                  100% owned by Covanta Energy
         (Mauritius)                                                                            India Investments Ltd.

29.      Covanta Waste to Energy of Italy,    Issued:  100 shares                               100% owned by Covanta Power
         Inc. (Delaware)                                                                        International Holdings, Inc.

30.      Edison (Bataan) Cogeneration         Issued:  4,800,000 common stock                   100%* owned by Covanta
         Corporation                           (Per Philippine law each Covanta director        Power International
         (Philippines)                        holds 1 share)                                    Holdings, Inc. (*per
                                                                                                Philippine law each Covanta
                                                                                                director holds 1 share)

31.      El Gorguel Energia S.L.              Issued: 15,027                                    100% owned by Enereurope
         (Spain) (in liquidation)                                                               Holdings III B.V.

32.      Enereurope Holdings III B.V.         Issued: EUR 20,000 and NLG 44,074.20              100% owned by Covanta Power
         (Netherlands)                                                                          International Holdings, Inc.

</Table>

<PAGE>

<Table>
<Caption>
                                                                                                        DESCRIPTION OF
                         NAME                                                                             ANTICIPATED
                   (JURISDICTION OF                                                                    OWNERSHIP AS OF THE
                     ORGANIZATION)                    CAPITAL STOCK OR EQUITY INTERESTS                   CLOSING DATE
         ------------------------------------ ------------------------------------------------- -------------------------------
      <C>                                  <C>                                               <C>
33.      Goa Holdings, Ltd.                   Issued: 10,000 shares; 34,852 convertible         100% owned by Covanta Energy
         (Mauritius)                          debentures                                        India (Samalpatti) Ltd.
                                              (Per the terms of issuance, the
                                              convertible debentures
                                              automatically converted to shares
                                              upon the commercial operation date
                                              of the Samalpatti Project, but,
                                              the company has not yet effected
                                              the necessary recapitalization
                                              with the Mauritius authorities.)

34.      Hidro Operaciones Don Pedro                                                            100% owned by Covanta
         S.A.                                                                                   Power International
         (Costa Rica)                                                                           Holdings, Inc.

35.      Linan Ogden-Jinjiang                 Covanta Energy China (Alpha) Ltd. - 63.85%        63.85% owned by Covanta
         Cogeneration Co., Ltd.               interest                                          Energy China (Alpha) Ltd.;
         (People's Republic of China)         local private Chinese interests - 36.15%          36.15% is owned by local
                                              Authorized: Capital of $14,800,000                private Chinese interests.
                                              Issued: All issued

36.      Madurai Power Corporation Pvt. Ltd.  Issued: Covanta Energy India (Balaji) Ltd.--      Covanta Energy India (Balaji)
         (India)                              15,506,033 shares (76.643%);                      Ltd. (76.643%); Samayanallur
                                              Samayanallur Power Investments Pvt. Ltd.          Power Investments Pvt. Ltd.
                                              (Indian developer) -  4,725,482 shares (23.357%)  (Indian developer) (23.357%)

37.      Magellan Cogeneration, Inc.          Issued: 659,000 at Php 100 par value              100% owned by Covanta
         (Philippines)                        (Per Philippine law each Covanta director holds   Energy Philippine
                                              1 share)                                          Holdings, Inc. (*per
                                                                                                Philippine law each Covanta
                                                                                                director holds 1 share)

38.      Ogden Energy (Gulf) Limited          Issued: 2 shares issued at $1.00 par value        100% owned by Covanta
         (Mauritius)                                                                            Power International
                                                                                                Holdings, Inc.

39.      Ogden Energy India                   Issued: 2 shares                                  100% owned by Covanta
         (Bakreshwar) Ltd.                                                                      Power International
         (Mauritius)                                                                            Holdings, Inc.

40.      Ogden Energy of Bongaigaon Pvt.      Issued: twenty shares issued at Rs. 10/- to       100% held by nominee outside
         Ltd.                                 nominee outside attorneys subject to Covanta      attorneys subject to Covanta
         (in liquidation)                     direction                                         direction
         (India)

41.      Ogden Power Development              Issued:  75 A shares at $1.00 par value and 2     100% owned by OPI Quezon, Inc.
         Cayman, Inc.                         non-voting redeemable shares at $.01 par value
         (Cayman Islands)

</Table>

<PAGE>

<Table>
<Caption>
                                                                                                        DESCRIPTION OF
                         NAME                                                                             ANTICIPATED
                   (JURISDICTION OF                                                                    OWNERSHIP AS OF THE
                     ORGANIZATION)                    CAPITAL STOCK OR EQUITY INTERESTS                   CLOSING DATE
         ------------------------------------ ------------------------------------------------- -------------------------------
      <C>                                  <C>                                               <C>
42.      Ogden Taiwan Investments Limited     Issued:  2 shares issued at $1.00 par value       100% owned by Covanta Energy
         (Mauritius)                                                                            India Investments Ltd.

43.      OPDB, Ltd. (Cayman Islands)          Issued:  2 shares issued at $1.00 par value       100% owned by Covanta Power
                                                                                                Development of Bolivia, Inc.

44.      Covanta Operaciones LICA S.L.        Issued: 3,006                                     100% owned by
         (Spain) (in liquidation)                                                               Enereurope Holdings III
                                                                                                B.V.

45.      OPI Quezon, Inc.                     Issued: 100 shares                                100% owned by Covanta
         (Delaware)                                                                             Power International
                                                                                                Holdings, Inc.

46.      Power Operations and Maintenance     Issued: 12,000 issued at $1.00 par value          100% owned by Covanta Four
         Ltd.                                                                                   Ltd.
         (Bermuda)

47.      Taixing Ogden-Yanjiang               Covanta Energy China (Delta) Ltd. - 60% interest  60% owned by Covanta Energy
         Cogeneration Co., Ltd.               Covanta Energy China (Gamma) Ltd. - 36.3%         China (Delta) Ltd.; 36.3%
         (People's Republic of China)         interest                                          owned by Covanta Energy China
                                              Local Chinese government controlled entity  -     (Gamma) Ltd.; 3.7% owned by
                                              3.7% interest                                     local Chinese government
                                              Authorized: Registered capital of $20,250,000     controlled entity
                                              Issued: All issued

48.      Zibo Ogden-Bohui Cogeneration Co.,   Covanta Energy China (Beta) Ltd. - 60% interest   60% owned by Covanta Energy
         Ltd.                                 Local private Chinese interests - 40%             China (Beta) Ltd; 40% is
         (People's Republic of China)         Authorized: Registered Capital of $20,000,000     owned by local private
                                              Issued: All issued                                Chinese interests.

49.
</Table>

<PAGE>

                             ANNEX A TO SCHEDULE 4.2

    The stockholders of American Ref-Fuel Holdings Corp. and their respective
outstanding shares of American Ref-Fuel Holdings Corp. Common Stock owned
immediately prior to the Closing Date are listed below:

<Table>
<Caption>
                        HOLDER                                NO. OF SHARES
---------------------------------------------------------     -------------
<S>                                                           <C>
DLJ Merchant Banking III, L.P.                                       610.44
DLJ Merchant Banking Partners III, L.P.                           66,451.05
DLJ Offshore Partners III, C.V                                     3,274.39
DLJ Offshore Partners III-1, C.V                                   1,086.01
DLJ Offshore Partners III-2, C.V                                     773.64
DLJMB Partners III GmbH & Co. KG                                     513.23
Millenium Partners II, L.P.                                          684.80
MBP III Plan Investors, L.P.                                      25,672.82
UXT Holdings (Offshore) Ltd.                                      11,092.59
UXT AIV, L.P.                                                     48,233.30
AIG Highstar Capital II, L.P.                                     21,835.82
AIG Highstar Capital II Prism Fund, L.P.                          38,190.52
AIG Highstar Capital II Overseas Investors, L.P.                   1,207.70
AIG Highstar Capital II Ref-Fuel Co-Investment Fund, L.P.          3,064.45
AIG Highstar Capital, L.P.                                        41,296.24
         TOTAL                                                   263,987.00
</Table>

<PAGE>

                                  SCHEDULE 4.13

                               REAL ESTATE ASSETS

I.  FEE INTERESTS

    A.  OFFICE LOCATIONS

    Fairfield, New Jersey Corporate Headquarters

        o   40 Lane Road, Township of Fairfield, Essex County, New Jersey 07007,
            owned by Covanta Projects, Inc.

    B.  PROJECT LOCATIONS

    Marion County WTE Project, Oregon

        o   Ground Lease between Covanta Marion Land Corp. and Covanta Marion,
            Inc., dated November 1, 1986.

        o   Special Warranty Deed from Covanta Marion, Inc. to Covanta Marion
            Land Corp., dated as of December 11, 1986.

        o   Commercial Deeds of Trust and Security Agreements, dated as of
            September 1, 1984 and February 15, 1985.

    Mount Lassen Biomass Project, California

        o   59 acre parcel situated in County of Lassen, California, owned by
            Mt. Lassen Power

    Pacific Oroville Biomass Project, California

        o   43.29 acre parcel situated in the City of Oroville, County of Butte,
            California, owned by Pacific Oroville Power, Inc.

    C.  OTHER

        o   83 acres of undeveloped desert land situated between Sidewinder Road
            and Ogilby Road in the Imperial Valley, California, owned by Covanta
            Secure Services, Inc.
<PAGE>

II.      LEASEHOLD INTERESTS

    A. OFFICE LOCATIONS

        o   Lease Agreement, dated February 5, 1998, between Covanta Power
            Pacific, Inc., Patrician Associates, Inc. and RR&C Development
            Company for office space located at 13181 Crossroads Parkway North,
            Suite 180, City of Industry, California 91746.

        o   Lease Agreement, dated November 1, 2004, between Brian S. Baas and
            Wesley J. Sphar, and Covanta Power Pacific, Inc. for office space
            located at 2825 and 2829 Childress Drive, Anderson, CA 96007.

    B. PROJECT LOCATIONS

    Burney Mountain Power Biomass Project, California

        o   Ground Lease between Fruit Growers Supply Company and Ultrapower I,
            dated as of December 1, 1982, as amended November 9, 1983.

        o   Sublease between Burney Mountain Power and Three Mountain Power,
            LLC, dated January 1, 2005.

    Detroit WTE Project, Michigan

        o   Lease Agreement between Michigan Waste Energy, Inc. and Resource
            Recovery Business Trust 1991-A, as amended and supplemented, dated
            October 23, 1991.

        o   Sublease Agreement between the Greater Detroit Resource Recovery
            Authority and Michigan Waste Energy, Inc., dated September 10, 1986.

        o   Lease Agreement between Michigan Waste Energy Inc. and Resource
            Recovery Business Trust-B, dated October 23, 1991, as amended.

    Gude Biogas Project, Maryland

        o   Landfill Gas Lease and Operating Agreement For Conversion Systems
            Between Central Plants, Inc. and Montgomery County, Maryland, dated
            December 15, 1983.

        o   Assignment of Lease, dated June 20, 1984, between Central Plants,
            Inc. and Pacific Lighting Energy Systems, Inc.

        o   Lease Amendment No. 1 among Montgomery County, Maryland, Central
            Plants, Inc. and Pacific Lighting Energy Systems, dated October 30,
            1984.

<PAGE>

        o   Memorandum and Second Amendment of Lease between Pacific Lighting
            Energy Systems and Montgomery County, Maryland, dated October 24,
            1985.

        o   Amendment No. 3 between Montgomery County, Maryland and Pacific
            Energy, dated December 19, 1988.

        o   Sublease between Pacific Lighting Energy Systems and Pacific
            Lighting Bio-Energy Producing Partners I, dated November 15, 1985.

        o   Amendment to Sublease between Pacific Lighting Energy Systems and
            Pacific Lighting Bio-Energy Producing Partners, dated December 13,
            1985.

    Honolulu WTE Project, Hawaii

        o   Lease Agreement between State Street Bank and Trust Company and
            Covanta Honolulu Resource Recovery Venture (f/k/a Honolulu Resource
            Recovery Venture), dated July 7, 1993.

    Indianapolis WTE Project, Indiana

        o   Facility Site Lease between City of Indianapolis and Massburn, Inc.
            (Covanta Indianapolis, Inc.'s successor in interest by merger to
            Massburn, Inc.), dated as of December 1, 1985.

    Marion County WTE Project, Oregon

        o   Ground Lease between Covanta Marion Land Corp. and Covanta Marion,
            Inc., dated November 1, 1986.

    Montgomery County WTE Project, Maryland

        o   Facility Site Lease between Potomac Electric Power Company and the
            Northeast Maryland Waste Disposal Authority (assumed by Covanta
            Montgomery, Inc), dated as of October 5, 1989.

    Otay Biogas Project, California

        o   Operating Agreement and Subpermit for Conversion Systems, dated June
            27, 1984, between Cambrian Energy Systems, Inc. and Herzog
            Construction Corp.

        o   Assignment of Lease between Cambrian Energy Systems, Inc. and
            Central Plants, Inc., dated June 11, 1982.

<PAGE>

    Oxnard Biogas Project, California

        o   Assignment of Landfill Gas Lease among Ventura Regional Sanitation
            District and various individuals and entities, dated August 5, 1998.

        o   Third Amendment to Landfill Gas Lease and Operating Agreement for
            Conversion Systems between Pacific Recovery Corporation and Cambrian
            Energy Systems and the City of Oxnard, dated June 23, 1992.

        o   Landfill Gas Lease and Operating Agreement for Conversion Systems
            between Cambrian Energy Systems, Inc. and The City of Oxnard, dated
            November 25, 1981.

        o   Ratification of Landfill Gas Lease between City of Oxnard and Oxnard
            Landfill Associates, dated January 2, 1986.

        o   Memorandum of Lease between Cambrian Energy Systems, Inc. and The
            City of Oxnard, dated November 25, 1981.

        o   Assignment of Lease between Cambrian Energy Systems, Inc. and
            Central Plants, Inc., dated December 1, 1981.

        o   Memorandum of Assignment of Lease between Cambrian Energy Systems,
            Inc. and Central Plants, Inc., dated December 1, 1981.

        o   Memorandum of Assignment of Lease between Pacific Lighting Energy
            Systems and Oxnard Landfill Associates, dated January 25, 1985.

        o   Landfill Gas Lease, and Operating Agreement for Conversion Systems
            among Cambrian Energy Systems and Jack Martin Roth, Geraldine K.
            Roth, Gerald K. Roth, Harold W. Muckenthaler, Beverly A. Baier,
            Robert W. Baier, R. Jane Baier, Eleanor F Bailard, Jeanne B. Ware,
            Bank of California, N.A., as Executor of the Estate of Louis T.
            Kraemer, Deceased, and Stacy H. Dobrzensky and Bank of California,
            N.A., as Executors of the Estate of W. R. Bailard, Deceased, and
            Ventura Regional County Sanitation District, dated December 1, 1983.

        o   Memorandum of Lease among Cambrian Energy Systems, L.P., Jack Martin
            Roth, Geraldine K. Roth, Gerald K. Roth, Harold W. Muckenthaler,
            Beverly A. Baier, Robert W. Baier, R. Jane Baier, Eleanor F.
            Bailard, Jeanne B. Ware, Bank of California, N.A., as Executor of
            the Estate of Louis T. Kraemer, Deceased, and Stacy H. Dobrzensky
            and Bank of California, N.A., as Executors of the Estate of W. R.
            Bailard, Deceased, and Ventura Regional County Sanitation District,
            dated December 1, 1983.
<PAGE>

        o   Assignment of Lease between Cambrian Energy Systems and Pacific
            Lighting Energy Systems, dated March 14, 1984.

        o   Memorandum of Assignment of Lease between Cambrian Energy Systems
            and Pacific Lighting Energy Systems, dated March 14, 1984.

        o   Assignment, Assumption and Consent to Assignment between Pacific
            Lighting Energy Systems and Oxnard Landfill Associates, dated
            January 25, 1985.

        o   Memorandum of Assignment of Lease between Pacific Lighting Energy
            Systems and Oxnard Landfill Associates, dated January 25, 1985
            (refers to Landfill Gas Lease, dated November 25, 1981).

        o   Assignment, Assumption and Consent to Assignment between Pacific
            Lighting Energy Systems and Oxnard Landfill Associates, dated
            January 25, 1985 (Refers to Landfill Gas Lease, dated April 22,
            1983).

        o   Assignment of Lease between Central Plants, Inc. and Pacific
            Lighting Energy Systems, dated March 14, 1984.

        o   Amendment to Landfill Gas Lease and Operating Agreement for
            Conversion Systems between Central Plants, Inc. and City of Oxnard,
            dated November 23, 1983 (Amendment to Landfill Gas Lease, dated
            November 25, 1981).

        o   Amendment to Landfill Gas Lease and Operating Agreement for
            Conversion Systems between Pacific Lighting Energy Systems and City
            of Oxnard, dated June 26, 1984 (Amendment to Landfill Gas Lease,
            dated November 25, 1981).

