Employment Agreement - Waste Management Inc. and Jim Trevethan


                              EMPLOYMENT AGREEMENT

WASTE MANAGEMENT, INC. (the "Company"), and JIM TREVETHAN (the "Executive")
hereby enter into this EMPLOYMENT AGREEMENT ("Agreement") dated as of June 1,
2000 (the "Effective Date"), as follows:

1.       EMPLOYMENT.

The Company shall employ Executive, and Executive shall be employed by the
Company upon the terms and subject to the conditions set forth in this
Agreement.

2.       TERM OF EMPLOYMENT.

The period of Executive's employment under this Agreement shall commence on June
1, 2000, and be for a continuously renewing (on a daily basis) three (3) year
term, without any further action by either the Company or Executive, unless
Executive's employment is terminated in accordance with Section 5 below. The
date on which Executive commences employment with the Company shall be referred
to as the "Commencement Date" and the period during which Executive is employed
hereunder shall be referred to as the "Employment Period".

3.       DUTIES AND RESPONSIBILITIES.

(a)      Executive shall serve as Senior Vice President-Sales & Marketing. In
         such capacity, Executive shall perform such duties and have the power,
         authority and functions commensurate with such positions in similarly
         sized public companies and such other authority and functions
         consistent with such positions as may be assigned to Executive from
         time to time by the Chief Executive Officer, President, Executive Vice
         President, or the Board of Directors.

(b)      Executive shall devote substantially all of his working time, attention
         and energies to the business of the Company, and affiliated entities.
         Executive may make and manage his personal investments (provided such
         investments in other activities do not violate, in any material
         respect, the provisions of Section 8 of this Agreement), be involved in
         charitable and professional activities and, with the consent of the
         Board, serve on boards of other for profit entities, provided such
         activities do not materially interfere with the performance of his
         duties hereunder.

4.       COMPENSATION AND BENEFITS.

(a)      BASE SALARY. During the Employment Period, the Company shall pay
         Executive a base salary at the annual rate of TWO HUNDRED FIFTY
         THOUSAND DOLLARS ($250,000.00) per year or such higher rate as may be
         determined from time to time by the Company ("Base Salary"). Such Base
         Salary shall be paid in accordance with the Company's standard payroll
         practice for its executive officers. Once increased, Base Salary shall
         not be reduced.

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(b)      ANNUAL BONUS. During the Employment Period, Executive will be entitled
         to participate in an annual incentive compensation plan of the Company.
         The Executive's target annual bonus will be seventy-five percent (75%)
         of his Base Salary as in effect for such year (the "Target Bonus"), and
         his actual annual bonus may range from 0% to 150% (2 times Target
         Bonus), and will be determined based upon achievement of performance
         goals (initially seventy percent [70%] financial [return on capital
         invested and EBITDA] and thirty percent [30%] personal, but may be tied
         to other metrics as may be established from time to time by the
         Compensation Committee of the Board) as approved by the Compensation
         Committee of the Board, from time to time.

(c)      STOCK OPTIONS. Executive shall be eligible to be considered for stock
         option grants under the Company's annual stock option award program as
         administered by, and at the discretion of, the Compensation Committee
         of the Board of Directors, beginning in 2001.

(d)      BENEFIT PLANS AND VACATION. Executive shall be eligible to participate
         in or receive benefits under any pension plan, profit sharing plan,
         medical and dental benefits plan, life insurance plan, short-term and
         long-term disability plans, or any other health, welfare or fringe
         benefit plan, generally made available by the Company to its executive
         officers at a level commensurate with his position. During the
         Employment Period, Executive shall be entitled to vacation each year in
         accordance with the Company's policies in effect from time to time, but
         in no event less than four (4) weeks paid vacation per calendar year.
         The Executive shall also be entitled to such periods of sick leave as
         is customarily provided by the Company for its senior executive
         employees. Executive shall be eligible to participate in the Company's
         401(k) Plan.

(e)      EXPENSE REIMBURSEMENT. The Company shall promptly reimburse Executive
         for the ordinary and necessary business expenses incurred by Executive
         in the performance of the duties hereunder in accordance with the
         Company's customary practices applicable to its executive officers.

(f)      EXECUTIVE DEFERRAL PLAN. Executive shall be entitled to participate in
         the Company's "Executive Deferral Plan", and any replacement plan or
         arrangement, all to the extent maintained or instituted by the Company,
         and covering its principal executive officers, at a level commensurate
         with his position.

(g)      OTHER PERQUISITES. Executive shall be entitled to all perquisites
         provided to Senior Vice Presidents of the Company as approved by the
         Compensation Committee of the Board of Directors, and as they may exist
         from time to time.

5.       TERMINATION OF EMPLOYMENT.

Executive's employment hereunder may be terminated under the following
circumstances:

(a)      DEATH. Executive's employment hereunder shall terminate upon
         Executive's death.



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(b)      TOTAL DISABILITY. The Company may terminate Executive's employment
         hereunder upon Executive becoming "Totally Disabled". For purposes of
         this Agreement, Executive shall be "Totally Disabled" if Executive has
         been physically or mentally incapacitated so as to render Executive
         incapable of performing Executive's material usual and customary duties
         under this Agreement for six (6) consecutive months (such consecutive
         absence not being deemed interrupted by Executive's return to service
         for less than 10 consecutive business days if absent thereafter for the
         same illness or disability). Any such termination shall be upon thirty
         (30) days written notice given at any time thereafter while Executive
         remains Totally Disabled, provided that a termination for Total
         Disability hereunder shall not be effective if Executive returns to
         full performance of his duties within such thirty (30) day period.

