8-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT PURSUANT
TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of earliest event reported): May 25, 2005

DANIELSON HOLDING CORPORATION

(Exact name of Registrant as Specified in Its Charter)

Delaware	1-6732	95-6021257
(State or Other Jurisdiction	(Commission	(I.R.S. Employer
of Incorporation)	File Number)	Identification No.)

40 Lane Road Fairfield, New Jersey	07004
(Address of principal executive offices)	(Zip Code)

(973) 882-9000

(Registrant’s telephone number, including area code)

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12(b))

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 1.01. Entry into a Material Definitive Agreement.

     On May 25, 2005, the Compensation Committee of the Board of Directors of Danielson Holding Corporation (“Danielson”) approved an amendment to a certain stock option agreement between Danielson and Robert S. Silberman, a director of Danielson. The amendment accelerates Mr. Silberman's right to exercise certain vested stock options that would otherwise have become exercisable on June 8, 2005, subject to his agreement not to sell any shares of Danielson’s common stock issuable upon the exercise of such stock options before June 8, 2005. The stock options, which were issued in accordance with Danielson’s Equity Award Plan for Directors, vested on December 8, 2004. The amendment accelerates the exercisability date of the options to May 25, 2005.

     The acceleration of exercisability of the options allows Mr. Silberman to participate in Danielson’s rights offering in connection with its proposed acquisition of American Ref-Fuel Holdings Corp. (“Ref-Fuel”). Under this rights offering, Danielson’s existing stockholders will be issued rights to purchase Danielson’s Common Stock on a pro rata basis, with each holder entitled to purchase approximately 0.9 shares of Danielson’s Common Stock at an exercise price of $6.00 per share for each share of Danielson’s Common Stock then held.

     A copy of the Amendment to Stock Option Agreement that effects this acceleration is attached hereto as Exhibit 10.1 and is incorporated by reference herein.

Item 9.01. Financial Statements and Exhibits.

(a)	Financial Statements of Business Acquired – Not Applicable
(b)	Pro Forma Financial Information – Not Applicable
(c)	Exhibits

Exhibit No.	Exhibit
10.1	Amendment to Stock Option Agreement

SIGNATURES

     Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized

Date: May 26, 2005

DANIELSON HOLDING CORPORATION
(Registrant)

By: /s/ Timothy J. Simpson          
Name: Timothy J. Simpson,
Title: Senior Vice President, General Counsel and Secretary

DANIELSON HOLDING CORPORATION

EXHIBIT INDEX

Exhibit No.	Exhibit
10.1	Amendment to Stock Option Agreement.

EX-10.1

Exhibit 10.1

DANIELSON HOLDING CORPORATION

AMENDMENT TO STOCK OPTION AGREEMENT

     THIS AMENDMENT TO STOCK OPTION AGREEMENT, is made as of the 25th day of May, 2005, between Danielson Holding Corporation, a Delaware corporation (the “Company”), and Robert S. Silberman (the “Optionee”). Capitalized terms used herein that are not otherwise defined shall have the meaning ascribed to them in the Danielson Holding Corporation Equity Award Plan for Directors (the “Plan”) or in the Stock Option Agreement dated as of December 8, 2004 between the Company and the Optionee (the “Original Agreement”).

W I T N E S S E T H:

     WHEREAS, pursuant to Section 3(b) of the Plan, the Committee has exclusive authority to among other things, at its discretion, accelerate the vesting of Awards; and

     WHEREAS, the Committee has determined that it is desirable to accelerate the exercisability of the Option granted pursuant to the Original Agreement in order to permit the Optionee to participate in the Company’s rights offering in connection with its proposed acquisition of American Ref-Fuel Holdings Corp.

     NOW, THEREFORE, in consideration of the premises and of the mutual covenants and agreements hereinafter contained, the parties hereto mutually covenant and agree as follows:

     1. Amendment to Section 5. Section 5 of the Original Agreement is hereby amended and restated to read in its entirety as follows:

     “The Optionee shall not be entitled to exercise the Option until May 25, 2005. Subject to the provisions of Section 3, the Option may be exercised only while the Optionee is a Director.”

     2. Agreement Not to Sell. As consideration for the Company’s agreement to amend the Option as set forth herein, the Optionee hereby agrees not to sell any shares of the Company’s Common Stock acquired by him upon exercise of the Option before June 8, 2005.

     3. Original Agreement. In all other respects, the Original Agreement shall remain unchanged.

     4. Incorporation of the Plan. Notwithstanding the terms and conditions contained herein, this Amendment shall be subject to and governed by all the terms and conditions of the Plan, which is hereby incorporated by reference. In the event of any discrepancy or

inconsistency between the terms and conditions of this Amendment and of the Plan, the terms and conditions of the Plan shall control.

     5. Interpretation. The interpretation and construction by the Committee of any terms or conditions of the Plan, or of this Amendment, or other matters related to the Plan shall be final and conclusive.

     6. Counterpart Execution. This Amendment may be executed in counterparts, each of which shall constitute an original and all of which, when taken together with the Original Agreement, shall constitute the entire document.

* * *

     IN WITNESS WHEREOF, the Company has caused this Amendment to be duly executed by its officer thereunto duly authorized, and the Optionee has executed this Amendment all as of the day and year first above written.

DANIELSON HOLDING CORPORATION
By:	/s/ Timothy J. Simpson
Its: Senior Vice President, General Counsel and Secretary
OPTIONEE:
/s/ Robert S. Silberman
Robert S. Silberman