        o   Landfill Gas Lease and Operating Agreement for Conversion Systems
            among Cambrian Energy Systems, Inc., Ventura Coastal Corporation,
            and Ventura Regional County Sanitation District, dated April 22,
            1983.

        o   Assignment of Lease between Cambrian Energy Systems and Central
            Plants, Inc., dated June 3, 1983.

        o   Memorandum of Assignment of Lease between Cambrian Energy Systems,
            Inc. and Central Plants, Inc., dated June 3, 1983.

        o   Memorandum of Lease among Cambrian Energy Systems, Ventura Coastal
            Corporation and Ventura Regional County Sanitation District, dated
            April 22, 1983 (Rerecorded March 13, 1985).

        o   Memorandum of Assignment of Lease between Central Plants, Inc. and
            Pacific Lighting Energy Systems, dated March 14, 1984 (Rerecorded
            December 14, 1984).
<PAGE>

        o   Memorandum of Assignment of Lease between Pacific Lighting Energy
            Systems and Oxnard Landfill Associates, dated January 25, 1985.

        o   First Amendment to Landfill Gas Lease and Operating Agreement for
            Conversion Systems between Oxnard Landfill Associates and Ventura
            Regional Sanitation District, dated April 18, 1991.

        o   Landfill Gas Lease and Operating Agreement for Conversion Systems
            among Cambrian Energy Systems, J.H.&R. Properties, C.H.F&S.
            Properties, J.&C. Properties, and Ventura Regional County Sanitation
            District, dated November 30, 1983.

        o   Memorandum of Lease among Cambrian Energy Systems, J.H.&R.
            Properties, C.H.F.&S. Properties, J.& C. Properties, and Ventura
            Regional Sanitation District, dated November 30, 1983.

        o   Memorandum of Lease among Cambrian Energy Systems, Jack Martin Roth,
            Geraldine K. Roth, Gerald K. Roth, Harold W. Muchethaler, Beverly A.
            Baier, Robert W. Baier, R. Jane Baier, Eleanor F. Bailard, Jeanne B.
            Ware, Bank of California, N.A., as Executor of Estate of Louis T.
            Kraemer, and Stacy H. Dobrzensky, dated December 1, 1983.

        o   Assignment of Lease between Cambrian Energy Systems and Pacific
            Lighting Energy Systems, dated December 21, 1983.

        o   Memorandum of Assignment of Lease between Cambrian Energy Systems
            and Pacific Lighting Energy Systems, dated December 21, 1983.

        o   Memorandum of Assignment of Lease between Cambrian Energy Systems
            and Pacific Lighting Energy Systems, dated March 14, 1984.

        o   Assignment of Lease between Cambrian Energy Systems and Pacific
            Lighting Energy Systems, dated May 22, 1984.

        o   Memorandum of Assignment of Lease between Cambrian Energy Systems
            and Pacific Lighting Energy Systems, dated May 22, 1984.

        o   Memorandum of Lease among Cambrian Energy Systems, L.P., Jack Martin
            Roth, Geraldine K. Roth, Gerald K. Roth, Harold W. Muckenthaler,
            Beverly A. Baier, Robert W. Baier, R. Jane Baier, Eleanor F.
            Bailard, Jeanne B. Ware, Bank of California, N.A., as Executor of
            the Estate of Louis T. Kraemer, Deceased, and Stacy H. Dobrzensky
            and Bank of California, N.A., as Executors of the Estate of W. R.
            Bailard, Deceased, and Ventura Regional County Sanitation District,
            dated December 1, 1983.
<PAGE>

        o   Assignment of Lease between Cambrian Energy Systems and Pacific
            Lighting Energy Systems, dated March 14, 1984.

        o   Memorandum of Assignment of Lease between Cambrian Energy Systems
            and Pacific Lighting Energy Systems, dated March 14, 1984.

        o   Assignment, Assumption and Consent to Assignment between Pacific
            Lighting Energy Systems and Oxnard Landfill Associates, dated
            January 25, 1985 (Refers to Landfill Gas Lease, dated April 22,
            1983).

        o   Assignment of Lease between Central Plants, Inc. and Pacific
            Lighting Energy Systems, dated March 14, 1984.

        o   Amendment to Landfill Gas Lease and Operating Agreement for
            Conversion Systems between Central Plants, Inc. and City of Oxnard,
            dated November 23, 1983 (Amendment to Landfill Gas Lease, dated
            November 25, 1981).

        o   Amendment to Landfill Gas Lease and Operating Agreement for
            Conversion Systems between Pacific Lighting Energy Systems and City
            of Oxnard dated June 26, 1984 (Amendment to Landfill Gas Lease,
            dated November 25, 1981).

        o   Memorandum of Assignment of Lease between Pacific Lighting Energy
            Systems and Oxnard Landfill Associates, dated January 25, 1985
            (Refers to Landfill Gas Lease dated November 25, 1981).

    Salinas/Crazy Horse Biogas Project, California

        o   Landfill Gas Lease and Operating Agreement for Conversion Systems
            among Cambrian Energy Systems and the City of Salinas and Salinas
            Disposal Service, Inc., dated July 3, 1984.

        o   Memorandum of Lease among Cambrian Energy Systems, City of Salinas
            and Salinas Disposal Service, Inc., dated July 3, 1984.

        o   Amendment No. 1 to Landfill Gas Lease between Salinas Valley Solid
            Waste Authority, as successor to the City of Salinas and Pacific
            Lighting Energy Systems (Pacific Energy) as successor to Cambrian
            Energy Systems, dated September 24, 1997.

    Santa Clara Biogas Project, California

        o   Lease and Operating Agreement for Landfill Gas Conversion Systems
            among the City of Santa Clara, Santa Clara Reclamation Corporation,
            Santa Clara Landfill Corporation All Purpose Landfill Company and
            Cambrian Energy Systems, dated June 27, 1984.
<PAGE>

        o   Memorandum of Lease among the City of Santa Clara, Santa Clara
            Reclamation Corporation, Santa Clara Landfill Corporation, All
            Purpose Landfill Company and Cambrian Energy Systems, dated June 27,
            1984.

        o   Memorandum of Assignment of Lease between Cambrian Energy Systems
            and Pacific Lighting Energy Systems, dated July 12, 1984.

        o   Lease and Operating Agreement for Landfill Conversion Systems -
            Amendment No. 1 to Original Agreement among the City of Santa Clara,
            Santa Clara Landfill Corporation, All Purpose Landfill Company, and
            Pacific Lighting Energy Systems, dated July, 23, 1985.

        o   First Amendment to Lease and Operating Agreement for Landfill
            Conversion Systems among the City of Santa Clara, Santa Clara
            Reclamation Corporation, Santa Clara Landfill Corporation, All
            Purpose Landfill Company, and Pacific Energy, dated March 8, 1988.

        o   Agreement between the City of Santa Clara and All Purpose Landfill
            Company, dated January 25, 1977.

        o   Agreement between the City of Santa Clara and All Purpose Landfill
            Company, dated September 21, 1982.

        o   Amendment No. 1 to Agreement between the City of Santa Clara and All
            Purpose Landfill Company, dated October 4, 1983.

        o   Amendment No. 2 to Agreement between the City of Santa Clara and All
            Purpose Landfill Company dated January 31, 1984.

    Stockton Biogas Project, California

        o   Landfill Gas Lease and Operating Agreement for Conversion Systems
            between Cambrian Energy Systems, Inc. and the City of Stockton,
            dated August 27, 1982.

        o   Memorandum of Lease between Cambrian Energy Systems, Inc and the
            City of Stockton, dated August 27, 1982.

        o   Assignment of Lease between Cambrian Energy Systems, Inc. and
            Central Plants, Inc., dated October 6, 1982.

        o   Assignment of Lease between Central Plants, Inc. and Pacific
            Lighting Energy Systems, dated March 14, 1984.

        o   Memorandum of Assignment of Lease between Central Plants Inc. and
            Pacific Lighting Systems, dated March 14, 1984.
<PAGE>

        o   First Amendment to Landfill Gas Lease and Operating Agreement for
            Conversion Systems between Pacific Gas and Electric Company and
            Pacific Lighting Energy Systems and the City of Stockton, dated May
            14, 1986.

        o   Amendment to City of Stockton-Pacific Energy-Austin Road Landfill
            Gas Lease and Operating Agreement, dated August 17, 1992.

    Three Mountain Power Project, California

        o   Sublease between Burney Mountain Power and Three Mountain Power,
            LLC, dated January 1, 2005.

<PAGE>

                                  SCHEDULE 4.16

                               MATERIAL CONTRACTS

A. CORPORATE

    1.  Corporate Services and Expense Reimbursement Agreement, dated March 10,
        2004, between Covanta Energy Corporation and Danielson Holding
        Corporation; and

    2.  Tax Sharing Agreement, dated March 10, 2004, between Danielson Holding
        Corporation and Covanta Energy Corporation and the other parties
        thereto, as amended.

B. PARENT GUARANTEES/SUPPORT AGREEMENTS

    1.  Covanta Guaranty, dated December 20, 1985, between Covanta Energy
        Corporation, Town of Babylon and the Town of Babylon Industrial
        Development Agency;

    2.  Covanta Guarantee, dated as of August 1, 1985, as amended, among Covanta
        Bristol, Inc. and the Bristol Contracting Communities.

    3.  Covanta Guarantee, dated December 21, 1992, between Covanta Energy
        Corporation and Greater Detroit Resource Recovery Authority.

    4.  Covanta Guaranty, dated February 1, 1988, between Covanta Energy
        Corporation and County of Fairfax; Fairfax County Solid Waste Authority;

    5.  Covanta Guaranty, dated August 1998, between Covanta Energy Corporation
        and Covanta Haverhill Associates (f/k/a Ogden Haverhill Associates);

    6.  Covanta Guaranty, dated January 9, 1985, between Covanta Energy
        Corporation and Hillsborough County, Florida, as amended;

    7.  Covanta Operating Guaranty, dated December 21, 1992, between Covanta
        Energy Corporation and City and County of Honolulu;

    8.  Covanta Liquidated Damages Guaranty, dated July 7, 1993, between Covanta
        Energy Corporation and City and County of Honolulu, Connecticut Bank and
        Trust and Hawaii Solid Waste Disposal Energy & Resource Recovery
        Facility Trust (assigned to OPI 12/21/92);

    9.  Amended and Restated Covanta Guaranty Agreement, dated June 29, 1989,
        between Covanta Energy Corporation and Town of Huntington;

    10. Covanta Guaranty, dated December 1, 1995, between Covanta Indianapolis,
        Inc. and the City of Indianapolis;

<PAGE>

    11. Covanta Guaranty, dated December 1, 1996, between Covanta Indianapolis,
        Inc. and the City of Indianapolis;

    12. Covanta Guaranty, dated October 1, 1987, between Covanta Energy
        Corporation and County of Kent; Department of Public Works;

    13. Covanta Guaranty, dated September 25, 1987, between Covanta Energy
        Corporation and Lancaster County Solid Waste Management Authority;

    14. Covanta Guaranty, dated January 16, 1990, between Covanta Energy
        Corporation and Lee County;

    15. Covanta Guaranty, dated December 21, 1992 and reaffirmed on July 1,
        1996, between Covanta Energy Corporation and Greater Detroit Resource
        Recovery Authority;

    16. Covanta Guaranty, dated December 21, 1992, between Covanta Energy
        Corporation and The Detroit Edison Co.;

    17. Covanta Guaranty, dated October 21, 1991, and amended July 1, 1996,
        among Covanta Energy Corporation, Ogden Projects, Inc., Michigan Waste
        Energy and Greater Detroit Resource Recovery Authority;

    18. Covanta Guaranty, dated November 16, 1990, between Covanta Energy
        Corporation and Northeast Maryland Waste Disposal Authority;

    19. Guarantee Agreement, dated October 10, 2003, from Covanta Energy
        Corporation to Covanta Onondaga Limited Partnership;

    20. Covanta Guaranty, dated April 15, 1989, between Covanta Energy
        Corporation and Pasco County;

    21. Covanta Guarantee, dated as of May 1, 1990, among Covanta Stanislaus,
        Inc., the City of Modesto and Stanislaus County, California, as amended;

    22. Covanta Guaranty, dated June 1, 1998, between Covanta Energy Corporation
        and Covanta Union, Inc.;

    23. Insurance Agreement, dated April 1, 2001, between American Ref-Fuel
        Company of Southeastern Connecticut, ARC and MBIA Insurance Company;

    24. Equity Contribution Agreement, dated as of April 30, 2001 between MSW
        Energy Holdings LLC, Ref-Fuel Corp., Ref-Fuel Holdings LLC and American
        Ref-Fuel Company LLC, as amended on December 12, 2003;

    25. Certain subsidiaries have general partner liability under law to
        subsidiaries that are general partnerships or limited partnerships;
<PAGE>

    26. Letter of Credit Reimbursement Agreement, between Ref-Fuel Corp. as
        Applicant and Bayerische Hypo-und Vereinsbank, New York Branch as
        Issuing Bank, dated as of April 30, 2004;

    27. Amended and Restated Letter of Credit Reimbursement Agreement, between
        MSW Energy Holdings LLC, as Applicant, and Bayerische Hypo-und
        Vereinsbank, as Issuing Bank, dated as of April 30, 2004;

    28. Second Amended and Restated Company Support Agreement, entered into as
        of April 30, 2001, by and between American Ref-Fuel Company of Hempstead
        and American Ref-Fuel Company LLC;

    29. Parent Company Guaranty, entered into as of June 1, 2001, by American
        Ref-Fuel Company LLC in favor of The Chase Manhattan Bank, as trustee;

    30. Amended and Restated Company Support Agreement, dated as of December 1,
        1997, by and among American Ref-Fuel Company of Essex County,
        Browning-Ferris Industries, Inc. and Duke Capital Corporation;

    31. Reimbursement Agreement, by and among ARC Essex, American Ref-Fuel
        Company LLC and Browning-Ferris Industries, dated as of April 30, 2001;

    32. Reimbursement Agreement, by and among ARC Essex, American Ref-Fuel
        Company LLC and Duke Capital Corporation, dated as of April 30, 2001;

    33. Parent Company Guaranty, entered into as of June 1, 2001, by American
        Ref-Fuel Company LLC, in favor of Manufacturers and Traders Trust
        Company;

    34. Parent Company Issuer Guaranty, entered into as of June 1, 2001, by
        American Ref-Fuel Company LLC in favor of the Niagara County Industrial
        Development Agency;

    35. Corporate Guaranty Agreement, entered into as of April 30, 2001, by
        American Ref-Fuel Company LLC, in favor of Occidental Chemical
        Corporation and Hooker Energy Corporation;

    36. Guaranty Agreement, entered into as of March 9, 2004 by American
        Ref-Fuel Company LLC in favor of Constellation Power Source, Inc.;

    37. Guaranty Agreement, entered into as of October 13, 2004 by American
        Ref-Fuel Company LLC in favor of Constellation New Energy, Inc.;

    38. Company Support Agreement, entered into as of April 30, 2001, by and
        between American Ref-Fuel Company of Southeastern Connecticut and
        American Ref-Fuel Company LLC;
<PAGE>

    39. Parent Undertaking, entered into as of April 30, 2001, by and between
        American Ref-Fuel Company of Southeastern Connecticut and American
        Ref-Fuel Company LLC;

    40. Corporate Guaranty Agreement, dated as of April 30, 2001, between
        American Ref-Fuel Company LLC and State Street Bank and Trust Company,
        as Trustee, in connection with Corporate Credit Bonds/Tax Exempt
        Interest (American REF-Fuel Company of Southeastern Connecticut Project
        - 1992 Series A);

    41. Corporate Guaranty Agreement, dated as of October 1, 2001, between
        American Ref-Fuel Company LLC and State Street Bank and Trust Company,
        as trustee in connection with the Corporate Credit Bonds (American
        Ref-fuel Company LLC - I Series A);

    42. Corporate Credit Guaranty, dated as of October 1, 2001, between ARC and
        State Street Bank and Trust Company, as Trustee (American Ref-fuel
        Company LLC - II Series A);

    43. Company Support Agreement, entered into as of November 1, 2001, by and
        between American Ref-Fuel Operations of SEMASS, L.P. and ARC;

    44. Contingent Capital Loan Agreement, entered into as of November 1, 2001,
        by and between American Ref-Fuel Operations of SEMASS, L.P. and ARC;

    45. Corporate Guaranty Agreement I, dated as of April 30, 2001, made by
        American Ref-Fuel Company LLC to and for the benefit of State Street
        Bank and Trust Company (as successor to Fleet National Bank), as Owner
        Trustee;

    46. Corporate Guaranty Agreement II, dated as of April 30, 2001, made by
        American Ref-Fuel Company LLC to and for the benefit of State Street
        Bank and Trust Company (as successor to Fleet National Bank), as Owner
        Trustee;

    47. Corporate Guaranty Agreement III, dated as of April 1, 2001, made by
        American Ref-Fuel Company LLC to and for the benefit of General Electric
        Capital Corporation;

    48. Corporate Guaranty Agreement IV, dated as of April 1, 2001, made by
        American Ref-Fuel Company LLC to and for the benefit of General Electric
        Capital Corporation;

    49. Amended and Restated Corporate Guarantee Agreement I, entered into as of
        August 28, 2001, by American Ref-Fuel Company LLC, in favor of and for
        the benefit of Viacom, Inc.;

    50. Amended and Restated Corporate Guarantee Agreement II, entered into as
        of August 28, 2001, by American Ref-Fuel Company LLC, in favor of and
        for the benefit of Viacom, Inc.;

    51. Indemnity Letter, dated April 16, 1997, from American Ref-Fuel Company
        of Delaware County, L.P. and Browning-Ferris Industries, Inc. to the
        Delaware County Industrial Development Authority;
<PAGE>

    52. Guarantee Agreement, dated as of August 28, 2001, from American Ref-Fuel
        Company LLC to and for the benefit of the Delaware County Solid Waste
        Authority;

    53. Letters of credit on behalf of Subsidiaries of ARC under the May 1, 2003
        $75,000,000 Amended and Restated Credit Agreement between American
        Ref-Fuel Company LLC and Citicorp North America, Inc., as Administrative
        Agent;

    54. Operator Guaranty, dated December 10, 1996, by Covanta Projects, Inc. in
        favor of Quezon Power (Philippines), Limited Co. (assigned to project
        lenders);

    55. Guaranty (O&M), dated April 2, 1999, by Covanta Energy Group, Inc., as
        amended October 31, 2004, in favor of NEPC Consortium Power Ltd.
        (assigned to Overseas Private Investment Corporation);

    56. Guarantee, Dated April 25, 2000, by Covanta Energy Corporation in favor
        of Madurai Power Corporation Pvt. Ltd. (assigned to project lenders);

    57. Share Retention and Financial Support Agreement, dated April 25, 2000
        among Covanta Energy Corporation, Covanta Energy India (Balaji) Ltd.,
        Samayanallur Power Investments Pvt. Ltd., ICICI Limited and Madurai
        Power Corporation Pvt. Ltd. (assigned to project lenders).