(c)      TERMINATION BY THE COMPANY FOR CAUSE. The Company may terminate
         Executive's employment hereunder for "Cause" at any time within ninety
         (90) days after the Chairman of the Audit or Governance Committee of
         the Board has knowledge thereof.

         (i)      For purposes of this Agreement, the term "Cause" shall be
                  limited to (1) willful misconduct by Executive with regard to
                  the Company which has a material adverse effect on the
                  Company; (2) the willful refusal of Executive to attempt to
                  follow the proper written direction of the Chief Executive
                  Officer, the President, an Executive Vice President, or the
                  Board of Directors, provided that the foregoing refusal shall
                  not be "Cause" if Executive in good faith believes that such
                  direction is illegal, unethical or immoral and promptly so
                  notifies the Board; (3) substantial and continuing willful
                  refusal by the Executive to attempt to perform the duties
                  required of him hereunder (other than any such failure
                  resulting from incapacity due to physical or mental illness)
                  after a written demand for substantial performance is
                  delivered to the Executive by the Chief Executive Officer, the
                  President, an Executive Vice President, or the Board of
                  Directors, which specifically identifies the manner in which
                  it is believed that the Executive has substantially and
                  continually refused to attempt to perform his duties
                  hereunder; or (4) the Executive being convicted of a felony
                  (other than a felony involving a traffic violation or as a
                  result of vicarious liability). For purposes of this
                  paragraph, no act, or failure to act, on Executive's part
                  shall be considered "willful" unless done or omitted to be
                  done, by him not in good faith and without reasonable belief
                  that his action or omission was in the best interests of the
                  Company.

         (ii)     A Notice of Termination for Cause shall mean a notice that
                  shall indicate the specific termination provision in Section
                  5(c)(i) relied upon and shall set forth in reasonable detail
                  the facts and circumstances which provide for a basis for
                  termination for Cause. Further, a Notification for Cause shall
                  be required to include a copy of a resolution duly adopted by
                  at least two-thirds (2/3rds) of the entire membership of the
                  Board at a meeting of the Board which was called for the
                  purpose of considering such termination and which Executive
                  and his representative had the right to attend and address the
                  Board, finding that, in the 


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                  good faith of the Board, Executive engaged in conduct set
                  forth in the definition of Cause herein and specifying the
                  particulars thereof in reasonable detail. The date of
                  termination for a termination for Cause shall be the date
                  indicated in the Notice of Termination. Any purported
                  termination for Cause which is held by a court or arbitrator
                  not to have been based on the grounds set forth in this
                  Agreement or not to have followed the procedures set forth in
                  this Agreement shall be deemed a termination by the Company
                  without Cause.

(d)      VOLUNTARY TERMINATION BY EXECUTIVE. Executive may terminate employment
         hereunder with or without Good Reason at any time upon written notice
         to the Company.

         (i)      A Termination for Good Reason means a termination by Executive
                  by written notice given within ninety (90) days after the
                  occurrence of the Good Reason event, unless such circumstances
                  are fully corrected prior to the date of termination specified
                  in the Notice of Termination for Good Reason. For purposes of
                  this Agreement, "Good Reason" shall mean the occurrence or
                  failure to cause the occurrence, as the case may be, without
                  Executive's express written consent, of any of the following
                  circumstances: (1) any material diminution of Executive's
                  positions, duties or responsibilities hereunder (except in
                  each case in connection with the termination of Executive's
                  employment for Cause or Total Disability or as a result of
                  Executive's death, or temporarily as a result of Executive's
                  illness or other absence), provided that a change in reporting
                  structure shall not constitute Good Reason under any
                  circumstances as long as Executive reports to the Chief
                  Executive Officer, the President, the Chief Operating Officer,
                  or an Executive Vice President; further provided that if the
                  Company becomes a fifty percent or more subsidiary of any
                  other entity, Executive shall be deemed to have a material
                  diminution of his position unless he is also a Senior Vice
                  President of the ultimate parent entity; (2) removal of, or
                  the non-re-election of, the Executive from officer positions
                  with the Company specified herein or removal of the Executive
                  from any of his then officer positions with the Company; (3)
                  requiring Executive's principal place of business to be
                  located other than in Houston, Texas; (4) a failure by the
                  Company (I) to continue any bonus plan, program or arrangement
                  in which Executive is entitled to participate (the "Bonus
                  Plans"), provided that any such Bonus Plans may be modified at
                  the Company's discretion from time to time but shall be deemed
                  terminated if (x) any such plan does not remain substantially
                  in the form in effect prior to such modification and (y) if
                  plans providing Executive with substantially similar benefits
                  are not substituted therefor ("Substitute Plans"), or (II) to
                  continue Executive as a participant in the Bonus Plans and
                  Substitute Plans on at least the same basis as to potential
                  amount of the bonus as Executive participated in prior to any
                  change in such plans or awards, in accordance with the Bonus
                  Plans and the Substitute Plans; (5) any material breach by the
                  Company of any provision of this Agreement, including without
                  limitation Section 10 hereof; or (6) failure of any successor
                  to the Company (whether direct or indirect and whether by
                  merger, acquisition, consolidation or otherwise) to assume in
                  a writing 



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                  delivered to Executive upon the assignee becoming such, the
                  obligations of the Company hereunder.

         (ii)     A Notice of Termination for Good Reason shall mean a notice
                  that shall indicate the specific termination provision relied
                  upon and shall set forth in reasonable detail the facts and
                  circumstances claimed to provide a basis for Termination for
                  Good Reason. The failure by Executive to set forth in the
                  Notice of Termination for Good Reason any facts or
                  circumstances which contribute to the showing of Good Reason
                  shall not waive any right of Executive hereunder or preclude
                  Executive from asserting such fact or circumstance in
                  enforcing his rights hereunder. The Notice of Termination for
                  Good Reason shall provide for a date of termination not less
                  than ten (10) nor more than sixty (60) days after the date
                  such Notice of Termination for Good Reason is given, provided
                  that in the case of the events set forth in Sections
                  5(d)(i)(1) or (2) the date may be five (5) days after the
                  giving of such notice.

