Employment Agreement - Waste Management Inc. and Robert E. Dees Jr.


                              EMPLOYMENT AGREEMENT

WASTE MANAGEMENT, INC. (the "Company"), and ROBERT E. DEES, JR. (the
"Executive") hereby enter into this EMPLOYMENT AGREEMENT ("Agreement") dated as
of May 10, 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 May
22, 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-People. 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, 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 THREE HUNDRED FIFTY
         THOUSAND DOLLARS ($350,000.00) 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 investments 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. The
         bonus for the year 2000 is guaranteed to be a minimum of $262,500.000,
         and will be paid at the same time annual bonus are paid to other
         executives of the Company in 2001.

(c)      STOCK OPTIONS. Subject to the approval of the Compensation Committee
         of the Board of Directors, Executive shall be granted an initial stock
         option grant for TWO HUNDRED THOUSAND (200,000) shares of the
         Company's common stock, effective as of the Effective Date. The
         exercise price shall be the fair market value on such date, and the
         option shall vest in equal installments of twenty-five percent (25%)
         on each of the first four (4) anniversaries of the Commencement Date.
         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 after 90 days of employment.

(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)      SIGN-ON BONUS. Within thirty (30) days after the Commencement Date,
         the Company will pay Executive a sign-on bonus in the amount of ONE
         HUNDRED FIFTY THOUSAND DOLLARS ($150,000).

(g)      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.


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(h)      RELOCATION. The Company shall promptly reimburse Executive (on a fully
         grossed up basis for any amounts taxable to Executive), for reasonable
         and customary costs incurred in connection with the relocation of his
         principal residence to the Houston, Texas area at a level commensurate
         with Executive's position and the type of relocation benefits provided
         by public companies of similar size to their executives, which shall
         in any event include the purchase by the Company (or a relocation
         company) of such residence at its fair market value if not sold within
         90 days from the Commencement Date, any real estate commissions
         incurred in connection with the sale of such residence and any points
         on a loan for a new home. In addition, the Company shall provide
         Executive temporary housing in the Houston area for up to six (6)
         months from the Commencement Date.

(i)      OTHER PERQUISITES. Executive shall be entitled to the following
         benefits:

                  1. Auto Allowance in the amount of one thousand ($1,000)
                  dollars per month; and

                  2. Financial Planning Services at actual cost, and not to
                  exceed ten thousand ($10,000) dollars annually.

                  3. An Annual Physical Examination on a program designated by
                  the Company.

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.

(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 

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                  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, 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, 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 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 


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                  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 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; (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 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.


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(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.

         (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 


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                  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.

         (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.


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         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 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 


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                  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.

         (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 



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         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 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 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 


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                  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 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),


                                 Page 11 of 19
   12

                  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 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 



                                 Page 12 of 19
   13

                  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 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



                                 Page 13 of 19
   14

         (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.

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 



                                 Page 14 of 19
   15

         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 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.


                                 Page 15 of 19

   16

(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 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 

                                 Page 16 of 19
   17

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 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. It may not be amended except by a written agreement
signed by both parties.


                                 Page 17 of 19
   18

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.

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.


                                 Page 18 of 19
   19

(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/ LAWRENCE O'DONNELL, III
   ------------------------------------------
Name:  Lawrence O'Donnell, III
Title: Sr. Vice President, General Counsel & Secretary

 Date: May 11, 2000
      ---------------------------------------



EXECUTIVE:

/s/ ROBERT E. DEES, JR.
---------------------------------------------
Robert E. Dees, Jr.

Date: May 10, 2000
     ----------------------------------------
Address:
        -------------------------------------

---------------------------------------------



                                 Page 19 of 19