    58. Operation and Maintenance Guarantee, dated December 16, 1999, by Covanta
        Energy Group, Inc. in favor of Samalpatti Power Company Pvt. Ltd.
        (assigned to project lenders).

C. ENERGY CONTRACTS

    1.  Amended and Restated Energy Purchase Agreement, dated October 23, 1991,
        between Detroit Edison Company and Michigan Waste Energy, Inc, as
        amended;

    2.  Energy Purchase Agreement, dated July 11, 1986, between Consolidated
        Edison Company of New York, Inc. and American REF-FUEL Company of
        Hempstead;

    3.  Parallel Generation & Energy Purchase Agreement, as amended, dated
        October 10, 1986, between Long Island Lighting Company and American
        REF-FUEL Company of Hempstead;

    4.  Agreement for Purchase of Electric Power, as amended, dated July 1,
        1985, between Public Service Electric and Gas Company and American
        REF-FUEL Company of Essex County;

    5.  Confirmation Letter (2003), dated December 16, 2002, between American
        Ref-Fuel Company of Essex County and PSEG Energy Resources & Trade LLC;
<PAGE>

    6.  Confirmation Letter (2003 through 2007), dated December 16, 2002,
        between American Ref-Fuel Company of Essex County and PSEG Energy
        Resources & Trade LLC;

    7.  Power Purchase & Sale Agreement, dated October 18, 2004, between
        American Ref-Fuel Company of Essex County and Conectiv Energy Supply,
        Inc.;

    8.  Electrical Energy Purchase Agreement, as amended, dated December 2,
        1988, between Connecticut Resources Recovery Authority, Southeastern
        Connecticut Regional Resources Recovery Authority, American Ref-Fuel
        Company of Southeastern Connecticut and The Connecticut Light and Power
        Company;

    9.  Power Purchase Agreement, as amended, dated June 29, 1993, between
        American Ref-Fuel Company of Niagara, L.P. and Niagara Mohawk Power
        Corporation;

    10. Power Sales Agreement, as amended, dated June 13, 2003, between American
        Ref-Fuel Company of Niagara, L.P. and Constellation Power Source, Inc.;

    11. Power Sales Agreement, dated October 13, 2004, between American Ref-Fuel
        Company of Niagara, L.P. and Constellation New Energy, Inc.;

    12. Power Sales Agreement, dated October 31, 1985, between Commonwealth
        Electric Company and SEMASS Partnership;

    13. Power Sales Agreement for SEMASS Expansion, as amended, dated January
        15, 1988, between Commonwealth Electric Company and SEMASS Partnership;

    14. Agreement for Purchase of Electric Power, as amended, dated November 18,
        1988, between Atlantic City Electric Company and ARC Delaware as
        assignee of Delaware Resource Management, Inc.;

    15. Power Purchase Agreement, dated May 21, 1998, between Tamil Nadu
        Electricity Board and Madurai Power Corporation Pvt. Ltd., as amended;

    16. Steam Sales Agreement, as amended, dated May 5, 1993, between American
        Ref-Fuel Company of Niagara, L.P. and Occidental Chemical Company;

    17. Steam Service Agreement, as amended, dated November 30, 1995, between
        American Ref-Fuel Company of Niagara, L.P. and Praxair, Inc.;

    18. Steam Service Agreement, dated December 1, 1998, between American
        Ref-Fuel Company of Niagara, L.P. and The Goodyear Tire & Rubber
        Company; and

    19. Steam Service Agreement, dated April 28, 1999, between American Ref-Fuel
        Company of Niagara, L.P. and Niacet Corporation;
<PAGE>

    20. Steam Sales Agreement, dated December 12, 2002, between American
        Ref-Fuel Company of Niagara, L.P. and Norampac Industries, Inc.; and

    21. Interconnection Agreement, dated June 1, 2000, between American Ref-Fuel
        Company of Delaware Valley, L.P. and Philadelphia Electric Company;

D. SERVICE/WASTE/OPERATING CONTRACTS

    1.  Amended and Restated Service Agreement between, dated August 1, 1995,
        Covanta Babylon, Inc. and the Town of Babylon, as amended;

    2.  Amended and Restated Service Agreement, dated August 1, 1985, between
        Covanta Bristol, Inc. and the Bristol Resource Recovery Facility
        Operating Committee, as amended;

    3.  Second Amended and Restated Agreement for Operation and Maintenance of
        Solid Waste Disposal Resource Recovery and Energy Generating Facility,
        dated December 15, 1985, as amended and restated as of July 1, 1996,
        between Greater Detroit Resource Recovery Authority and Michigan Waste
        Energy, Inc.;

    4.  Service Agreement, dated August 28, 1985, among County of Fairfax,
        Virginia, Fairfax County Solid Waste Authority and Covanta Fairfax,
        Inc., as amended and supplemented;

    5.  Amended and Restated Service Agreement between, dated August 1, 1998,
        Covanta Haverhill Associates and Covanta Haverhill, Inc.;

    6.  Operations and Management Agreement, dated November 7, 1984, between
        Hillsborough County and Covanta Hillsborough, Inc, as amended;

    7.  Contract for Waste Processing and Disposal Services, dated July 3, 1985,
        between the City and County of Honolulu and Covanta Honolulu Resource
        Recovery Venture (f/k/a Honolulu Resource Recovery Venture), as amended
        and supplemented;

    8.  Amended and Restated Solid Waste Disposal Service Agreement, dated June
        29, 1989, between the Town of Huntington and Covanta Huntington, Limited
        Partnership, as amended;

    9.  Agreement, dated June 1, 1988, between the Solid Waste Disposal
        Authority of the City of Huntsville and Covanta Huntsville, Inc., as
        amended;

    10. Amended and Restated Service Agreement, dated September 23, 1985,
        between the Board of Public Works on behalf of the City of Indianapolis
        and Covanta Indianapolis, Inc., as amended;

    11. Amended and Restated Construction and Service Agreement, dated October
        1, 1987, between Covanta Kent Inc. and County of Kent;
<PAGE>

    12. Service Agreement, dated September 25, 1987, between Lancaster County
        Solid Waste Management Authority and Covanta Lancaster Inc.;

    13. Service Agreement, dated August 29, 1990, as amended, between Covanta
        Lee, Inc. and Lee County, Florida;

    14. Agreement for Electric Generation Facility Operation, Maintenance and
        Maintenance Services 2000, dated December 22, 2001, between Covanta
        Mid-Conn, Inc. (f/k/a Resource Recovery Systems of Connecticut, Inc.)
        and Connecticut Resources Recovery Authority;

    15. Amended and Restated Agreement for Operation and Maintenance of Power
        Block Facility, dated December 22, 2001, between Resource Recovery
        Systems of Connecticut and Connecticut Resources Recovery Authority;

    16. Service Agreement, dated November 16, 1990, between Northeast Maryland
        Waste Disposal Authority and Covanta Montgomery, Inc., as amended;

    17. Second Amended and Restated Solid Waste Disposal Service Agreement,
        dated October 10, 2003, between Covanta Onondaga Limited Partnership &
        Onondaga County Resource Recovery Association;

    18. Amended and Restated Completion, Operations and Maintenance Agreement,
        dated October 10, 2003, between Covanta Onondaga Limited Partnership and
        Covanta Onondaga Operations, Inc.;

    19. Operating and Maintenance Agreement, dated October 10, 2003, by and
        between Covanta Onondaga Limited Partnership and Covanta Onondaga
        Operations, Inc.;

    20. Amended and Restated Service Agreement, dated March 28, 1989, between
        Covanta Pasco, Inc. and Pasco County, as amended;

    21. Amended and Restated Service Agreement for the Supply and Acceptance of
        Solid Waste, dated June 1, 1986, between Covanta Stanislaus, Inc. and
        the City of Modesto and the County of Stanislaus, as amended;

    22. Amended and Restated Waste Disposal Contract, dated February 15, 1998,
        between Union County Utilities Authority and Covanta Union, Inc., as
        amended and restated June 15, 1998;

    23. Operations and Maintenance Agreement, dated June 1, 1998, between
        Covanta Union, Inc. and Covanta Operations of Union LLC, Inc.;

    24. Amended and Restated Solid Waste Disposal Agreement, dated as of May 1,
        1990, between BFI Waste Systems of North America, Inc. and Covanta
        Haverhill Associates, as amended; and

<PAGE>

    25. BFI Solid Waste Disposal Agreement, dated April 15, 1986, between
        Haverhill Power, Inc., Refuse Fuels Associates, and Browning-Ferris
        Industries, Inc.

    26. Service Agreement, as amended, dated December 1, 1985, between American
        REF-FUEL Company of Hempstead, the Town of Hempstead and the Town Board
        of Hempstead on behalf of the Town of Hempstead Refuse Disposal
        District;

    27. Amended and Restated Installment Sale Agreement dated as of June 1,
        2001, between the Niagara County Industrial Development Agency, Niagara
        County, New York and American Ref-Fuel Company of Niagara, L.P.;

    28. Solid Waste Disposal Agreement, as amended, dated December 31, 1987,
        between American Ref-Fuel Company of Niagara, L.P. (Occidental Chemical
        Corporation) and Town of Tonawanda;

    29. Solid Waste Disposal Agreement, as amended, dated October 15, 1991,
        between American Ref-Fuel Company of Niagara, L.P. (Occidental Chemical
        Corporation) and Town of Amherst Garbage and Refuse District No. 1;

    30. Amended and Restated Service Agreement, dated February 28, 1986, between
        American REF-FUEL Company of Essex County and the Port Authority of New
        York and New Jersey;

    31. Service Agreement, as amended, dated December 1, 1987, between
        Connecticut Resources Recovery Authority and American Ref-Fuel Company
        of Southeastern Connecticut;

    32. Master Waste Delivery Agreement, dated October 1, 1995, between
        TransRiver Marketing Company, L.P. and American Ref-Fuel Company of
        Niagara, L.P.;

    33. Limited Landfill Services Agreement, dated March 1, 1990, between EAC
        Operations, Inc. and Carver Marion Wareham Regional Refuse Disposal
        District;

    34. Amended and Restated Operating Services Agreement , dated November 1,
        2001, between American Ref-Fuel Operations of SEMASS, L.P. and SEMASS
        Partnership;

    35. Processed Bottom Ash Use Agreement, as amended, dated May 12, 2000,
        between SEMASS Partnership and Rhode Island Resource Recovery
        Corporation;

    36. Amended and Restated Management Services Agreement, dated November 1,
        2001, between SEMASS Partnership and American Ref-Fuel Operations of
        SEMASS, L.P.;

    37. Waste Management Agreement, as amended, dated May 25, 1982, between
        SEMASS Partnership and Carver, Marion, Wareham Regional Refuse Disposal
        District;
<PAGE>

    38. Service Agreement, as amended, dated September 1, 1987, between SEMASS
        Partnership and Martha's Vineyard Refuse Disposal and Resource Recovery
        District;

    39. Amended and Restated Waste Services Agreement, dated November 1, 2001,
        between SEMASS Partnership and American Ref-Fuel Operations of SEMASS,
        L.P.;

    40. Amended and Restated Waste Services Agreement, dated November 1, 2001,
        between SEMASS Partnership and American Ref-Fuel Operations of SEMASS,
        L.P.;

    41. Amended and Restated Waste Services Subcontract Agreement, dated
        November 1, 2001, between American Ref-Fuel Operations of SEMASS, L.P.
        and TransRiver Marketing Company, L.P.;

    42. SEMASS Residue Ash Disposal Services Agreement, dated January 1, 2003,
        between SEMASS Partnership and Waste Management of Massachusetts, Inc.;

    43. Disposal Agreement, as amended, dated July 1, 2002, between SEMASS
        Partnership and City of Boston;

    44. Disposal Agreement, dated October 4, 2004, between SEMASS Partnership
        and BFI-City of South Yarmouth;

    45. Disposal Agreement, dated March 30, 2000, between SEMASS Partnership and
        BFI-Somerset;

    46. Disposal Agreement, dated July 1, 2001, between SEMASS Partnership and
        BFI-Breckton;

    47. Community Host Agreement, as amended, dated January 30, 1989, between
        Westinghouse Electric Corporation, American Ref-Fuel Company of Delaware
        County, L.P., County of Delaware and City of Chester;

    48. Restated Service Agreement, as amended, dated December 1, 1988, between
        Delaware County Solid Waste Authority, Delaware Resource Management,
        Inc., Westinghouse Electric Corporation and American Ref-Fuel Company of
        Delaware County, L.P.;

    49. Agreement for Solid Waste Disposal, as amended, dated July 1, 1998,
        between American Ref-Fuel Company of Delaware Valley, L.P. and BFI Waste
        Systems of North America, Inc.;

    50. Disposal Services Agreement, as amended, dated January 2, 2002, between
        TransRiver Marketing Company, L.P. and Waste Management of
        Massachusetts, Inc.;

    51. Department of Sanitation City of New York Supply and Service Agreement,
        dated August 16, 2004, between TransRiver Marketing Company, L.P. and
        City of New York Department of Sanitation;

<PAGE>

    52. Service Agreement, as amended, dated November 27, 2001, between
        TransRiver Marketing Company, L.P. and Republic Services of
        Pennsylvania, L.L.C.;

    53. Disposal Agreement, as amended, dated May 1, 2002, between TransRiver
        Marketing Company, L.P. and Republic Services of New York, Inc.;

    54. Disposal Services Agreement 4/1/04 to 3/31/05, as amended, dated
        September 24, 2003, between TransRiver Marketing Company, L.P. and Waste
        Management of Pa.;

    55. Disposal Services Agreement, dated January 1, 2005, between TransRiver
        Marketing Company, L.P. and Waste Management of Massachusetts, Inc.;

    56. Plant Operation and Maintenance Agreement, dated December 1, 1995, as
        amended, between Quezon Power (Philippines), Limited Co. and Covanta
        Philippines Operating, Inc.

    57. Plant Operation and Maintenance Agreement, dated April 2, 1999, as
        amended, between NEPC Consortium Power Limited and Covanta Bangladesh
        Operations, Ltd.

    58. Operation and Maintenance Agreement, dated April 25, 2000, between
        Covanta Madurai Operating Pvt. Ltd. And Madurai Power Corporation Pvt.
        Ltd.

    59. Operation and Maintenance Agreement, dated December 3, 1999, between
        Samalpatti Power Company Pvt. Ltd. And Covanta Samalpatti Operating Pvt.
        Ltd.