(e)      TERMINATION BY THE COMPANY WITHOUT CAUSE. The Company may terminate
         Executive's employment hereunder without Cause at any time upon written
         notice to Executive.

(f)      EFFECT OF TERMINATION. Upon any termination of employment, Executive
         shall immediately resign from all Board memberships and other positions
         with the Company or any of its subsidiaries held by him at such time.

6.       COMPENSATION FOLLOWING TERMINATION OF EMPLOYMENT.

In the event that Executive's employment hereunder is terminated, Executive
shall be entitled to the following compensation and benefits upon such
termination:

(a)      TERMINATION BY REASON OF DEATH. In the event that Executive's
         employment is terminated by reason of Executive's death, the Company
         shall pay the following amounts to Executive's beneficiary or estate:

         (i)      Any accrued but unpaid Base Salary for services rendered to
                  the date of death, any accrued but unpaid expenses required to
                  be reimbursed under this Agreement, any vacation accrued to
                  the date of termination, any earned but unpaid bonuses for any
                  prior period, and, to the extent not otherwise paid, a
                  pro-rata "bonus" or incentive compensation payment to the
                  extent payments are awarded to senior executives of the
                  Company and paid at the same time as senior executives are
                  paid.

         (ii)     Any benefits to which Executive may be entitled pursuant to
                  the plans, policies and arrangements (including those referred
                  to in Section 4(d) hereof), as determined and paid in
                  accordance with the terms of such plans, policies and
                  arrangements.

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         (iii)    An amount equal to the Base Salary (at the rate in effect as
                  of the date of Executive's death) which would have been
                  payable to Executive if Executive had continued in employment
                  for two additional years. Said payments will be paid to
                  Executive's estate or beneficiary at the same time and in the
                  same manner as such compensation would have been paid if
                  Executive had remained in active employment.

         (iv)     As of the date of termination by reason of Executive's death,
                  stock options awarded to Executive shall be fully vested and
                  Executive's estate or beneficiary shall have up to one (1)
                  year from the date of death to exercise all such options,
                  provided that in no event will any option be exercisable
                  beyond its term.

         (v)      As otherwise specifically provided herein.

(b)      TERMINATION BY REASON OF TOTAL DISABILITY. In the event that
         Executive's employment is terminated by reason of Executive's Total
         Disability as determined in accordance with Section 5(b), the Company
         shall pay the following amounts to Executive:


         (i)      Any accrued but unpaid Base Salary for services rendered to
                  the date of termination, any accrued but unpaid expenses
                  required to be reimbursed under this Agreement, any vacation
                  accrued to the date of termination and any earned but unpaid
                  bonuses for any prior period. Executive shall also be eligible
                  for a pro-rata bonus or incentive compensation payment to the
                  extent such awards are made to senior executives of the
                  Company for the year in which Executive is terminated, and to
                  the extent not otherwise paid to the Executive.

         (ii)     Any benefits to which Executive may be entitled pursuant to
                  the plans, policies and arrangements (including those referred
                  to in Section 4(d) hereof) shall be determined and paid in
                  accordance with the terms of such plans, policies and
                  arrangements.

         (iii)    An amount equal to the Base Salary (at the rate in effect as
                  of the date of Executive's Total Disability) which would have
                  been payable to Executive if Executive had continued in active
                  employment for two years following termination of employment,
                  less any payments under any long-term disability plan or
                  arrangement paid for by the Company. Payment shall be made at
                  the same time and in the same manner as such compensation
                  would have been paid if Executive had remained in active
                  employment until the end of such period.

         (iv)     As of the date of termination by reason of Executive's Total
                  Disability, Executive shall be fully vested in all stock
                  option awards, and Executive shall have up to one (1) year
                  from the date of termination by reason of Total Disability to
                  exercise all such options; provided that in no event will any
                  option be exercisable beyond its term.

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         (v)      As otherwise specifically provided herein.

(c)      TERMINATION FOR CAUSE. In the event that Executive's employment is
         terminated by the Company for Cause, the Company shall pay the
         following amounts to Executive:

         (i)      Any accrued but unpaid Base Salary for services rendered to
                  the date of termination, any accrued but unpaid expenses
                  required to be reimbursed under this Agreement, any vacation
                  accrued to the date of termination and any earned but unpaid
                  bonuses for any prior period.

         (ii)     Any benefits to which Executive may be entitled pursuant to
                  the plans, policies and arrangements (including those referred
                  to in Section 4(d) hereof up to the date of termination) shall
                  be determined and paid in accordance with the terms of such
                  plans, policies and arrangements.

         (iii)    As otherwise specifically provided herein.

         Any options, restricted stock or other awards that have not vested
         prior to the date of such termination of employment shall be cancelled
         to the extent not then vested, and any options held by Executive shall
         be cancelled, whether or not then vested.

(d)      VOLUNTARY TERMINATION BY EXECUTIVE. In the event that Executive
         voluntarily terminates employment other than for Good Reason, the
         Company shall pay the following amounts to Executive:

         (i)      Any accrued but unpaid Base Salary for services rendered to
                  the date of termination, any accrued but unpaid expenses
                  required to be reimbursed under this Agreement, any vacation
                  accrued to the date of termination and any earned but unpaid
                  bonuses for any prior period.

         (ii)     Any benefits to which Executive may be entitled pursuant to
                  the plans, policies and arrangements (including those referred
                  to in Section 4(d) hereof up to the date of termination) shall
                  be determined and paid in accordance with the terms of such
                  plans, policies and arrangements.

         (iii)    As otherwise specifically provided herein.

         Any options, restricted stock or other awards that have not vested
         prior to the date of such termination of employment shall be cancelled
         to the extent not then vested, and Executive shall have 90 days
         following termination of employment to exercise any previously vested
         options; provided that in no event will any option be exercisable
         beyond its term.

(e)      TERMINATION BY THE COMPANY WITHOUT CAUSE; TERMINATION BY EXECUTIVE FOR
         GOOD REASON. In the event that Executive's employment is terminated by
         the Company for 


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         reasons other than death, Total Disability or Cause, or Executive
         terminates his employment for Good Reason, the Company shall pay the
         following amounts to Executive:

         (i)      Any accrued but unpaid Base Salary for services rendered to
                  the date of termination, any accrued but unpaid expenses
                  required to be reimbursed under this Agreement, any vacation
                  accrued to the date of termination and any earned but unpaid
                  bonuses for any prior period.

         (ii)     Any benefits to which Executive may be entitled pursuant to
                  the plans, policies and arrangements referred to in Section
                  4(d) hereof shall be determined and paid in accordance with
                  the terms of such plans, policies and arrangements.

         (iii)    An amount equal to two times the sum of Executive's Base
                  Salary plus his Target Annual Bonus (in each case as then in
                  effect), of which one-half shall be paid in a lump sum within
                  ten (10) days after such termination and one-half shall be
                  paid during the two (2) year period beginning on the date of
                  Executive's termination and shall be paid at the same time and
                  in the same manner as Base Salary would have been paid if
                  Executive had remained in active employment until the end of
                  such period.

         (iv)     The Company at its expense will continue for Executive and
                  Executive's spouse and dependents, all health benefit plans,
                  programs or arrangements, whether group or individual, and
                  also including deferred compensation, disability, automobile,
                  and other benefit plans, in which Executive was entitled to
                  participate at any time during the twelve-month period prior
                  to the date of termination, until the earliest to occur of (A)
                  two years after the date of termination; (B) Executive's death
                  (provided that benefits payable to Executive's beneficiaries
                  shall not terminate upon Executive's death); or (C) with
                  respect to any particular plan, program or arrangement, the
                  date Executive becomes covered by a comparable benefit by a
                  subsequent employer. In the event that Executive's continued
                  participation in any such plan, program, or arrangement of the
                  Company is prohibited, the Company will arrange to provide
                  Executive with benefits substantially similar to those which
                  Executive would have been entitled to receive under such plan,
                  program, or arrangement, for such period on a basis which
                  provides Executive with no additional after tax cost.

         (v)      Except to the extent prohibited by law, and except as
                  otherwise provided herein, Executive will be 100% vested in
                  all benefits, awards, and grants accrued but unpaid as of the
                  date of termination under any pension plan, profit sharing
                  plan, supplemental and/or incentive compensation plans in
                  which Executive was a participant as of the date of
                  termination. Executive shall also be eligible for a bonus or
                  incentive compensation payment, at the same time, on the same
                  basis, and to the same extent payments are made to senior
                  executives of the Company, pro-rated for the fiscal year in
                  which the Executive is terminated.



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         (vi)     Executive shall continue to vest in all stock option awards or
                  restricted stock awards over the two (2) year period
                  commencing on the date of such termination. Executive shall
                  have two (2) years and six (6) months after the date of
                  termination to exercise all options to the extent then vested,
                  provided that in no event will any option be exercisable
                  beyond its term.

         (vii)    As otherwise specifically provided herein.

(f)      NO OTHER BENEFITS OR COMPENSATION. Except as may be provided under this
         Agreement, under the terms of any incentive compensation, employee
         benefit, or fringe benefit plan applicable to Executive at the time of
         Executive's termination or resignation of employment, Executive shall
         have no right to receive any other compensation, or to participate in
         any other plan, arrangement or benefit, with respect to future periods
         after such termination or resignation.

(g)      NO MITIGATION; NO SET-OFF. In the event of any termination of
         employment hereunder, Executive shall be under no obligation to seek
         other employment and there shall be no offset against any amounts due
         Executive under this Agreement on account of any remuneration
         attributable to any subsequent employment that Executive may obtain.
         The amounts payable hereunder shall not be subject to setoff,
         counterclaim, recoupment, defense or other right which the Company may
         have against the Executive or others, except upon obtaining by the
         Company of a final unappealable judgment against Executive.

7.       RESIGNATION BY EXECUTIVE FOR GOOD REASON AND COMPENSATION PAYABLE
         FOLLOWING CHANGE IN CONTROL.

(a)      RESIGNATION FOR GOOD REASON FOLLOWING CHANGE IN CONTROL. In the event a
         "Change in Control" occurs and Executive terminates his employment for
         Good Reason thereafter, or the Company terminates Executive's
         employment other than for Cause or such termination for Good Reason or
         without Cause occurs in contemplation of such Change in Control (any
         termination within six (6) months prior to such Change in Control being
         presumed to be in contemplation unless rebutted by clear and
         demonstrable evidence to the contrary), the Company shall pay the
         following amounts to Executive:

         (i)      The payments and benefits provided for in Section 6(e), except
                  that the amount calculated pursuant to Section 6(e)(iii) shall
                  be paid in a lump-sum.