E. FINANCING AND REAL ESTATE AGREEMENTS

    1.  Conditional Sale and Security Agreement, dated as of July 1, 1998, as
        amended,among Covanta Alexandria/Arlington, Inc., Alexandria Sanitation
        Authority and Arlington County Solid Waste Authority;

    2.  Operating Lease Agreement. Dated as of November 1, 1998, among Covanta
        Alexandria/Arlington, Inc., Alexandria Sanitation Authority and
        Arlington County Solid Waste Authority;

    3.  Loan Agreement dated as of December 1, 1993, between Covanta Bristol,
        Inc. and Bristol Resource Recovery Faciltiy Operating Committee.Facility
        Site Sublease Agreement, dated December 1, 1985, as amended and restated
        August 1, 1995, between Town of Babylon Industrial Development Agency
        and Covanta Babylon, Inc.;

    4.  Facility Lease Agreement, dated December 1, 1985, as amended and
        restated August 1, 1995, between Town of Babylon Industrial Development
        Agency and Covanta Babylon, Inc.;
<PAGE>

    5.  Participation Agreement, dated September 1, 1991, among Michigan Waste
        Energy, Inc., Greater Detroit Resource Recovery Authority, Resource
        Recovery Business Trust-A, PMCC Leasing Corp., Wilmington Trust Company,
        and William J. Wade;

    6.  Participation Agreement, dated September 1, 1991, among Michigan Waste
        Energy, Inc., Greater Detroit Resource Recovery Authority, Resource
        Recovery Business Trust-B, Aircraft Services Corp., Wilmington Trust
        Company, and William J. Wade;

    7.  Lease Agreement, dated October 23, 1991, between Michigan Waste Energy
        Inc. and Resource Recovery Business Trust-A, as amended;

    8.  Lease Agreement, dated October 23, 1991, between Michigan Waste Energy
        Inc. and Resource Recovery Business Trust-B, as amended;

    9.  Conditional Sale and Security Agreement, dated February 1, 1988, between
        Fairfax County Solid Waste Authority and Covanta Fairfax, Inc., as
        amended March 1, 1995;

    10. Amended and Restated Lease Agreement, dated December 1, 1986, between
        SBR Associates and Refuse Fuels Associates, as amended;

    11. New Facility Site Lease, Indenture of Lease, dated December 1, 1986,
        u/d/t dated January 11, 1980, between Covanta Haverhill Associates and
        Dale F. Rogers and B. Richard Rogers, Trustees of the D&R Realty Trust;

    12. Lease Agreement dated as of November 1, 1989, as amended, between
        Connecticut Bank & Trust Company and Honolulu Resource Recovery Venture;

    13. Participation and Assignment Agreement, dated as of November 1, 1989,
        as amended, among Honolulu Resource Recovery Venture, Ford Motor Credit
        Corporation, Connecticut Bank & Trust Company, and the City and County
        of Honolulu;

    14. Facility Lease Agreement, dated January 15, 1997, between Covanta
        Huntington Limited Partnership and the Suffolk County Industrial
        Development Agency;

    15. First Amended and Restated Agreement of Limited Partnership, dated
        October 7, 1991, by and among Ogden Martin Systems of Huntington
        Resource Recovery One Corp., Pitney Bowes Credit Corporation, Ogden
        Martin Systems of Huntington Resource Recovery Six Corp., and Ogden
        Martin Systems of Huntington Resource Recovery Seven Corp.;

    16. Financing Agreement, dated as of December 1, 1985, between the City of
        Indianapolis and Massburn, Inc.;

    17. Loan Agreement, dated as of November 1, 1988, as supplemented, between
        Covanta Lake, Inc. and NRG/Recovery Group, Inc.;
<PAGE>

    18. Amended and Restated Lease Agreement, dated October 10, 2003, between
        Onondaga County Resource Recovery Association and Covanta Onondaga
        Limited Partnership;

    19. Second Amended and Restated Agreement of Limited Partnership of Covanta
        Onondaga Limited Partnership, dated October 10, 2003, by and among
        Covanta Onondaga, Inc., Covanta Onondaga Two Corp., Covanta Onondaga
        Three Corp., Covanta Onondaga Four Corp., Covanta Onondaga Five Corp.,
        Ford Motor Credit Company, Mariner Investment Strategies, Inc., and
        IEA-COV, LLC;

    20. Lease Agreement dated as of January 1, 2000 between Stanislaus Waste to
        Energy Financing Authority and Covanta Stanislaus, Inc.;

    21. Sublease Agreement dated as of January 1, 2000 between Stanislaus Waste
        Energy Financing Authority and Covanta Stanislaus, Inc.;

    22. Facility Lease Agreement, dated June 15, 1998, by and between the Union
        County Utilities Authority and Covanta Union, Inc;

    23. $275 million aggregate principal amount 6.26% Senior Notes due 2015 of
        American Ref-Fuel Company LLC, issued May 1, 2003;

    24. Indenture and First Supplemental Indenture, dated May 1, 2003, between
        American Ref-Fuel Company LLC and Wachovia Bank, National Association,
        as Trustee and Securities Intermediary;

    25. $200 million aggregate principal amount Series A and Series B 8 1/2%
        Senior Secured Notes due 2010 of MSW Energy Holdings LLC, issued June
        25, 2003;

    26. Indenture, by and among MSW Energy Holdings LLC, MSW Energy Finance Co.,
        Inc., and the Guarantor Parties named therein, and Wells Fargo Bank
        Minnesota, National Bank, as Trustee, dated as of June 25, 2003;

    27. $225 million aggregate principal amount Series A and Series B 7 3/8%
        Senior Secured Notes due 2010 of MSW Energy Holdings II LLC, issued
        November 24, 2003;

    28. Indenture, by and among MSW Energy Holdings II LLC, MSW Energy Finance
        II Co., Inc., and the Guarantor Parties named therein, and Wells Fargo
        Bank Minnesota, National Bank, as Trustee, dated as of November 24,
        2003.

    29. Quitclaim Deed, dated September 5, 2001, between Waste Systems
        International Lynn Transfer Station, Inc. to Transriver Marketing
        Company, L.P.;

    30. Lease, dated March 19, 2002, between 485 Properties, LLC and ARC;

    31. Lease Agreement, as amended, dated December 1, 1985, between Town of
        Hempstead Industrial Development Agency and American REF-FUEL Company of
        Hempstead;
<PAGE>

    32. Site Lease Agreement, dated November 1, 1986, between Town of Hempstead
        Industrial Development Agency and American REF-FUEL Company of
        Hempstead;

    33. Amended and Restated Company Sublease Agreement, dated June 1, 2001,
        between Town of Hempstead Industrial Development Agency and American
        REF-FUEL Company of Hempstead;

    34. Agency Sublease, dated March 1, 1997, between Town of Hempstead
        Industrial Development Agency and American REF-FUEL Company of
        Hempstead;

    35. Lessee Guaranty and Security Agreement, dated September 1, 1986, between
        American REF-FUEL Company of Hempstead, Bankers Trust Company and The
        Chase Manhattan Bank;

    36. Escrow and Security Agreement, dated February 28, 1986, between American
        REF-FUEL Company of Essex County, the Port Authority of New York and New
        Jersey and Midlantic National Bank;

    37. Lease and Agreement, as amended, dated February 28, 1986, between
        American REF-FUEL Company of Essex County and the Port Authority of New
        York and New Jersey;

    38. Lease Agreement, as amended, dated December 1, 1988, between Connecticut
        Resources Recovery Authority and American Ref-Fuel Company of
        Southeastern Connecticut;

    39. Site Lease, dated December 1, 1988, between Southeastern Connecticut
        Regional Resources Recovery Authority and American Ref-Fuel Company of
        Southeastern Connecticut;

    40. Loan Agreement (Duke Capital Series A), as amended, dated December 1,
        1998, between Connecticut Resources Recovery Authority and American
        Ref-Fuel Company of Southeastern Connecticut;

    41. Loan Agreement (BFI Series A), as amended, dated December 1, 1998,
        between Connecticut Resources Recovery Authority and American Ref-Fuel
        Company of Southeastern Connecticut;

    42. Loan Agreement, dated January 15, 1992, between Connecticut Resources
        Recovery Authority and American Ref-Fuel Company of Southeastern
        Connecticut;

    43. Lease Guaranty and Security Agreement, as amended, dated December 1,
        1988, between American Ref-Fuel Company of Southeastern Connecticut to
        The Connecticut National Bank;

    44. Payment-In-Lieu-Of-Tax Agreement, as amended, dated August 1, 1993,
        between American Ref-Fuel Company of Niagara, L.P. and Niagara County
        Industrial Development Agency;
<PAGE>

    45. Deed, dated May 5, 1993, by Hooker Energy Corporation granting to
        American Ref-Fuel Company of Niagara, L.P.;

    46. A-1 Boilerhouse Lease, dated May 5, 1993, between American Ref-Fuel
        Company of Niagara, L.P. and Occidental Chemical Corporation;

    47. Mortgage and Security Agreement, dated June 1, 2001, between American
        Ref-Fuel Company of Niagara, L.P., Niagara County Industrial Development
        Agency and Manufacturers and Traders Trust Company;

    48. Quitclaim Deed re: Lot 40-1, Rochester, MA Site, dated August 5, 1987,
        between William Byrne and SEMASS;

    49. Quitclaim Deed re: Lot 40-2, dated August 5, 1987, between SEMASS and
        Commonwealth Electric;

    50. Quitclaim Deed re: 131 and 141 Cranberry Highway, dated December 27,
        1984, between William Byrne to Bank of New England as Trustee for
        SEMASS;

    51. Amended and Restated Loan, Security and Trust Agreement, dated November
        1, 2001, between Massachusetts Development Finance Agency, SEMASS
        Partnership and State Street Bank and Trust Company;

    52. Settlement Agreement, dated October 19, 1995, between Carver, Marion,
        Wareham Regional Refuse Disposal District and SEMASS Partnership (Pls.)
        and Board of Health for the Town of Carver and Town of Carver (Defs.)
        and EAC Operations, Inc. (Third Party Def.);

    53. Settlement Agreement, as amended, dated March 30, 1990, between Wankinco
        River, Inc., The Carver, Marion, Wareham Regional Refuse Disposal
        District, SEMASS Partnership and EAC Operations, Inc.;

    54. Subordinated Payment Agreement, dated November 1, 2001, between American
        Ref-Fuel Operations of SEMASS, L.P. and SEMASS Partnership;

    55. Lease, as amended, dated April 15, 1983, between A.D. Makepeace Company
        and Carver, Marion, Wareham Regional Refuse Disposal District, Wankinco
        River, Inc.;

    56. Ground Lease, as amended, dated June 30, 1986, between Town of
        Braintree, Mass. And SEMASS Partnership;

    57. Quitclaim Deed, dated November 1, 1985, between Bank of New England to
        SEMASS Partnership Trust Agreement;

    58. Mortgage Deed and Security Agreement, as amended, dated August 1, 1991,
        between State Street Bank and Trust Company and SEMASS Partnership;
<PAGE>

    59. Leasehold Mortgage Deed and Security Agreement, as amended, dated August
        1, 1991, between State Street Bank and Trust Company and SEMASS
        Partnership;

    60. Trust Agreement, dated August 1, 1991, between SEMASS Partnership,
        Wankinco River, Inc. and Fleet National Bank;

    61. Declaration of Easements, Restrictions and Covenants, as amended, dated
        November 5, 1985, between SEMASS Partnership and Commonwealth Electric
        Company;

    62. Participation Agreement, dated April 1, 1997, between American Ref-Fuel
        Company of Delaware County, L.P., TIFD III-L Inc., Delaware Resource
        Management, Inc., Fleet National Bank, First Union National Bank,
        Browning-Ferris Industries, Inc. and Delaware Resource Lessee Trust;

    63. Tax Indemnification Agreement, dated April 1, 1997, between American
        Ref-Fuel Company of Delaware County, L.P. and TIFD III-L Inc.;

    64. ISDA Master Agreement, dated April 16, 1997, between American Ref-Fuel
        Company of Delaware County, L.P. and General Electric Capital
        Corporation;

    65. Amended and Restated Lease Security Agreement and Assignment, dated
        April 1, 1997, between American Ref-Fuel Company of Delaware County,
        L.P. and Fleet National Bank;

    66. Real Estate Purchase and Sale Agreement, as amended, dated March 19,
        1997, between American Ref-Fuel Company of Delaware County, L.P. and
        Chester Solid Waste Associates;

    67. Amended and Restated Lease Agreement, dated April 1, 1997, between
        American Ref-Fuel Company of Delaware County, L.P., Fleet National Bank
        and Delaware Resource Management, Inc.;

    68. Assignment of Lease and Easement, dated April 11, 1997, between American
        Ref-Fuel Company of Delaware County, L.P. and Chester Solid Waste
        Associates;

    69. Grant of Easement, dated April 16, 1997, between American Ref-Fuel
        Company of Delaware County, L.P. to Fleet National Bank;

    70. Special Warranty Deed, dated April 16, 1997, between American Ref-Fuel
        Company of Delaware County, L.P. and Chester Solid Waste Associates;

    71. Special Warranty Deed, dated April 16, 1997, between American Ref-Fuel
        Company of Delaware County, L.P. and Chester Solid Waste Associates;

    72. Grant of Easement, dated April 16, 1997, between American Ref-Fuel
        Company of Delaware County, L.P. and Chester Solid Waste Associates;
<PAGE>

    73. Grant of Easement, dated April 16, 1997, between American Ref-Fuel
        Company of Delaware County, L.P. and Chester Solid Waste Associates;

    74. Mutual Release and Settlement Agreement, dated August 28, 2001, between
        American Ref-Fuel Company of Delaware County, L.P., American Ref-Fuel
        Company, LLC, Delaware County, Delaware County Solid Waste Authority and
        Viacom, Inc.;

    75. Site Sublease, dated July 1, 1991, between The Connecticut National Bank
        and Delaware Resource Management, Inc.;

    76. Facility Ground Lease, as amended, dated December 1, 1988, between
        Chester Solid Waste Associates and Delaware Resource Management, Inc.;

    77. Common Agreement, dated April 25, 2000, between Madurai PowerCorporation
        Pvt. Ltd. And ICICI Limited (together with related novation, mortgage,
        pledge and security agreements);

    78. Working Capital Loan Consortium Agreement, dated August 29, 2002, among
        Madurai Power Corporation Pvt. Ltd., ICICI Limited, State Bank of India
        and Central Bank of India;

    79. Land Lease Agreement, dated January 20, 1999, between Tamil Nadu
        Electricity Board and Madurai Power Corporation Pvt. Ltd.;

F. PARTNERSHIP AND JOINT VENTURE AGREEMENTS

    1.  Third Amended and Restated Development and Shareholders Agreement, dated
        October 18, 2004, among Ogden Power Development-Cayman, Inc., PMR
        Limited Co., PMR Power, Inc. and Quezon Generating Company Ltd.

    2.  Shareholders Agreement, dated April 25, 2000, among Covanta Energy India
        (Balaji), Madurai Power Corporation Pvt. Ltd., Samayanallur Power
        Investments Pvt. Ltd. And Wartsila BPC Investment LLC.

    3.  Shareholders Agreement, dated February 26, 1999, as amended, among
        Shapoorji Pallonji Infrastructure Capital Company Ltd., SIV Industries
        Ltd., Fenmor Energy Ltd., Wartsila India Power Investment, LLC, Covanta
        Energy India (Samalpatti) Ltd., Goa Holdings Ltd. And Samalpatti Power
        Company Pvt. Ltd.

<PAGE>

                                  SCHEDULE 5.15

                             CASH MANAGEMENT SYSTEMS

(A)      Company  and Certain of its Subsidiaries

                  1. In the ordinary course of business the Company and certain
of its Subsidiaries (other than the ARC Subsidiaries (as defined below) as
described in Part (B) of this Schedule 5.15) (collectively, the "Covanta Group")
use a centralized cash management system (the "Cash Management System") similar
to those utilized by other major corporate enterprises. The Cash Management
System is designed to collect, transfer, and disburse efficiently funds
generated through the Company's operations and to record accurately such
collections, transfers, and disbursements as they are made. The principal
components of the Cash Management System are described in detail below, from the
project level up to the parent level.

                  2. Almost all bank accounts are held with JPMorgan Chase Bank,
N.A. ("Bank One") in Chicago, Illinois. The Covanta Group members routinely
deposit, withdraw and otherwise transfer funds to, from and between their bank
accounts by various methods including check, wire transfer, automated clearing
house transfer and electronic funds transfer. In addition, the Covanta Group
members generate thousands of accounts payable and payroll checks per month from
their bank accounts.

         WASTE-TO-ENERGY PROJECTS

                  3. Among the Covanta Group entities, the Company has
constructed, operates and, in certain cases, owns or leases 25 waste-to-energy
("WTE") projects. For each WTE project, a Company subsidiary operates and
manages the facility (the "WTE Operating Subsidiary"). In almost every case, the
WTE Operating Subsidiary enters into a contract with a

<PAGE>

client municipality or municipal authority, under which the WTE Operating
Subsidiary receives fees for the operation and maintenance ("O&M") of the
facility. These fees are typically referred to as the service or operating fee.
In addition, the WTE Operating Subsidiary typically receives a share of the
revenues from sales of energy generated by the WTE facility, and may receive
pass though costs. The portion of the project cash due to the WTE Operating
Subsidiary, including, where applicable, pass through costs, share of energy
revenues, surplus funds and other amounts payable to the Company, is herein
referred to as the "Operating Fee."