         (ii)     Executive will be 100% vested in all benefits, awards, and
                  grants (including stock option grants and stock awards; all of
                  such stock options exercisable for two (2) years following
                  Termination, provided that in no event will any option be
                  exercisable beyond its term) accrued but unpaid as of the date
                  of termination under any non-qualified pension plan,
                  supplemental and/or incentive compensation or bonus plans, in
                  which Executive was a participant as of the date 


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                  of termination. Executive shall also receive a bonus or
                  incentive compensation payment (the "bonus payment"), payable
                  at 100% of the maximum bonus available to Executive, pro-rated
                  as of the effective date of the termination. The bonus payment
                  shall be payable within five (5) days after the effective date
                  of Employee's termination. Except as may be provided under
                  this Section 7 or under the terms of any incentive
                  compensation, employee benefit, or fringe benefit plan
                  applicable to Executive at the time of Executive's resignation
                  from employment, Executive shall have no right to receive any
                  other compensation, or to participate in any other plan,
                  arrangement or benefit, with respect to future periods after
                  such resignation or termination.

(b)      CERTAIN ADDITIONAL PAYMENTS BY THE COMPANY.

         (i)      In the event that the Executive shall become entitled to
                  payments and/or benefits provided by this Agreement or any
                  other amounts in the "nature of compensation" (whether
                  pursuant to the terms of this Agreement or any other plan,
                  arrangement or agreement with the Company, any person whose
                  actions result in a change of ownership or effective control
                  covered by Section 280G(b)(2) of the Code or any person
                  affiliated with the Company or such person) as a result of
                  such change in ownership or effective control (collectively
                  the "Company Payments"), and such Company Payments will be
                  subject to the tax (the "Excise Tax") imposed by Section 4999
                  of the Code (and any similar tax that may hereafter be imposed
                  by any taxing authority) the Company shall pay to the
                  Executive at the time specified in subsection (iv) below an
                  additional amount (the "Gross-up Payment") such that the net
                  amount retained by the Executive, after deduction of any
                  Excise Tax on the Company Payments and any U.S. federal,
                  state, and for local income or payroll tax upon the Gross-up
                  Payment provided for by this Section 7(b), but before
                  deduction for any U.S. federal, state, and local income or
                  payroll tax on the Company Payments, shall be equal to the
                  Company Payments.

         (ii)     For purposes of determining whether any of the Company
                  Payments and Gross-up Payments (collectively the "Total
                  Payments") will be subject to the Excise Tax and the amount of
                  such Excise Tax, (x) the Total Payments shall be treated as
                  "parachute payments" within the meaning of Section 280G(b)(2)
                  of the Code, and all "parachute payments" in excess of the
                  "base amount" (as defined under Code Section 280G[b][3] of the
                  Code) shall be treated as subject to the Excise Tax, unless
                  and except to the extent that, in the opinion of the Company's
                  independent certified public accountants appointed prior to
                  any change in ownership (as defined under Code Section
                  280G[b][2]) or tax counsel selected by such accountants (the
                  "Accountants") such Total Payments (in whole or in part)
                  either do not constitute "parachute payments," represent
                  reasonable compensation for services actually rendered within
                  the meaning of Section 280G(b)(4) of the Code in excess of the
                  "base amount" or are otherwise not subject to the Excise Tax,
                  and (y) the value of any non-cash benefits or any deferred
                  payment or benefit shall be 

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                  determined by the Accountants in accordance with the
                  principles of Section 280G of the Code.

         (iii)    For purposes of determining the amount of the Gross-up
                  Payment, the Executive shall be deemed to pay U.S. federal
                  income taxes at the highest marginal rate of U.S. federal
                  income taxation in the calendar year in which the Gross-up
                  Payment is to be made and state and local income taxes at the
                  highest marginal rate of taxation in the state and locality of
                  the Executive's residence for the calendar year in which the
                  Company Payment is to be made, net of the maximum reduction in
                  U.S. federal income taxes which could be obtained from
                  deduction of such state and local taxes if paid in such year.
                  In the event that the Excise Tax is subsequently determined by
                  the Accountants to be less than the amount taken into account
                  hereunder at the time the Gross-up Payment is made, the
                  Executive shall repay to the Company, at the time that the
                  amount of such reduction in Excise Tax is finally determined,
                  the portion of the prior Gross-up Payment attributable to such
                  reduction (plus the portion of the Gross-up Payment
                  attributable to the Excise Tax and U.S. federal, state and
                  local income tax imposed on the portion of the Gross-up
                  Payment being repaid by the Executive if such repayment
                  results in a reduction in Excise Tax or a U.S. federal, state
                  and local income tax deduction), plus interest on the amount
                  of such repayment at the rate provided in Section
                  1274(b)(2)(B) of the Code. Notwithstanding the foregoing, in
                  the event any portion of the Gross-up Payment to be refunded
                  to the Company has been paid to any U.S. federal, state and
                  local tax authority, repayment thereof (and related amounts)
                  shall not be required until actual refund or credit of such
                  portion has been made to the Executive, and interest payable
                  to the Company shall not exceed the interest received or
                  credited to the Executive by such tax authority for the period
                  it held such portion. The Executive and the Company shall
                  mutually agree upon the course of action to be pursued (and
                  the method of allocating the expense thereof) if the
                  Executive's claim for refund or credit is denied.

                  In the event that the Excise Tax is later determined by the
                  Accountant or the Internal Revenue Service to exceed the
                  amount taken into account hereunder at the time the Gross-up
                  Payment is made (including by reason of any payment the
                  existence or amount of which cannot be determined at the time
                  of the Gross-up Payment), the Company shall make an additional
                  Gross-up Payment in respect of such excess (plus any interest
                  or penalties payable with respect to such excess) at the time
                  that the amount of such excess is finally determined.