                  4. The construction of each of the 25 WTE facilities was
funded by the issuance of municipal or private activity bonds (the "WTE Bonds").
In each case, a portion of the WTE Bonds (or successor issues) remains
outstanding. Each WTE Bond issue has a WTE Bond trustee. Of the 25 WTE
facilities operated by the Company, eight are owned by a municipality or
municipal authority. For these eight facilities operated by Borrowers, the WTE
Bonds are direct general obligation or revenue bonds for which the municipality
or municipal authority is the issuer and is directly responsible for debt
service. Covanta Group entities are the owners or lessees of the remaining 17
WTE facilities.

                  5. In almost every case, the WTE Bond trustee collects all
revenues due to the WTE project, including the Operating Fee and all revenues
from the sale of energy generated by the WTE project.(1) The trustee (or a third
party entity, such as a bank or escrow agent, to which the trustee has
transferred the cash) generally distributes these revenues, including those due
to the WTE Operating Subsidiary, on a monthly basis, pursuant to the terms of
the relevant

----------
(1) In the Fairfax and Alexandria WTE projects, the WTE Operating Subsidiary
collects the energy revenues from the power purchaser, as well as other revenues
from the community and from haulers delivering waste, and sends the net debt
service fee to the trustee on a monthly basis. In the Haverhill and Warren WTE
projects, a lockbox custodian collects cash and pays it over to the trustee (in
fact, the same entity as the lockbox custodian).

<PAGE>

trust indenture. The trust indenture typically specifies that the revenues must
first be applied to pay for O&M.

                  6. In general, each WTE Operating Subsidiary maintains two
accounts (both with Bank One) covering, respectively, receipts/deposits and
disbursements, and one petty cash account with Bank of America, N.A. ("Bank of
America"). Each WTE Operating Subsidiary maintains its three accounts at a zero
balance. All receipts for a specific WTE facility are deposited to that
facility's receipts account. At certain WTE facilities, receipts for
Supplemental Waste Disposal are deposited to that facility's receipts account.
As soon as the WTE Operating Subsidiary receives funds into its receipts
account, it transfers them up to the main operating subsidiary for all the WTE
projects, Covanta Waste-to-Energy, LLC (the "WTE Subgroup") and then to the
Covanta Energy Corporation main concentration account. The Borrowers anticipate
that the petty cash accounts will all be transferred to Bank One within the next
few months.

                  7. The WTE Subgroup maintains a concentration account, also
with Bank One (the "WTE Subgroup Concentration Account"), which receives cash
from the WTE Operating Subsidiaries and is swept daily to the Company. The WTE
Subgroup Concentration Account has a zero balance.

                  8. Company holds a main concentration or operating account,
again with Bank One (the "Operating Account"), into and from which flows all
cash related to the WTE Subgroup and, ultimately, the WTE Operating
Subsidiaries.

                  9. Company also maintains an overnight investment account (the
"Overnight Investment Account").

<PAGE>

                  10. Cash remaining in the Operating Account and Overnight
Investment Account are automatically invested each night by Bank One in Bank
One's commercial paper and in other first-tier securities. The following morning
the cash is re-deposited in the Operating Account and the Overnight Investment
Account. Upon notice from the Administrative Agent, at any time during the
occurrence and continuance of an Event of Default, the Company shall limit such
overnight investments to onshore accounts.

                  11. Each WTE Operating Subsidiary is responsible for funding
certain of the day-to-day operations of its facility, including payment of all
vendors and suppliers. Other day-to-day operating expenses, including payroll
and corporate overhead such as legal, finance, human resources and accounting,
are paid by the Company or other Covanta Group affiliates. Because (i) the WTE
Operating Subsidiary receives payments from the trustee only on a monthly basis,
(ii) certain expenses are paid by other upstream affiliates, and (iii) due to
the consolidated nature of the Cash Management System, the WTE Operating
Subsidiary's own accounts are maintained at a zero balance, when a WTE Operating
Subsidiary requires cash, it makes a request to the WTE Subgroup, which in turn
requests cash from the Company. The Company transfers the necessary cash from
the Operating Account into the WTE Subgroup Concentration Account, which sends
the cash down to the WTE Operating Subsidiary's disbursement account. The
Company may also agree to pay the amount due to the creditor directly, and
charge the WTE Operating Subsidiary through an inter-company account. Such
transfers and payments are made daily, and the Company weekly sends $5-10
million down to the WTE Operating Subsidiaries. This amount may change from time
to time as a result of the operating cash needs of the WTE Operating
Subsidiaries.

<PAGE>

         DOMESTIC INDEPENDENT POWER PRODUCTION PROJECTS

                  12. The Company has six independent power production ("IPP")
projects that are within the Covanta Energy Americas, Inc. ("CEA") group of
companies (the "CEA Subgroup"). In general, each IPP operating Subsidiary
maintains two accounts (all with Bank One) covering, respectively,
receipts/deposits and disbursements with the exception of one facility which
maintains an additional petty cash account with Bank of America. Each IPP
operating Subsidiary maintains its two accounts at a zero balance. Based on
distributions from each IPP project, as soon as the IPP Operating Subsidiary
receives funds into its receipts account, it transfers them up to the main
operating subsidiary for all the IPP projects, CEA. It is anticipated that the
petty cash account will be transferred to Bank One within the next few months.

                  13. In addition, five IPP operating partnerships maintain
accounts with Bank One. Management and Operating fees, as well as distributions,
are paid by each such partnership to its operators and owners, respectively,
that are within the CEA Subgroup. The CEA Subgroup account is swept daily to the
Covanta Energy Corporation main concentration account.

         WATER PROJECTS

                  14. A similar Cash Management System to that described for WTE
is in place for the Company's water project operated by Covanta Bessemer, Inc.
(the "Water Operating Subsidiary"). The Water Operating Subsidiary receives O&M
fees from the trustee of the project. The Water Operating Subsidiary transfers
cash from its accounts into a concentration account, held by Covanta Water
Systems, Inc (the "Water Subgroup Concentration Account").

<PAGE>

Cash from the Water Subgroup Concentration Account is transferred daily to the
Covanta Energy Corporation main concentration account. Both the Water Operating
Subsidiary's accounts and the Water Subgroup Concentration Account are
maintained at a zero balance. Transfers of cash from the Company to the Water
Operating Subsidiary occur in the same way as described above for the WTEs.

         PAYROLL

                  15. Various entities and bank accounts handle payroll within
the Cash Management System. The Company transfers cash to these accounts from
the Operating Account. Unless otherwise indicated below, all wages are paid
weekly.

                  16. One account held by Covanta Projects, Inc. ("CPI") with
Bank One (Account 675523435), is used to pay employees of: (i) CPI (i.e., plant
workers at all WTE facilities, other than those specifically mentioned below,
and certain supervisory personnel); (ii) Covanta Water Treatment Services, Inc.
(i.e., all plant workers at water/wastewater facilities); and (iii) Covanta
Energy Services of New Jersey, Inc. (i.e., plant workers at the Union and Warren
WTE facilities).

                  17. Another account, also with Bank One, held by CPI (Account
663000248) is used to pay employees of: (i) CPI (i.e., certain employees at the
Company's offices in Fairfield (New Jersey), as well as expatriate employees in
Asia and certain other supervisory employees); (ii) Covanta Union, Inc. (i.e.,
the business manager at the Union facility); (iii) Covanta Power Plant
Operations, (i.e., all domestic IPP plant workers ); and (iv) Covanta Water
Systems, Inc. (i.e., water/wastewater employees in Fairfield and certain
management-level employees). These wages are paid bi-weekly.

<PAGE>

         CPIH CASH MANAGEMENT SYSTEM

                  18. The CPIH Cash Management System is designed to collect,
transfer, and disburse efficiently funds generated through the CPIH's operations
and to record accurately such collections, transfers, and disbursements as they
are made. The principal components of the CPIH Cash Management System are
described in detail below.

                  19. The CPIH concentration account is held with Bank One. The
CPIH concentration account will serve to collect project distributions, make
required disbursements (including political risk insurance premiums and working
capital for international projects) and reimburse Covanta Energy Corporation]
for certain expenditures. These certain expenditures include payroll for
expatriate employees in Asia, professional fees and any other expenses that are
obligations of CPIH.

         INTERNATIONAL SUBSIDIARIES

                  20. The majority of international Subsidiaries affiliated with
CPIH fund and operate themselves with few, if any, cash inputs from CPIH.
Routinely, cash will be distributed up to CPIH on a quarterly, semi-annual or
annual basis through the channels of Subsidiary ownership. A limited amount of
cash is retained in off-shore accounts from time to time in order to fund
certain CPIH working capital and overhead expenditures outside the U.S.

         INTERNATIONAL PAYROLL

                  21. Various entities and bank accounts handle payroll within
the Cash Management System. Expatriate employees in Asia who were hired in Asia
are paid out of a Hong Kong bank account utilizing a local payroll service.
Funds for the Hong Kong account are either received from various Asian
operations (e.g. China or India) or are transferred from CPIH from time to time.
The remainder of the payroll for international Subsidiaries is self-funding

<PAGE>

utilizing revenues generated from various contractual arrangements.

          BANKRUPTCY RESERVE ACCOUNT

                  22. The Company has established an investment account at
JPMorgan Securities, Inc. in which it maintain Cash and Cash Equivalents in
respect of Class 4 Claims (the "Class 4 Claims Account"). Amounts in this Class
4 Claims Account are reserved for the satisfaction of claims pursuant to the
Plan of Reorganization.]

(B) American Ref-Fuel Holdings Corp. and its Subsidiaries

                  1. In the ordinary course of business American Ref-Fuel
Company LLC ("ARC LLC") and its subsidiaries (the indirect subsidiaries of
American Ref-Fuel Holdings Corp.) use a centralized cash management system (the
"ARC Cash Management System") similar to those utilized by other major corporate
enterprises. The ARC Cash Management System is designed to efficiently collect,
transfer, and disburse unrestricted funds generated through the operations of
ARC LLC and subsidiaries and to record accurately such collections, transfers,
and disbursements as they are made. The principal components of the ARC Cash
Management System, which manages the cash from the subsidiary level up to the
ARC LLC level are described in detail below. Distributions from ARC LLC to its
indirect parent American Ref-Fuel Holdings Corp. are also described.

                  2. ARC LLC was formed to develop, own and operate six
waste-to-energy ("WTE") projects which are each owned through an ARC LLC
subsidiary (the "WTE Operating Subsidiary"). Typically, the WTE Operating
Subsidiary has entered into one or more long-term contracts with client
municipalities or municipal authorities, under which the WTE Operating
Subsidiary receives fees for the disposal of waste by the facility. These fees
are typically

<PAGE>

referred to as the service or tip fees. These fees could also include the
receipt of pass through costs which are contractually borne by the client in the
case of uncontrollable circumstances such as changes in law. In addition, the
WTE Operating Subsidiary typically receives all or a share of the revenues from
sale of energy generated by the WTE facility.

                  3. The WTE Operating Subsidiaries own or lease all of the ARC
LLC WTE facilities. The construction of each facility was funded by the issuance
of municipal or private activity bonds (the "WTE Bonds"). In each case, a
portion of the WTE Bonds (or successor issues) remains outstanding. Each WTE
Bond issue has a WTE Bond trustee and four of the six WTE Operating Subsidiaries
have restricted bank accounts. In these cases, the revenues due to the WTE
project, including the service fee, pass through costs and the revenues from the
sale of energy are deposited into a restricted bank account held by the trustee.
The trustee generally distributes these revenues to the WTE Operating
Subsidiary's unrestricted bank account (as described below) on a monthly basis
to fund operating expenses. Typically the relevant trust indentures specify that
the revenues must first be applied to pay for operations and maintenance
expenses. Distributions to ARC LLC are released from the WTE Operating
Subsidiary upon the satisfaction of certain covenants set forth in the documents
relating to the WTE Bonds.

                  4. Almost all unrestricted bank accounts currently are held
with Wachovia Bank, N.A. ("Wachovia") in Summit, New Jersey . (ARC may chose to
move these accounts to Bank One or another bank in the future.) ARC LLC and its
subsidiaries routinely deposit, withdraw and otherwise transfer funds to, from
and between their bank accounts by various methods including check, wire
transfer, automated clearing house transfer and electronic funds transfer. In
addition to the WTE Operating Subsidiaries related accounts, ARC LLC has a

<PAGE>

marketing company subsidiary and a management company subsidiary that maintain
bank accounts at Wachovia. Typically, thousands of accounts payable checks are
generated per month from these bank accounts. In general, each subsidiary
maintains an account with Wachovia covering receipts/deposits and disbursements
and one petty cash account with a local bank (with a balance of no more than
$5,000).
                  5. Each subsidiary is responsible for funding certain of the
day-to-day operations including payment to all vendors and suppliers. Other
day-to-day operating expenses, including payroll and corporate overhead such as
legal, finance, human resources and accounting, are paid by other ARC LLC
subsidiaries and subsequently reimbursed as allocated from the other
subsidiaries. Due to the consolidated nature of the ARC Cash Management System,
the subsidiary accounts at Wachovia are maintained at a zero balance. When the
subsidiary's disbursements exceed its deposits on a given day, ARC LLC transfers
the necessary cash from the its operating account to the subsidiary's account.
Likewise when the subsidiary has deposits that generate excess cash not needed
to cover disbursements, it is transferred to the ARC LLC operating account.
These transfers are automatically enacted by Wachovia on a daily basis.

                  6. Wages are paid on a weekly basis. Payroll is funded from
the ARC LLC unrestricted account at Wachovia to the payroll service provider on
a weekly basis and reimbursed by the various ARC LLC subsidiaries on a monthly
basis and accounted for as an intercompany loan until the reimbursement is
received.

                  7. ARC LLC also maintains an investment account with Wachovia.
Cash remaining in its operating and investment account is manually invested each
night by the

<PAGE>

Corporate Cash Manager in money market instruments, commercial paper and in
other first-tier securities based on projected operating needs.

                  8. Distributions from ARC LLC to its parent Ref-Fuel Holdings
LLC are restricted by the documents relating to its debt which allow for
quarterly distributions subject to the satisfaction of certain covenants.
Distributions from Ref-Fuel Holdings are not restricted and are immediately
wired to its parents MSW I and MSW II. Distributions from MSW I and MSW II to
their indirect parent American Ref-Fuel Holdings Corp. are restricted by the
documents relating to their debt which allow for quarterly or monthly
distributions subject to the satisfaction of certain covenants. Once funds are
released to American Ref-Fuel Holdings Corp., they are unrestricted. American
Ref-Fuel Holdings Corp. pays its own operating expenses from its accounts at
Wachovia and JPMorgan Chase and is free to distribute the remainder to its
shareholders.

<PAGE>

                                  SCHEDULE 5.18
                              POST CLOSING MATTERS

1. No later than 45 days following the Closing Date, Covanta Waste to Energy,
LLC shall deliver to the Collateral Agent (as defined in the First Lien Credit
Agreement and subject to the provisions of Section 5.4 of the Intercreditor
Agreement) (i) a share certificate or certificates representing 65% of its
ownership interests in Covanta Waste to Energy Asia Investments (provided that
such division of ownership interests is permissible under applicable law) and
(ii) a completed supplement to the Pledge and Security Agreement with respect
thereto.

2. Immediately following the Closing Date, the Company shall commence reasonable
commercial efforts with respect to Generating Resources Recovery Partners, L.P.
and Pacific Energy Operating Group, L.P. (the "Subject Partnerships") to obtain
the necessary consents of the partners in such entities to permit each Subject
Partnership to become a Guarantor hereunder and a Grantor under the Pledge and
Security Agreement by executing and delivering to the Administrative Agent and
the Collateral Agent a Counterpart Agreement and otherwise taking all such
actions and execute and deliver, or cause to be executed and delivered, all such
documents, instruments, agreements that would have been required to have been
delivered pursuant to Sections 3.1(b), 3.1(h) (to the extent applicable), 3.1(i)
and 3.1(m) if the Subject Partnerships were Subsidiary Guarantors on the Closing
Date. The Company shall, or shall cause the Subject Partnerships to, consummate
such actions promptly upon receiving such consents.

3. Within 30 days of the Closing Date, Collateral Agent shall receive from
Company or the applicable Guarantor Subsidiary, (i) an ALTA survey of the
Closing Date Mortgaged Property located in Oroville, California (the "Oroville
Property"), certified to Collateral Agent with a form of certification
reasonably satisfactory to Collateral Agent and dated not more than thirty days
prior to the date of such delivery; and (ii) with respect to the Oroville
Property, a revised Title Policy deleting the "general survey exception" and
otherwise in form and substance reasonably acceptable to Collateral Agent.

4. No later than ten Business Days after the Closing Date, the Company shall
deliver to the Collateral Agent (as defined in the First Lien Credit Agreement
and subject to the provisions of Section 5.4 of the Intercreditor Agreement)
signature pages to the Intercompany Master Note executed by each of the Foreign
Subsidiaries of Company.

5. No later than ten Business Days after the Closing Date, the Company shall
deliver to the Administrative Agent executed and effective releases in form and
substance reasonably satisfactory to the Administrative Agent of foreign law
pledges of the equity interests in Ogden Power Development-Cayman, Inc. and
Covanta Philippines Operating, Inc.