         (iv)     The Gross-up Payment or portion thereof provided for in
                  subsection (iii) above shall be paid not later than the
                  thirtieth (30th) day following an event occurring which
                  subjects the Executive to the Excise Tax; provided, however,
                  that if the amount of such Gross-up Payment or portion thereof
                  cannot be finally determined on or before such day, the
                  Company shall pay to the Executive on such day an estimate, as
                  determined in good faith by the Accountant, of the minimum
                  amount of such payments and shall pay the remainder of such
                  payments (together with 


                                  Page 11 of 19
   12

                  interest at the rate provided in Section 1274(b)(2)(B) of the
                  Code), subject to further payments pursuant to subsection
                  (iii) hereof, as soon as the amount thereof can reasonably be
                  determined, but in no event later than the ninetieth day after
                  the occurrence of the event subjecting the Executive to the
                  Excise Tax. In the event that the amount of the estimated
                  payments exceeds the amount subsequently determined to have
                  been due, such excess shall constitute a loan by the Company
                  to the Executive, payable on the fifth day after demand by the
                  Company (together with interest at the rate provided in
                  Section 1274(b)(2)(B) of the Code).

         (v)      In the event of any controversy with the Internal Revenue
                  Service (or other taxing authority) with regard to the Excise
                  Tax, the Executive shall permit the Company to control issues
                  related to the Excise Tax (at its expense), provided that such
                  issues do not potentially materially adversely affect the
                  Executive, but the Executive shall control any other issues.
                  In the event the issues are interrelated, the Executive and
                  the Company shall in good faith cooperate so as not to
                  jeopardize resolution of either issue, but if the parties
                  cannot agree the Executive shall make the final determination
                  with regard to the issues. In the event of any conference with
                  any taxing authority as to the Excise Tax or associated income
                  taxes, the Executive shall permit the representative of the
                  Company to accompany the Executive, and the Executive and the
                  Executive's representative shall cooperate with the Company
                  and its representative.

         (vi)     The Company shall be responsible for all charges of the
                  Accountant.

         (vii)    The Company and the Executive shall promptly deliver to each
                  other copies of any written communications, and summaries of
                  any verbal communications, with any taxing authority regarding
                  the Excise Tax covered by this Section 7(b).

(c)      CHANGE IN CONTROL. For purposes of this Agreement, "Change in Control"
         means the occurrence of any of the following events:

         (i)      any Person is or becomes the Beneficial Owner, directly or
                  indirectly, of securities of the Company (not including in the
                  securities beneficially owned by such person any securities
                  acquired directly from the Company or its Affiliates)
                  representing twenty-five percent (25%) or more of the combined
                  voting power of the Company's then outstanding voting
                  securities;

         (ii)     the following individuals cease for any reason to constitute a
                  majority of the number of directors then serving: individuals
                  who, on the Commencement Date, constitute the Board and any
                  new director (other than a director whose initial assumption
                  of office is in connection with an actual or threatened
                  election contest, including but not limited to a consent
                  solicitation, relating to the election of directors of the
                  Company) whose appointment or election by the Board or
                  nomination for election by the Company's stockholders was
                  approved or recommended by a vote of the at least two-thirds
                  (2/3rds) of the directors then still in office who either were
                  directors on the Commencement Date or whose 


                                  Page 12 of 19
   13

                  appointment, election or nomination for election was
                  previously so approved or recommended;

         (iii)    there is a consummated merger or consolidation of the Company
                  or any direct or indirect subsidiary of the Company with any
                  other corporation, other than (A) a merger or consolidation
                  which would result in the voting securities of the Company
                  outstanding immediately prior thereto continuing to represent
                  (either by remaining outstanding or by being converted into
                  voting securities of the surviving or parent entity) more than
                  fifty percent (50%) of the combined voting power of the voting
                  securities of the Company or such surviving or parent equity
                  outstanding immediately after such merger or consolidation or
                  (B) a merger or consolidation effected to implement a
                  recapitalization of the Company (or similar transaction) in
                  which no Person, directly or indirectly, acquired twenty-five
                  percent (25%) or more of the combined voting power of the
                  Company's then outstanding securities (not including in the
                  securities beneficially owned by such person any securities
                  acquired directly from the Company or its Affiliates); or

         (iv)     the stock holders of the Company approve a plan of complete
                  liquidation of the Company or there is consummated an
                  agreement for the sale or disposition by the Company of all or
                  substantially all of the Company's assets (or any transaction
                  having a similar effect), other than a sale or disposition by
                  the Company of all or substantially all of the Company's
                  assets to an entity, at least fifty percent (50%) of the
                  combined voting power of the voting securities of which are
                  owned by stockholders of the Company in substantially the same
                  proportions as their ownership of the Company immediately
                  prior to such sale.

         For purposes of this Section 7(c), the following terms shall have the
         following meanings:

         (i)      "Affiliate" shall mean an affiliate of the Company, as defined
                  in Rule 12b-2 promulgated under Section 12 of the Securities
                  Exchange Act of 1934, as amended from time to time (the
                  "Exchange Act");

         (ii)     "Beneficial Owner" shall have the meaning set forth in Rule
                  13d-3 under the Exchange Act;

         (iii)    "Person" shall have the meaning set forth in Section 3(a)(9)
                  of the Exchange Act, as modified and used in Sections 13(d)
                  and 14(d) thereof, except that such term shall not include (1)
                  the Company, (2) a trustee or other fiduciary holding
                  securities under an employee benefit plan of the Company, (3)
                  an underwriter temporarily holding securities pursuant to an
                  offering of such securities or (4) a corporation owned,
                  directly or indirectly, by the stockholders of the Company in
                  substantially the same proportions as their ownership of
                  shares of Common Stock of the Company.