6. No later than ten Business Days after the Closing Date, the Company shall
deliver to the Administrative Agent executed and effective releases in form and
substance reasonably satisfactory to the Administrative Agent of foreign law
pledges of the equity interests in Covanta Energy India Investments Ltd, Covanta
Energy India (Balaji) Limited and Covanta Energy India (Samalpatti) Ltd.

<PAGE>

7. No later than fifteen Business Days after the Closing Date, the Company shall
deliver to the Administrative Agent executed and effective releases in form and
substance reasonably satisfactory to the Administrative Agent of foreign law
pledges of the equity interests in Edison (Bataan) Cogeneration Corporation and
Covanta Energy Philippine Holdings, Inc.

8. With respect to Covanta Philippines Operating, Inc., Covanta Energy India
Investments Ltd., Covanta Energy India (Balaji) Limited and Covanta Energy India
(Samalpatti) Ltd., within 10 Business Days the Company or the applicable
Subsidiary shall take such actions, including, without limitation, causing such
issuer to register the pledge of its equity interests on its books and records
or making such filings or recordings, in each case as may be reasonably
necessary or advisable, under the laws of such issuer's jurisdiction to insure
the validity, perfection and Second Priority of the security interest of the
Collateral Agent, but only if, and to the extent, that such an interest is
recognized under the laws of such jurisdiction.

<PAGE>

                                  SCHEDULE 6.1

                              CERTAIN INDEBTEDNESS

<Table>
<Caption>
         Project                         Description                          Agreement, as amended to date
-------------------------- ---------------------------------------- --------------------------------------------------
<S>                        <C>                                      <C>
Alexandria                 Performance Guaranties                   Covanta Guaranty, dated October 1, 1985, between
                                                                    Covanta Energy Corporation and the City of
                                                                    Alexandria; Alexandria Sanitation Authority;
                                                                    Arlington County and Arlington Solid Waste
                                                                    Authority, as amended

Babylon                    Performance Guaranties                   Covanta Guaranty, dated December 20, 1985,
                                                                    between Covanta Energy Corporation, Town of
                                                                    Babylon and the Town of Babylon Industrial
                                                                    Development Agency(1)

Bristol                    Performance Guaranties                   Covanta Guaranty, dated August 1, 1985, between
                                                                    Covanta Energy Corporation and City of Bristol;
                                                                    Town of Berlin; Town of Burlington; City of New
                                                                    Britain; Town of Plainville; Town of Plymouth;
                                                                    Town of Southington; Town of Washington

Mid-Conn                   Performance Guaranties                   Covanta Guaranty, dated October 1, 1996, between
                                                                    Covanta Energy Corporation and Town of Branford,
                                                                    CT; Town of Hartland, CT; and Town of Seymour, CT

Fairfax                    Performance Guaranties                   Covanta Guaranty, dated February 1, 1988,
                                                                    between Covanta Energy Corporation and County of
                                                                    Fairfax; Fairfax County Solid Waste Authority

Haverhill                  Performance Guaranties                   Covanta Guaranty, dated December 23, 1986,
                                                                    between Covanta Energy Corporation and New
                                                                    England Power Co., as amended

Haverhill                  Performance Guaranties                   Covanta Guaranty, dated August 1998, between
                                                                    Covanta Energy Corporation and Covanta Haverhill
                                                                    Associates (f/k/a Ogden Haverhill Associates)

Hennepin                   Performance Guaranties                   Covanta Guaranty, dated July 8, 2003, between
                                                                    Covanta Energy Corporation and County of Hennepin

Hillsborough               Performance Guaranties                   Covanta Guaranty, dated January 9, 1985, between
                                                                    Covanta Energy Corporation and Hillsborough
                                                                    County, Florida
</Table>

----------
(1) This entity is a Bankrupt Subsidiary. No decision has been made yet to
assume or reject the contracts listed for this Subsidiary. The Bankrupt
Subsidiary reserves its right under Section 365 of the Bankruptcy Code to assume
or reject each of the contracts listed.

<PAGE>

<Table>
<Caption>
         Project                         Description                          Agreement, as amended to date
-------------------------- ---------------------------------------- --------------------------------------------------
<S>                        <C>                                      <C>
Honolulu                   Performance Guaranties                   Covanta Operating Guaranty, dated December 21,
                                                                    1992, between Covanta Energy Corporation and
                                                                    City and County of Honolulu

Honolulu                   Performance Guaranties                   Covanta Liquidated Damages Guaranty, dated July
                                                                    7, 1993, between Covanta Energy Corporation and
                                                                    City and County of Honolulu; Connecticut Bank
                                                                    and Trust, Hawaii Solid Waste Disposal, Energy &
                                                                    Resource Recovery Facility Trust (assigned to
                                                                    OPI 12/21/92)

Huntington                 Performance Guaranties                   Amended and Restated Covanta Guaranty, dated
                                                                    June 29, 1989, between Covanta Energy
                                                                    Corporation and Town of Huntington

Huntsville                 Performance Guaranties                   Covanta Guaranty, dated June 1, 1988, between
                                                                    Covanta Energy Corporation and Solid Waste
                                                                    Disposal Authority of the City of Huntsville

Indianapolis               Performance Guaranties                   Covanta Guaranty, dated December 1, 1985,
                                                                    between Covanta Energy Corporation and City of
                                                                    Indianapolis

Kent                       Performance Guaranties                   Covanta Guaranty, dated October 1, 1987, between
                                                                    Covanta Energy Corporation and County of Kent;
                                                                    Department of Public Works

Lancaster                  Performance Guaranties                   Covanta Guaranty, dated September 25, 1987,
                                                                    between Covanta Energy Corporation and Lancaster
                                                                    County Solid Waste Management Authority

Lee                        Performance Guaranties                   Covanta Guaranty, dated January 16, 1990,
                                                                    between Covanta Energy Corporation and Lee
                                                                    County, as amended

Marion                     Performance Guaranties                   Guaranty Agreement, dated December 11, 1986, of
                                                                    Ogden Corporation re: Obligations of Ogden
                                                                    Martin Systems of Marion, Inc. and Ogden Marion
                                                                    Land Corp. to Columbia Williamette Leasing, Inc.

Marion                     Performance Guaranties                   Covanta Guaranty, dated September 10, 1984,
                                                                    between Covanta Energy Corporation and Portland
                                                                    General Electric Co.

Marion                     Performance Guaranties                   Covanta Guaranty, dated September 10, 1984,
                                                                    between Covanta Energy Corporation and Marion
                                                                    County Oregon

Detroit                    Performance Guaranties                   Covanta Guaranty, dated December 21, 1992, and
                                                                    reaffirmed on July 1, 1996, between Covanta
                                                                    Energy Corporation and Greater Detroit Resource
                                                                    Authority
</Table>

<PAGE>

<Table>
<Caption>
         Project                         Description                          Agreement, as amended to date
-------------------------- ---------------------------------------- --------------------------------------------------
<S>                        <C>                                      <C>
Detroit                    Performance Guaranties                   Covanta Guaranty, dated December 21, 1992,
                                                                    between Covanta Energy Corporation and The
                                                                    Detroit Edison Co.

Detroit                    Performance Guaranties                   Covanta Guaranty, dated October 21, 1991, and
                                                                    amended July 1, 1996, between Covanta Energy
                                                                    Corporation and Ogden Projects, Inc., Michigan
                                                                    Waste to Energy, and Greater Detroit Resource
                                                                    Authority

Honolulu                   Performance Guaranties                   Assignment and Assumption Agreement, dated
                                                                    December 21, 1992, between Combustion
                                                                    Engineering, Inc., and Covanta Projects, Inc.

Montgomery                 Performance Guaranties                   Covanta Guaranty, dated November 16, 1990,
                                                                    between Covanta Energy Corporation and Northeast
                                                                    Maryland Waste Disposal Authority

Onondaga                   Performance Guaranties                   Amended and Restated Covanta Guaranty, dated
                                                                    November 15, 1992, between Covanta Energy
                                                                    Corporation and Onondaga County Resource
                                                                    Recovery Agency

Onondaga                   Performance Guaranties                   Guarantee Agreement, dated October 10, 2003,
                                                                    between Covanta Energy Corporation and Covanta
                                                                    Onondaga Limited Partnership

Pasco                      Performance Guaranties                   Covanta Guaranty, dated April 15, 1989, between
                                                                    Covanta Energy Corporation and Pasco County

Stanislaus                 Performance Guaranties                   Covanta Guaranty, dated May 1, 1990, between
                                                                    Covanta Energy Corporation and City of Modesto
                                                                    and County of Stanislaus

Union                      Performance Guaranties                   Covanta Guaranty, dated June 1, 1998, between
                                                                    Covanta Energy Corporation and Covanta Union,
                                                                    Inc.

Wallingford                Performance Guaranties                   Covanta Guaranty, dated February 1, 1990,
                                                                    between Covanta Energy Corporation and
                                                                    Connecticut Resources Recovery Authority
                                                                    (Wallingford)

Bessemer                   Performance Guaranties                   Guaranty, dated June 1, 1998, between Ogden
                                                                    Projects Inc. and Government Utilities Service
                                                                    Corporation

Koma-Kulshan               Performance Guaranties                   Guaranty, dated December 15, 1989, between
                                                                    Covanta Power Pacific Inc. and Puget Sound Power
                                                                    & Light Company
</Table>

<PAGE>

<Table>
<Caption>
         Project                         Description                          Agreement, as amended to date
-------------------------- ---------------------------------------- --------------------------------------------------
<S>                        <C>                                      <C>
Southeast Connecticut      Company Support Agreement                Company Support Agreement, entered into as of
                                                                    April 30, 2001, by and between American Ref-Fuel
                                                                    Company of Southeastern Connecticut and American
                                                                    Ref-Fuel Company LLC

Southeast Connecticut      Company Support Agreement                Parent Undertaking, entered into as of April 30,
                                                                    2001, by and between American Ref-Fuel Company of
                                                                    Southeastern Connecticut and American Ref-Fuel
                                                                    Company LLC

Southeast Connecticut      Performance Guaranties                   Corporate Credit Guaranty, dated as of October 1,
                                                                    2001, between American Ref-Fuel Company LLC
                                                                    and State Street Bank and Trust Company, as
                                                                    trustee (American Ref-Fuel Company LLC - II
                                                                    Series A)

Southeast Connecticut      Performance Guaranties                   Corporate Guaranty Agreement, dated as of April
                                                                    30, 2001, between American Ref-Fuel Company LLC
                                                                    and State Street Bank and Trust Company, as
                                                                    trustee, in connection with Corporate Credit
                                                                    Bonds/Tax Exempt Interest (American Ref-Fuel
                                                                    Company of Southeastern Connecticut Project -
                                                                    1992 Series A)

Southeast Connecticut      Performance Guaranties                   Corporate Guaranty Agreement, dated as of
                                                                    October 1, 2001, between American Ref-Fuel
                                                                    Company LLC and State Street Bank and Trust
                                                                    Company, as trustee in connection with the
                                                                    Corporate Credit Bonds (American Ref-Fuel
                                                                    Company LLC - I Series A)

MSW Energy Holdings        Equity Contribution Agreement            Equity Contribution Agreement dated as of
LLC/American Ref-Fuel                                               April 30, 2001, among Duke Capital Corporation,
Corp./Ref-Fuel Holdings                                             American Ref-Fuel Holdings Corp., Ref-Fuel
                                                                    Holdings LLC and American Ref-Fuel Company LLC,
                                                                    as amended

MSW Energy Holdings LLC    $200,000,000 Senior Secured Notes due    Indenture dated as of June 25, 2003 relating to
                           2010 (8.5%)                              $200,000,000 8.5% Senior Secured Notes due 2010,
                                                                    as supplemented

MSW Energy Holdings II     $225,000,000 Senior Secured Notes due    Indenture dated as of November 24, 2003,
LLC                        2010 (7.38%)                             relating to $225,000,000 7.38% Senior Secured
                                                                    Notes due 2010 as supplemented

Babylon                    Interest Rate Swap                       Interest Rate Swap Agreement, dated August 1,
                                                                    1985, between Covanta Babylon, Inc. and AIG
                                                                    Financial Product Corporation(2)

Bessemer                   OPI's Guarantee of Service Agreement     Guarantee, dated June 1, 1998, by Covanta
                           ("S.A.") obligations, capped at $3       Projects, Inc. for the benefit of The
                           million                                  Governmental Utility Services Corporation of the
                                                                    City of Bessemer
</Table>

----------
(2) Covanta Babylon has no obligation to pay AIG unless Town of Babylon pays
Covanta Babylon (i.e., The cost of the Swap is a pass through to the client.)

<PAGE>

<Table>
<Caption>
         Project                         Description                          Agreement, as amended to date
-------------------------- ---------------------------------------- --------------------------------------------------
<S>                        <C>                                      <C>
Bristol                    Guarantee of performance obligations     Electricity Guarantee, dated as of August 1,
                           under Power Purchase Agreement ("PPA").  1985, by Covanta Energy Corporation to and for
                                                                    the benefit of The Connecticut Light and Power
                                                                    Company

CEC                        Program Agreement guarantees CEC's       Program Agreement, dated October 20, 2003,
                           obligations to reimburse amounts paid    between ACE American Insurance Company and
                           by ACE for losses and expenses under     Covanta Energy Corporation, Inc.
                           the retention for Workers'
                           Compensation, General Liability
                           Automobile Liability for the policy
                           period. This is a post petition
                           insurance policy.

Haripur                    Performance L/C's securing obligations   L/C issued per Application for Standby Letter of
                           under Power Purchase Agreement ("PPA")   Credit, dated June 23, 2004, between Covanta
                                                                    Energy Corporation and Citibank

Haripur                    Guarantee of operations and              Guarantee dated April 2, 1999 from Covanta
                           maintenance ("O&M") obligations          Energy Group, Inc. as amended October 31, 2004
                                                                    to NEPC Consortium Power Ltd

Huntington                 Guarantee of Partnership obligations,    Covanta Corporation Guarantee Agreement,  dated
                           including tax indemnity and              January 30, 1992, by Covanta Energy Corporation
                           termination put price.                   to Allstate Insurance Co. and Ogden Martin
                                                                    Systems of Huntington Resource Recovery Nine
                                                                    Corporation

                                                                    First Amended & Restated Ogden Corporation
                                                                    Guarantee Agreement:  dated January 30, 1992,
                                                                    for Mission Zeta and Pitney Bowes Credit
                                                                    Corporation

[Koma Kulshan              Guarantee of PPA Obligations             Guarantee, dated December 15, 1989, by Covanta
                                                                    Power Pacific, Inc. (f/k/a Pacific Energy) for
                                                                    the benefit of Puget Sound Power & Light Company]

Madurai                    Parent support undertakings with         Share Retention and Financial Support Agreement
                           respect to standby Equity Commitment,    dated April 25, 2000 among Covanta Energy
                           Interest Rate Differential and equity    Corporation, Covanta Energy (Balaji) Ltd.,
                           retention                                Samayanallur Power Investments Pvt. Ltd., ICICI
                                                                    Limited, and Madurai Power Corporation Pvt. Ltd.

Madurai                    Guarantee of O&M obligations             O&M Guarantee dated April 25, 2000 by Covanta
                                                                    Energy Corporation for benefit of Madurai Power
                                                                    Corporation Pvt. Ltd.