                                  Page 13 of 19
   14

8.       RESTRICTIVE COVENANTS.

(a)      COMPETITIVE ACTIVITY. Executive covenants and agrees that at all times
         during Executive's period of employment with the Company, and for two
         (2) years thereafter, Executive will not engage in, assist, or have any
         active interest or involvement, whether as an employee, agent,
         consultant, creditor, advisor, officer, director, stockholder
         (excluding holding of less than 3% of the stock of a public company),
         partner, proprietor or any type of principal whatsoever in any person,
         firm, or business entity which, directly or indirectly, is materially
         engaged in the waste management business competitive with that
         conducted and carried on by the Company, without the Company's specific
         written consent to do so. "Material" shall mean more than five (5%)
         percent of their revenue is generated from the waste management
         business; provided that the revenues within Executive's area of
         responsibility or authority are more than 10% composed of revenues from
         the waste disposal business.

(b)      NON-SOLICITATION. Executive covenants and agrees that at all times
         during Executive's period of employment with the Company, and for a
         period of two (2) years after the Termination thereof, whether such
         termination is voluntary or involuntary by wrongful discharge, or
         otherwise, Executive will not directly and personally knowingly (i)
         induce any customers of the Company or corporations affiliated with the
         Company to patronize any similar business which competes with any
         material business of the Company; (ii) after his termination of
         employment, request or advise any customers of the Company or
         corporations affiliated with the Company to withdraw, curtail or cancel
         such customer's business with the Company; or (iii) after his
         termination of employment, individually or through any person, firm,
         association or corporation with which he is now, or may hereafter
         become associated, solicit, entice or induce any then employee of the
         Company, or any subsidiary of the Company, to leave the employ of the
         Company, or such other corporation, to accept employment with, or
         compensation from the Executive, or any person, firm, association or
         corporation with which Executive is affiliated without prior written
         consent of the Company. The foregoing shall not prevent Executive from
         serving as a reference for employees.

(c)      PROTECTED INFORMATION. Executive recognizes and acknowledges that
         Executive has had and will continue to have access to various
         confidential or proprietary information concerning the Company and
         corporations affiliated with the Company of a special and unique value
         which may include, without limitation, (i) books and records relating
         to operation, finance, accounting, sales, personnel and management,
         (ii) policies and matters relating particularly to operations such as
         customer service requirements, costs of providing service and
         equipment, operating costs and pricing matters, and (iii) various trade
         or business secrets, including customer lists, route sheets, business
         opportunities, marketing or business diversification plans, business
         development and bidding techniques, methods and processes, financial
         data and the like, to the extent not generally known in the industry
         (collectively, the "Protected Information"). Executive therefore
         covenants and agrees that Executive will not at any time, either while
         employed by the Company or afterwards, knowingly make any independent
         use of, or knowingly disclose 


                                  Page 14 of 19
   15

         to any other person or organization (except as authorized by the
         Company) any of the Protected Information, provided that (i) while
         employed by the Company, Executive may in good faith make disclosures
         he believes desirable, provided that are authorized by the Company or
         otherwise in accordance with Company policy, and (ii) Executive may
         comply with legal process.

9.       ENFORCEMENT OF COVENANTS.

(a)      RIGHT TO INJUNCTION. Executive acknowledges that a breach of the
         covenants set forth in Section 8 hereof will cause irreparable damage
         to the Company with respect to which the Company's remedy at law for
         damages may be inadequate. Therefore, in the event of breach or
         threatened breach of the covenants set forth in this section by
         Executive, Executive and the Company agree that the Company shall be
         entitled to the following particular forms of relief, in addition to
         remedies otherwise available to it at law or equity; injunctions, both
         preliminary and permanent, enjoining or restraining such breach or
         threatened breach and Executive hereby consents to the issuance thereof
         forthwith and without bond by any court of competent jurisdiction.

(b)      SEPARABILITY OF COVENANTS. The covenants contained in Section 8 hereof
         constitute a series of separate covenants, one for each applicable
         State in the United States and the District of Columbia, and one for
         each applicable foreign country. If in any judicial proceeding, a court
         shall hold that any of the covenants set forth in Section 8 exceed the
         time, geographic, or occupational limitations permitted by applicable
         laws, Executive and the Company agree that such provisions shall and
         are hereby reformed to the maximum time, geographic, or occupational
         limitations permitted by such laws. Further, in the event a court shall
         hold unenforceable any of the separate covenants deemed included
         herein, then such unenforceable covenant or covenants shall be deemed
         eliminated from the provisions of this Agreement for the purpose of
         such proceeding to the extent necessary to permit the remaining
         separate covenants to be enforced in such proceeding.

         Executive and the Company further agree that the covenants in Section 8
         shall each be construed as a separate agreement independent of any
         other provisions of this Agreement, and the existence of any claim or
         cause of action by Executive against the Company whether predicated on
         this Agreement or otherwise, shall not constitute a defense to the
         enforcement by the Company of any of the covenants of Section 8.

10.      INDEMNIFICATION.

The Company shall indemnify and hold harmless Executive to the fullest extent
permitted by Delaware law for any action or inaction of Executive while serving
as an officer and director of the Company or, at the Company's request, as an
officer or director of any other entity or as a fiduciary of any benefit plan.
This provision includes the obligation and undertaking of the Executive to
reimburse the Company for any fees advanced by the Company on behalf of the
Executive should it later be determined that Executive was not entitled to have
such fees advanced by the Company under Delaware law. The Company shall cover
the Executive under 


                                  Page 15 of 19
   16

directors and officers liability insurance both during and, while potential
liability exists, after the Employment Term in the same amount and to the same
extent as the Company covers its other officers and directors.