Madurai                    Contingent share premium                 Shareholders Agreement dated April 25, 2000
                                                                    among Covanta Energy India (Balaji) Ltd.,
</Table>

<PAGE>

<Table>
<Caption>
         Project                         Description                          Agreement, as amended to date
-------------------------- ---------------------------------------- --------------------------------------------------
<S>                        <C>                                      <C>
                                                                    Madurai Power Corporation Pvt. Ltd.,
                                                                    Samayanallur Power Investments Pvt. Ltd. and
                                                                    Wartsilla BPC Investment LLC

Union                      Guarantee of Operating Lease             Subordinated Rent Guarantee Agreement:  dated
                           Obligations                              June 1, 1998, by Covanta Energy Corporation for
                                                                    the benefit of the Union County Utilities
                                                                    Authority and Summit Bank, as Trustee

DHC and CEC                Indemnity Agreement                      Indemnity Agreement with ACE that supports the
                                                                    surety program with ACE

CEC                        Program Agreement guarantees CEC's       Program Agreement dated October 20, 2004 between
                           obligations to reimburse amounts paid    ACE American Insurance Company and Covanta
                           by ACE for losses and expenses under     Energy Corporation
                           the retention for WC, GL and Auto
                           liability for the policy period

American Ref-Fuel          Indemnity Agreement                      Indemnity Agreement, dated as of April 30, 2001
Company LLC                                                         with certain affiliates of American Insurance
                                                                    Group that supports the surety program with AIG

American Ref-Fuel          Indemnity Agreement                      Indemnity Agreement, dated as of April 26, 2004
Company LLC                                                         with Travelers Casualty and Surety Company of
                                                                    America that supports the surety program with
                                                                    Travelers

Hempstead                  Project debt                             Lease Agreement dated as of December 1, 1985,
                                                                    between the Town of Hempstead Industrial
                                                                    Development Agency, as Lessor, and American
                                                                    Ref-Fuel Company of Hempstead, as Lessee; Lessee
                                                                    Guarantee and Security Agreement dated as of
                                                                    September 1, 1986, between American Ref-Fuel
                                                                    Company of Hempstead and Bankers Trust Company,
                                                                    as Trustee

Hempstead.                 Company Support Agreement                Second Amended and Restated Company Support
                                                                    Agreement, entered into as of April 30, 2001, by
                                                                    and between American Ref-Fuel Company of
                                                                    Hempstead and American Ref-Fuel Company LLC

Essex                      Project debt                             Conditional Sale Agreement dated as of February 28,
                                                                    1986, between American Ref-Fuel Company of
                                                                    Essex County, as Purchaser, and The Port
                                                                    Authority of New York and New Jersey, as Seller,
                                                                    as amended

Essex                      Company Support Agreement                Amended and Restated Company Support Agreement,
                                                                    dated as of December 1, 1997, by and among
                                                                    American Ref-Fuel Company of Essex County,
                                                                    Browning-Ferris Industries, Inc. and Duke
                                                                    Capital Corporation
</Table>

<PAGE>

<Table>
<Caption>
         Project                         Description                          Agreement, as amended to date
-------------------------- ---------------------------------------- --------------------------------------------------
<S>                        <C>                                      <C>
Essex.                     Reimbursement Agreement                  Reimbursement Agreement, by and among, ARC
                                                                    Essex, American Ref-Fuel Company LLC and Allied
                                                                    Waste Industries, Inc., dated as of April 30,
                                                                    2001

Essex
                           Reimbursement Agreement                  Reimbursement Agreement, by and among, ARC Essex,
                                                                    American Ref-Fuel Company LLC and Duke Capital Corporation,
                                                                    dated as of April 30, 2001.

SECONN                     Project debt                             Lease Agreement dated as of September 1, 1988,
                                                                    between the Connecticut Resources Recovery
                                                                    Authority and American Ref-Fuel Company of
                                                                    Southeastern Connecticut, as amended; Lessee
                                                                    Guarantee and Security Agreement dated as of
                                                                    December 1, 1988, between American Ref-Fuel
                                                                    Company of Southeastern Connecticut and the
                                                                    Trustee, as amended

Niagara                    Project debt                             Amended and Restated Installment Sale Agreement
                                                                    dated as of June 1, 2001, between the Niagara
                                                                    County Industrial Development Agency, Niagara
                                                                    County, New York and American Ref-Fuel Company
                                                                    of Niagara, L.P.; Memorandum of Amended and
                                                                    Restated Installment Sale Agreement dated as of
                                                                    June 1, 2001, between the Niagara County
                                                                    Industrial Development Agency and American
                                                                    Ref-Fuel Company of Niagara, L.P.

Niagara                    Performance Guaranties                   Guaranty Agreement, entered into as of March 9,
                                                                    2004 by American Ref-Fuel Company LLC in favor
                                                                    of Constellation Power Source, Inc.

Niagara                    Performance Guaranties                   Guaranty Agreement, entered into as of October 13,
                                                                    2004 by American Ref-Fuel Company LLC in favor of
                                                                    Constellation New Energy, Inc.

Niagara                    Performance Guaranties                   Corporate Guaranty Agreement, entered into as of
                                                                    April 30, 2001, by American Ref-Fuel Company
                                                                    LLC, in favor of Occidental Chemical Corporation
                                                                    and Hooker Energy Corporation

SEMASS                     Project debt                             Amended and Restated Loan and Security Trust
                                                                    Agreement dated as of November 1, 2001, among
                                                                    the Massachusetts Development Finance Agency,
                                                                    SEMASS Partnership and State Street Bank and
                                                                    Trust Company, as Trustee

SEMASS                     Company Support Agreement                Company Support Agreement, entered into as of
                                                                    November 1, 2001, by and between American
                                                                    Ref-Fuel Operations of SEMASS, L.P. and American
                                                                    Ref-Fuel Company LLC
</Table>

<PAGE>

<Table>
<Caption>
         Project                         Description                          Agreement, as amended to date
-------------------------- ---------------------------------------- --------------------------------------------------
<S>                        <C>                                      <C>
SEMASS                     Company Support Agreement                Contingent Capital Loan Agreement, entered into
                                                                    as of November 1, 2001, by and between American
                                                                    Ref-Fuel Operations of SEMASS, L.P. and American
                                                                    Ref-Fuel Company LLC

Delaware Valley            Project debt                             Amended and Restated Lease Agreement dated as of
                                                                    April 1, 1997, between Fleet National Bank, as
                                                                    Owner Trustee and Lessor, and Delaware Resource
                                                                    Management, Inc., and American Ref-Fuel Company
                                                                    of Delaware Valley, L.P.,  (f/k/a American
                                                                    Ref-Fuel Company of Delaware County, L.P.) as
                                                                    Lessee; and Participation Agreement dated as of
                                                                    April 1, 1997, among TIFD III-L Inc., as Owner
                                                                    Participant, Delaware Resource Management Inc.,
                                                                    as Original Lessee, American Ref-Fuel Company of
                                                                    Delaware County, L.P., as Lessee, Fleet National
                                                                    Bank, as Owner Trustee, First Union National
                                                                    Bank, as Indenture Trustee, Browning-Ferris
                                                                    Industries, Inc., and Delaware Resource Lessee
                                                                    Trust

Delaware Valley            Performance Guaranties                   Corporate Guaranty Agreement I dated as of
                                                                    April 30, 2001, made by American Ref-Fuel Company LLC
                                                                    to and for the benefit of State Street Bank and
                                                                    Trust Company (as successor to Fleet National
                                                                    Bank), as Owner Trustee

Delaware Valley            Performance Guaranties                   Corporate Guarantee Agreement II dated as of
                                                                    April 30, 2001, made by American Ref-Fuel
                                                                    Company LLC to and for the benefit of State
                                                                    Street Bank and Trust Company (as successor to
                                                                    Fleet National Bank), as Owner Trustee

Delaware Valley            Performance Guaranties                   Corporate Guaranty Agreement III dated as of
                                                                    April 1, 2001, made by American Ref-Fuel Company LLC to
                                                                    and for the benefit of General Electric Capital
                                                                    Corporation

Delaware Valley            Performance Guaranties                   Corporate Guaranty Agreement IV dated as of
                                                                    April 1, 2001, made by American Ref-Fuel Company LLC to
                                                                    and for the benefit of General Electric Capital
                                                                    Corporation

Delaware Valley            Performance Guaranties                   Amended and Restated Corporate Guarantee
                                                                    Agreement I entered into as of August 28, 2001, by
                                                                    American Ref-Fuel Company LLC, in favor of and for the
                                                                    benefit of Viacom, Inc.

Delaware Valley            Performance Guaranties                   Amended and Restated Corporate Guarantee
                                                                    Agreement I entered into as of August 28, 2001, by
                                                                    American Ref-Fuel Company LLC, in favor of and for the
                                                                    benefit of Viacom, Inc.
</Table>

<PAGE>

<Table>
<Caption>
         Project                         Description                          Agreement, as amended to date
-------------------------- ---------------------------------------- --------------------------------------------------
<S>                        <C>                                      <C>
Delaware Valley            Performance Guaranties                   Guarantee Agreement dated as of August 28, 2001,
                                                                    from American Ref-Fuel Company LLC to and for the
                                                                    benefit of the Delaware County Solid Waste
                                                                    Authority

American Ref-Fuel          $275,000,000 Senior Notes due 2015       Indenture dated as of May 1, 2003, as
Company LLC                (6.26%)                                  supplemented

Hempstead                  $42,670,000 Corporate Credit Bonds       Amended and Restated Company Sublease Agreement,
                                                                    dated as of June 1, 2001, between the Agency and
                                                                    the Company

Hempstead                  Performance Guaranties                   Parent Company Guaranty, entered into as of
                                                                    June 1, 2001, by American Ref-Fuel Company LLC in
                                                                    favor of The Chase Manhattan Bank, as trustee

Niagara                    165,010,000 Corporate Credit Bonds       Amended and Restated Company Sublease Agreement,
                                                                    dated as of June 1, 2001, between the Agency and
                                                                    the Company

Niagara                    Performance Guaranties                   Parent Company Issuer Guaranty, entered into as
                                                                    of June 1, 2001, by American Ref-Fuel Company
                                                                    LLC, in favor of Niagara County Industrial
                                                                    Development Agency

Niagara                    Performance Guaranties                   Parent Company Guaranty, entered into as of
                                                                    June 1, 2001, by American Ref-Fuel Company LLC, in
                                                                    favor of Manufacturers and Traders Trust Company

SECONN                     $30,000,000 Corporate Credit Bonds       Loan Agreement dated as of January 15, 1992,
                                                                    between the Authority and American Ref-Fuel
                                                                    Company of Southeastern Connecticut relating to
                                                                    the Bonds

SECONN                     $13,500,000 Corporate Credit Bonds       Loan Agreement dated as of December 1, 1998,
                                                                    between the Authority and American Ref-Fuel
                                                                    Company of Southeastern Connecticut, with regard
                                                                    to the BFI Series A Bonds, as amended; and Loan
                                                                    Agreement dated as of December 1, 1998, between
                                                                    the Authority and American Ref-Fuel Company of
                                                                    Southeastern Connecticut, with regard to the
                                                                    Duke Capital Series A Bonds, as amended

Delaware Valley            Letter of Credit                         Letter of Credit issued for the benefit of the
                                                                    Pennsylvania Department of Environmental
                                                                    Protection in a face amount of $1,457,017 with a
                                                                    maturity date of May 1, 2006.

Delaware Valley            Indemnity Agreement                      Indemnity Letter, dated as of April 16, 1997,
                                                                    from American Ref-Fuel Company of Delaware
                                                                    Valley, L.P. to Delaware County Industrial
                                                                    Development Authority
</Table>

<PAGE>

<Table>
<Caption>
         Project                         Description                          Agreement, as amended to date
-------------------------- ---------------------------------------- --------------------------------------------------
<S>                        <C>                                      <C>
Alexandria 975 TPD         Project debt                             Amended and Restated Conditional Sale and
Mass Burn WTE Facility.                                             Security Agreement, dated July 1, 1998
                                                                    between Alexandria Sanitation Authority,
                                                                    Arlington Solid Waste and Covanta
                                                                    Alexandria/Arlington Inc.

Alexandria WTE Facility    Project debt                             Operating Lease Agreement, dated November 1,
Clean Air Act Retrofit.                                             1998, between City of Alexandria, Virginia
Operating Lease (Not on                                             Sanitation Authority and Arlington County Solid
Balance Sheet)                                                      Waste Authority, and Covanta
                                                                    Alexandria/Arlington, Inc.

Babylon 750 TPD Mass       Project debt                             Facility Lease Agreement, dated December 1,
Burn WTE Facility.                                                  1985, as amended and restated, dated
                                                                    August 1, 1995, between Covanta Babylon, Inc.
                                                                    and the Town of Babylon Industrial Development
                                                                    Agency; and Interest Rate Swap Agreement, dated
                                                                    as of August 1, 1995 between Covanta Babylon,
                                                                    Inc. and AIG Financial Products Corp.

Bristol 650 TPD Mass       Project debt                             Loan Agreement, dated April 15, 2005, between
Burn WTE Facility.                                                  Covanta Bristol, Inc. and the Bristol Resource
                                                                    Recovery Facility Operating Committee, as
                                                                    amended.

Fairfax 3000 TPD Mass      Project debt                             Conditional Sale and Security Agreement, dated
Burn WTE Facility.                                                  February 1, 1988 between Covanta Fairfax, Inc.
                                                                    and Fairfax County Solid Waste Authority

Haverhill 1650 TPD Mass    Project debt                             Amended and Restated Loan Agreement, dated August
Burn WTE Facility.                                                  1, 1998, between Covanta Haverhill Associates and
                                                                    Massachusetts Industrial Finance Agency; OHA
                                                                    Series 1998 B Loan Agreement, dated as of
                                                                    December 1, 1998 between Covanta Haverhill Associates
                                                                    and Massachusetts Development Finance Agency; OHA
                                                                    Series 1999 A Loan Agreement, dated as of December 1,
                                                                    1999 between Covanta Haverhill Associates and
                                                                    Massachusetts Development Finance Agency; and
                                                                    Amended and Restated Loan Agreement, dated as of
                                                                    August 1, 1998, between SBR Associates (a Covanta
                                                                    Energy corporation ("CEC") subsidiary) and
                                                                    Massachusetts Industrial Finance Agency
</Table>

<PAGE>

<Table>
<Caption>
         Project                         Description                          Agreement, as amended to date
-------------------------- ---------------------------------------- --------------------------------------------------
<S>                        <C>                                      <C>
Huntington 750 TPD Mass    Project debt                             Lease Agreement, dated January 15, 1997, between
Burn WTE Facility.                                                  Ogden Martin Systems of Huntington Limited
                                                                    Partnership and Suffolk County Industrial
                                                                    Development Agency

Indianapolis 2362 TPD      Project debt                             Financing Agreement, dated September 1, 1985,
Mass Burn WTE Facility.                                             between Covanta Indianapolis, Inc. and the City
                                                                    of Indianapolis

Lake 528 TPD Mass Burn     Project debt                             Loan Agreement, dated November 1, 1988 between,
WTE Facility.                                                       Covanta Lake Inc. and Lake County, Florida, as
                                                                    first supplemented by the First Supplemental Loan
                                                                    Agreement dated 10-1-93 and the Second
                                                                    Supplemental Loan Agreement dated 12-14-04

Marion 550 TPD Mass Burn   Project debt                             Loan Agreements, dated October 1, 1995 and
WTE Facility.                                                       May 1, 1996, between Covanta Marion, Inc. and
                                                                    Marion County, Oregon

Onondaga 990 TPD Mass      Project debt                             Amended and Restated Lease Agreement, dated
Burn WTE Facility.                                                  October 10, 2003, between Covanta Onondaga
                                                                    Limited Partnership and Onondaga County Resource
                                                                    Recovery Agency, as amended; Amended & Restated
                                                                    Limited Partnership Agreement, dated November 15,
                                                                    1994, between Covanta Onondaga, Inc., Ford
                                                                    Motor Credit Co., Bushton Co., and DCC Project
                                                                    Finance Nine, Inc. (Partnership deal treated
                                                                    partially as debt for accounting purposes, but
                                                                    transaction is essentially a Contingent
                                                                    Liability.  See Schedule 7.4 (iv))

Stanislaus 800 TPD Mass    Project debt                             Lease Agreement, dated January 1, 2000, between
Burn WTE Facility.                                                  Covanta Stanislaus, Inc. and Stanislaus
                                                                    Waste-to-Energy Financing Agency

Union 1440 TPD Mass Burn   Project debt                             Facility Lease Agreement, dated June 15, 1998,
WTE Facility                                                        between the Union County Utilities Authority and
                                                                    Ogden Martin Systems of Union, Inc.
</Table>

<PAGE>

<Table>
<Caption>
         Project                         Description                          Agreement, as amended to date
-------------------------- ---------------------------------------- --------------------------------------------------
<S>                        <C>                                      <C>
Wallingford 420 TPD Mass   Project debt                             Amended and Restated Lease Agreement, dated
Burn WTE Facility.                                                  February 1, 1990 between Ogden Projects of
                                                                    Wallingford LP and Connecticut Resources
                                                                    Recovery Authority

Warren 400 TPD Mass        Project debt                             Agreement of Sale, dated July 1, 1986, between
Burn WTE Facility.(3)                                               Warren Energy Resource Co. and Pollution Control
                                                                    Financing Authority

Yanjiang                   Project debt                             RMB working capital loan commitment, dated
                                                                    June 3, 2005, between Taixing Ogden Yanjiang
                                                                    Cogeneration Company, Ltd. And Bank of China,
                                                                    Taixing Industrial Park Sub-branch

Madurai                    Project debt                             Common Agreement, dated April 25, 2000, as
                                                                    amended, between Madurai Power Corporation Pvt.
                                                                    Ltd. (f/k/a Balaji Power Corporation Pvt.
                                                                    Ltd)and ICICI Limited

Madurai                    Project debt                             Working Capital Loan Consortium Agreement, dated
                                                                    August 29, 2002, among Madurai Power Corporation
                                                                    Pvt. Ltd. and, ICICI Bank Ltd., State Bank of
                                                                    India, and Central Bank of India

Madurai                    Project debt                             Intercreditor Agreement, dated April 25, 2000,
                                                                    between ICICI Limited and Guarantees, dated
                                                                    April 25, 2000, from Ogden

Magellan(4)                Project debt                             Omnibus Agreement, dated April 11, 2000,
                                                                    among Magellan Cogeneration, Inc., Solidbank
                                                                    Corporation, United Coconut Planters Bank, SB
                                                                    Capital Investment Corporation, Security Bank
                                                                    Corporation, Banco de OroUniversal Bank and Bank
                                                                    of Commerce

Magellan(4)                Trade Creditor Debt                      To be issued by the court in connection with
                                                                    corporate rehabilitation proceedings

Quezon                     Guarantee of O&M Obligations             Operator Guarantee dated December 10, 1996 by
                                                                    Covanta Projects Inc. for the benefit of Quezon
                                                                    Power (Philippines), Limited Co.

Samalpatti                 Parent Undertaking to Retain Interest    Letter Agreement dated December 16, 1999 between
                                                                    Infrastructure Finance Company Ltd. and Covanta
                                                                    Energy Group, Inc.

Samalpatti                 Guarantee of O&M Obligations             O&M Guarantee dated December 16, 1999 by Covanta
                                                                    Energy Group, Inc. for the benefit of Samalpatti
                                                                    Power Company Pvt. Ltd.
</Table>

------
         (3) This entity is a Bankrupt Subsidiary/Affected Entity. No decision
has been made yet to assume or reject the contracts listed for this Subsidiary.
The Bankrupt Subsidiary reserves its right under Section 365 of the Bankruptcy
Code to assume or reject each of the contracts listed.

         (4) Magellan Cogeneration, Inc. ("MCI") is an Affected Entity. Although
MCI is not presently subject to the Credit Agreement covenants, the final
resolution of corporate rehabilitation proceedings may result in MCI becoming a
Subsidiary of Covanta.

<PAGE>

<Table>
<Caption>
         Project                         Description                          Agreement, as amended to date
-------------------------- ---------------------------------------- --------------------------------------------------
<S>                        <C>                                      <C>
Samalpatti                 Contingent Share Premium                 Agreement dated December 4,1999 among Covanta
                                                                    Energy India (Samalpatti) Ltd., Goa Holdings
                                                                    Ltd. and Fenmor Energy Ltd.

Trezzo                     Contingent Subordinated Loan/Equity      Capitalization Agreement dated July 23, 2004
                           Commitment                               among Covanta Waste to Energy of Italy, Inc.,
                                                                    Actelios S.p.A. and Prima S.r.l.

Trezzo                     Guarantee of Service and Maintenance     Ogden Guarantee dated February 9, 2001 between
                           Obligations                              Prima S.r.l. and Covanta Energy Group, Inc.

ARC SEMASS                 Letter of Credit                         Letter of Credit issued for the benefit of
                                                                    Rockland Trust Company as Trustee, Massachusetts
                                                                    Department of Environmental Protection in a face
                                                                    amount of $1,718,500

ARC SEMASS                 Letter of Credit                         Letter of Credit issued for the benefit of
                                                                    Rockland Trust Company as Trustee, Massachusetts
                                                                    Department of Environmental Protection in a face
                                                                    amount of $1,463,942

ARC SEMASS                 Letter of Credit                         Letter of Credit issued for the benefit of
                                                                    Rockland Trust Company as Trustee, Massachusetts
                                                                    Department of Environmental Protection in a face
                                                                    amount of $881,765

ARC SEMASS                 Letter of Credit                         Letter of Credit issued for the benefit of
                                                                    Rockland Trust Company as Trustee, Massachusetts
                                                                    Department of Environmental Protection in a face
                                                                    amount of $757,122

ARC SEMASS                 Letter of Credit                         Letter of Credit issued for the benefit of
                                                                    Rockland Trust Company as Trustee, Massachusetts
                                                                    Department of Environmental Protection in a face
                                                                    amount of $1,733,424
</Table>

<PAGE>

                                                                SURETY BONDS

<Table>
<Caption>
                                                         ENERGY BONDS
  GROUP  BOND NUMBER       PROJECT               PRINCIPAL             SURETY COMPANY          BOND TYPE              BOND AMOUNT
<S>      <C>         <C>                   <C>                         <C>                <C>                         <C>
WTE      8161-67-43  Alexandria/Arlington  OMS Alexandria/Arlington     Chubb             Closure Bond                   $130,000
         8161-67-83  Fairfax               OMS Fairfax                  Chubb             Closure Bond                   $654,200
         8136-31-01  Haverhill             OMS Haverhill                Chubb             Closure Bond                 $8,555,000
         8136-30-23  Indianapolis          OMS Indianapolis             Chubb             Closure Bond                   $218,159
                                           Covanta Lee & Covanta
         45009664    Lee & Hillsborough    Hillsborough                 Greenwich         Performance/Payment Bond        $50,000
         8182-89-41  Three Mountain Power  Three Mountain Power LLC     Chubb/AIG         Subdivision Bond                $60,800
WATER    8182-92-97  Wilmington            DSS Environmental, Inc.      Chubb             Performance/Payment Bond       $802,981
         8187-70-76  Watch Tower           DSS Environmental, Inc.      Chubb             Performance/Payment Bond     $1,439,900
         8182-92-05  Delhi                 DSS Environmental, Inc.      Chubb             Performance/Payment Bond     $2,883,000
         8182-92-98  Stamford              DSS Environmental, Inc.      Vigilant (Chubb)  Performance/Payment Bond     $3,400,000
ARC      104209108   Niagara               City of Tonawanda            Travelers         Performance/Payment Bond        245,586
         104209105   Niagara               Town of Tonawanda            Travelers         Performance Bond              1,070,051
         104209104   Niagara               Village of Kenmore           Travelers         Performance Bond                306,629
         104209110   Niagara               Town of Cheektowaga          Travelers         Performance Bond              1,434,592
                                           Niagara Solid Waste
         104209103   Niagara               Management Consortium        Travelers         Performance Bond                878,517
         104209102   Niagara               Town of Amherst              Travelers         Performance Bond              1,332,992
         104209111   Niagara               Town of Alden                Travelers         Performance Bond                114,943
         104209106   Niagara               Village of Alden             Travelers         Performance Bond                 43,485
         104209112   Niagara               Village of Williamsville     Travelers         Performance Bond                 99,162
         104209107   Niagara               Village of Blasdell          Travelers         Performance Bond                 49,581
         ESD7315555  TransRiver            City of New York             AIG               Performance Bond            15,6111,400
         ESD7312049  TransRiver            City of New York             AIG               Performance Bond              1,810,514
         104349042   TransRiver            City of Philadelphia         Travelers         Performance Bond              2,093,000
                                           Delaware County Solid
         104349040   Delaware Valley       Waste Authority              Travelers         Performance Bond              7,500,000
                                                                                          TOTAL                        52,684,393
</Table>

<PAGE>

                                  SCHEDULE 6.2

                                  CERTAIN LIENS

Pledge by Covanta Waste to Energy of Italy, Inc. (CWTEI) to Banca Nazionale del
Lavoro S.p.A., as agent, in connection with the Trezzo project financing and
pursuant to the Contratto di Capitalizzazion dated July 23, 2004, of (i) a CWTEI
bank account securing its obligation to contribute equity or make subordinated
loans of up to 130k Euros if the project waste permit is not increased to 500
tonnes/day by 06-30-06 and up to 990k Euros in the event of an adverse outcome
in ongoing arbitration with the EPC contractor; and (ii) CWTEI's (a) equity
interest in Prima s.r.l. (the project company) and (b) right to be repaid by
Prima s.r.l. for any amounts owed to CWTEI by Prima s.r.l., in the event of an
acceleration of the underlying non-recourse project financing.

Liens and pledges with respect to indebtedness, leases and other material
project documents concerning Projects and electrical generation plants and
cogeneration plants of Affiliates to which Foreign Subsidiaries are a party

Liens in existence on the date of this Agreement on or with respect to assets of
any Subsidiary of Company, to the extent such Liens secure an obligation of such
Subsidiary of Company (or an Affiliate in which such Subsidiary is an equity
owner) to Persons other than the Company and its Excluded Subsidiaries and their
respective Affiliates, so long as (a) such obligation is associated with a
Project (or a project of an Affiliate in which such Subsidiary is an equity
owner), (b) such Lien is limited to (1) assets associated with such Project (or
project of an Affiliate in which such Subsidiary is an equity owner) (which in
any event shall not include assets held by any Borrower other than a Borrower
whose sole business is the ownership and/or operation of such Project and
substantially all of whose assets are associated with such Project), and/or (2)
equity interests in such Subsidiary, but in the case of clause (2) only if such
Subsidiary's sole business is the ownership and/or operation of such Project (or
project of an Affiliate in which such Subsidiary is an equity owner) and
substantially all of such Subsidiary's assets are associated with such Project
(or project of an Affiliate in which such Subsidiary is an equity owner) and (c)
such obligation is otherwise permitted under this Agreement.(1)

Liens on Intellectual Property set forth on Schedule 4.7 to the Pledge and
Security Agreement.

Liens in existence on the date of this Agreement evidenced by financing
statements listed on Annex A hereto.

----------
(1) Emergence entities may have certain outstanding obligations with respect to
Bankrupt Subsidiaries; however, we cannot make representations that agreements
will be assumed prior to the emergence of those entities.

                 [Annex A with UCC search results is appended.]
<PAGE>

                                  SCHEDULE 6.7

                               CERTAIN INVESTMENTS

<Table>
<Caption>
                  PROJECT/ENTITY
                                                            NATURE OF INVESTMENT                        AMOUNT
-------------------------------------------------------------------------------------------------------------------------
<S>                                                <C>                                         <C>
Trezzo                                             Additional equity or subordinated loans     Up to 1.12 million Euros

Italian and/or United Kingdom waste-to-energy      Additional equity                           Up to $7 million
project additional investments

Madurai                                            Contingent share premium                    Up to $360,000

Samalpatti                                         Contingent share premium                    Up to $130,000

MSW I                                              Purchase of a .2% interest in Duke           $1,307,000
                                                   later this year (September/October)
</Table>

<PAGE>

                                 SCHEDULE 6.9-A

                         CERTAIN PERMITTED ASSET SALES

<Table>
<Caption>
                   PROJECT OR SUBSIDIARY                                       NATURE OF ASSET SALE
------------------------------------------------------------ ---------------------------------------------------------
<S>                                                          <C>
Three Mountain Power Project                                 Disposition of development rights including permits and
                                                             any project assets

Bessemer                                                     Disposition of operating agreement

Burney Mountain Power Project                                Disposition of project assets or ownership of project entity

Mountain Lassen Power Project                                Disposition of project assets or ownership of project entity

Huantai Power Project (China)                                Disposition of ownership of project entity

Linan Power Project (China)                                  Disposition of ownership of project entity

Yanjiang Power Project (China)                               Disposition of ownership of project entity and/or sale
                                                             of land use rights for excess property

DSS Environmental                                            Sale of assets or stock

Pacific Energy Resources, Inc.                               Disposition of project assets or ownership of project entity

Santa Clara Biogas Project                                   Disposition of project assets or ownership of project entity

Oxnard Biogas Project                                        Disposition of project assets or ownership of project entity

Gude Biogas Project                                          Disposition of project assets or ownership of project entity

Bataan Power Project (Philippines)                           Disposition of project assets or ownership of project entity

Island Power Project (Philippines)                           Disposition of equity ownership and advances

Magellan Power Project (Philippines)                         Disposition of ownership of project entity

General                                                      Inventory Spare Parts & Equipment
</Table>

<PAGE>

                                 SCHEDULE 6.9-B

                        FOREIGN SUBSIDIARY RESTRUCTURING

The parties acknowledge that, after the Closing Date, the Company ("Covanta")
intends to restructure the ownership of most of its non-US operations in a
manner designed to achieve certain business and treasury objectives. This
restructuring will involve the following features:

1.       Ownership Modifications. Covanta intends to consolidate the ownership
         of some or all of its non-US subsidiaries under Covanta Energy India
         Investments Ltd. ("CEIIL" - an existing first-tier subsidiary/holding
         company of Covanta Power International Holdings, Inc. ("CPIH")
         organized in Mauritius); another existing first-tier non-US holding
         company held by CPIH; or a newly organized first-tier non-US holding
         company held by the Covanta group ("Holdco"). Further, Covanta intends
         to hold 100% of Holdco's outstanding stock through a new first-tier
         foreign subsidiary ("Newco") organized outside of the United States
         (e.g., Mauritius or the Cayman Islands). Covanta intends to
         characterize Newco as a partnership for US tax purposes, the equity of
         Newco being held by CPIH and another (existing or new) US Covanta group
         member ("US Subsidiary"). Finally, as Newco will be fulfilling a
         treasury and holding company function on behalf of the CPIH group,
         Covanta intends to restructure the ownership of its various non-US
         subsidiary note receivable interests (e.g., the CEIIL notes held by
         CPIH) with Newco. The result being that the existing obligor (e.g.,
         CEIIL) would be indebted to Newco, and Newco would be indebted to CPIH
         ("US to non-US lending").

2.       Approved Steps. The Company would like to ensure that it can, without
         seeking a waiver under the Agreement, effect the following: (1)
         transfer ownership of existing non-US entities under Holdco, US
         Subsidiary and/or any first-tier non-US subsidiary (including the
         ability to contribute down to lower tier subsidiaries); (2) create
         Newco and, if necessary, US Subsidiary, and transfer from CPIH and
         other Covanta group members, as appropriate, the ownership of Holdco
         and other first-tier non-US subsidiaries to Newco; (3) modify the US to
         non-US lending in the manner noted in Schedule 6.9-B.1 above; (4) if
         necessary, liquidate (for US tax and/or legal purposes) US subsidiaries
         of CPIH (e.g., OPI Quezon Inc.); and (5) release any existing pledges
         of first-tier foreign subsidiary stock to effect the foregoing.

<PAGE>

                                  SCHEDULE 6.12

                      CERTAIN TRANSACTIONS WITH AFFILIATES

o        Corporate Services and Expense Reimbursement Agreement between
         Danielson Holding Corporation and Covanta Energy Corporation dated
         March 10, 2004;

o        Master Waste Delivery Agreements dated as of October 1, 1995, between
         TransRiver and certain of the Ref-Fuel project partnerships, other
         written and oral brokerage arrangements between TransRiver and the
         remaining Ref-Fuel project partnerships and similar brokerage
         arrangements for metals sales among all such parties;

o        Management Services Agreement, dated November 1, 2003, between Covanta
         Energy Asia Pacific Ltd. and Covanta Energy India Investments Ltd.;

o        Management Services Agreement, dated January 1, 2002, between Covanta
         Energy (Thailand) Ltd. and Covanta Philippines Operating, Inc.;

o        Consultancy and Management Services Agreement, dated March 19, 2000,
         between Covanta Energy Philippines Holdings, Inc. (f/k/a Ogden Energy
         Philippine Holdings, Inc.) and Covanta Philippines Operating,
         Inc.(f/k/a Ogden Philippines Operating, Inc.);

o        Asset Management Services Agreement, dated January 1, 2002, between
         Covanta Energy (Thailand) Ltd. and Edison (Bataan) Cogeneration Corp.;

o        Management Services Agreement, dated July 1, 2002, between Covanta
         Energy (Thailand) Ltd. and Covanta One Ltd.;

o        Consultancy and Management Services Agreement, dated August 23, 2001
         between Covanta Energy India Pvt. Ltd. and Covanta Samalpatti Operating
         Pvt. Ltd. (f/k/a Ogden Madhya Pradesh Operating Pvt. Ltd.);

o        Plant Operation and Maintenance Agreement, dated December 1, 1995, as
         amended, between Quezon Power (Philippines), Limited Co. (as
         successor-in-interest to Quezon Power, Inc.) and Covanta Philippines
         Operating, Inc.;

o        Plant Operation and Maintenance Agreement, dated April 2, 1999, by and
         between NEPC Consortium Power Limited and Covanta Bangladesh
         Operations, Ltd, as amended;

o        Technical Services Agreement, dated July 1, 1999, by and between NEPC
         Consortium Power Ltd. and Covanta One Ltd.;

o        Operation and Maintenance Agreement, dated April 25, 2000, between
         Ogden Balaji O&M Services Private Ltd & Madurai Power Corporation Pvt.
         Ltd. (f/k/a Balaji Power Corporation Pvt. Ltd.);

<PAGE>

o        Operation and Maintenance Agreement, dated December 3, 1999, between
         Samalpatti Power Company Private Ltd. and Covanta Samalpatti Operating
         Pvt. Ltd. (f/k/a Ogden Madhya Pradesh Operating Pvt. Ltd.); and

o        Amended and Restated Operating Services Agreement, dated November 1,
         2001 by and between SEMASS Partnership and American Ref-Fuel Operations
         of SEMASS, L.P.

o        Tax Sharing Agreement, dated March 10, 2004, between Danielson Holding
         Corporation and Covanta Energy Corporation and the other parties
         thereto, as amended.

o        Tax Sharing/Allocation Agreement between Covanta Energy Corporation and
         Covanta Tampa Construction.

o        Tax Sharing/Allocation Agreement between Covanta Energy Corporation and
         Covanta Lake II, Inc.

o        Tax Sharing/Allocation Agreement between Covanta Energy Corporation and
         Covanta Warren Energy Resources Co., LP, Covanta Equity of Stanislaus,
         Inc. and Covanta Equity of Alexandria/Arlington, Inc.

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