11.      DISPUTES AND PAYMENT OF ATTORNEY'S FEES.

If at any time during the term of this Agreement or afterwards there should
arise any dispute as to the validity, interpretation or application of any term
or condition of this Agreement, the Company agrees, upon written demand by
Executive (and Executive shall be entitled upon application to any court of
competent jurisdiction, to the entry of a mandatory injunction, without the
necessity of posting any bond with respect thereto, compelling the Company) to
promptly provide sums sufficient to pay on a current basis (either directly or
by reimbursing Executive) Executive's costs and reasonable attorney's fees
(including expenses of investigation and disbursements for the fees and expenses
of experts, etc.) incurred by Executive in connection with any such dispute or
any litigation, provided that Executive shall repay any such amounts paid or
advanced if Executive is not the prevailing party with respect to at least one
material claim or issue in such dispute or litigation. The provisions of this
Section 11, without implication as to any other section hereof, shall survive
the expiration or termination of this Agreement and of Executive's employment
hereunder.

12.      WITHHOLDING OF TAXES.

The Company may withhold from any compensation and benefits payable under this
Agreement all applicable federal, state, local, or other taxes.

13.      SOURCE OF PAYMENTS.

All payments provided under this Agreement, other than payments made pursuant to
a plan which provides otherwise, shall be paid from the general funds of the
Company, and no special or separate fund shall be established, and no other
segregation of assets made, to assure payment. Executive shall have no right,
title or interest whatever in or to any investments which the Company may make
to aid the Company in meeting its obligations hereunder. To the extent that any
person acquires a right to receive payments from the Company hereunder, such
right shall be no greater than the right of an unsecured creditor of the
Company.

14.      ASSIGNMENT.

Except as otherwise provided in this Agreement, this Agreement shall inure to
the benefit of and be binding upon the parties hereto and their respective
heirs, representatives, successors and assigns. This Agreement shall not be
assignable by Executive (but any payments due hereunder which would be payable
at a time after Executive's death shall be paid to Executive's designated
beneficiary or, if none, his estate) and shall be assignable by the Company only
to any financially solvent corporation or other entity resulting from the
reorganization, merger or consolidation of the Company with any other
corporation or entity or any corporation or entity to or with which 

                                  Page 16 of 19
   17

the Company's business or substantially all of its business or assets may be
sold, exchanged or transferred, and it must be so assigned by the Company to,
and accepted as binding upon it by, such other corporation or entity in
connection with any such reorganization, merger, consolidation, sale, exchange
or transfer in a writing delivered to Executive in a form reasonably acceptable
to Executive (the provisions of this sentence also being applicable to any
successive such transaction).

15.      ENTIRE AGREEMENT; AMENDMENT.

This Agreement shall supersede any and all existing oral or written agreements,
representations, or warranties between Executive and the Company or any of its
subsidiaries or affiliated entities relating to the terms of Executive's
employment by the Company, including without limitation, that certain Employment
Agreement dated January 5, 1999 by and between Executive and the Company. It may
not be amended except by a written agreement signed by both parties.

16.      GOVERNING LAW.

This Agreement shall be governed by and construed in accordance with the laws of
the State of Texas applicable to agreements made and to be performed in that
State, without regard to its conflict of laws provisions.

17.      REQUIREMENT OF TIMELY PAYMENTS.

If any amounts which are required, or determined to be paid or payable, or
reimbursed or reimbursable, to Executive under this Agreement (or any other
plan, agreement, policy or arrangement with the Company) are not so paid
promptly at the times provided herein or therein, such amounts shall accrue
interest, compounded daily, at an 8% annual percentage rate, from the date such
amounts were required or determined to have been paid or payable, reimbursed or
reimbursable to Executive, until such amounts and any interest accrued thereon
are finally and fully paid, provided, however, that in no event shall the amount
of interest contracted for, charged or received hereunder, exceed the maximum
non-usurious amount of interest allowed by applicable law.

18.      NOTICES.

Any notice, consent, request or other communication made or given in connection
with this Agreement shall be in writing and shall be deemed to have been duly
given when delivered or mailed by registered or certified mail, return receipt
requested, or by facsimile or by hand delivery, to those listed below at their
following respective addresses or at such other address as each may specify by
notice to the others:

                         To the Company:    Waste Management, Inc.
                                            1001 Fannin, Suite 4000
                                            Houston, Texas 77002
                                            Attention: Corporate Secretary

                         To Executive:      At the address for Executive set 
                                            forth below.



                                  Page 17 of 19
   18

19.      MISCELLANEOUS.

(a)      WAIVER. The failure of a party to insist upon strict adherence to any
         term of this Agreement on any occasion shall not be considered a waiver
         thereof or deprive that party of the right thereafter to insist upon
         strict adherence to that term or any other term of this Agreement.

(b)      SEPARABILITY. Subject to Section 9 hereof, if any term or provision of
         this Agreement is declared illegal or unenforceable by any court of
         competent jurisdiction and cannot be modified to be enforceable, such
         term or provision shall immediately become null and void, leaving the
         remainder of this Agreement in full force and effect.

(c)      HEADINGS. Section headings are used herein for convenience of reference
         only and shall not affect the meaning of any provision of this
         Agreement.

(d)      RULES OF CONSTRUCTION. Whenever the context so requires, the use of the
         singular shall be deemed to include the plural and vice versa.

(e)      COUNTERPARTS. This Agreement may be executed in any number of
         counterparts, each of which so executed shall be deemed to be an
         original, and such counterparts will together constitute but one
         Agreement.

IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of
the day and year first above written.


WASTE MANAGEMENT, INC.


By: /s/ A. Maurice Myers
    -------------------------------
Name:  A. Maurice Myers
Title: Chairman, Chief Executive
       Officer & President

Date:  1/26/01
      -----------------------------





                                  Page 18 of 19

   19

EXECUTIVE:


 /s/ Jim Trevethan
----------------------------
JIM TREVETHAN

Date: 1/26/01
----------------------------

Address:
        --------------------

                                 Page 19 of 19