Employment Agreement - Wheelabrator Technologies Inc. and Richard Felago


                              EMPLOYMENT AGREEMENT

WHEELABRATOR TECHNOLOGIES, INC., for and on behalf of its affiliated
corporations (collectively referred to as the "Company") and RICHARD FELAGO (the
"Employee") hereby enter into this EMPLOYMENT AGREEMENT ("Agreement") dated as
of May 25, 1999, as follows:

1. EMPLOYMENT.

The Company shall employ Employee, and Employee 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 Employee's employment under this Agreement shall begin as of May
25, 1999, and shall continue for a period of three (3) years thereafter (the
"Initial Term") and shall be automatically renewed for successive one (1) year
periods thereafter, unless Employee's employment is terminated in accordance
with Section 6 below.

3. DUTIES AND RESPONSIBILITIES.

(a)      Employee shall serve as President, Wheelabrator Technologies, Inc. In
         such capacity, Employee shall perform such duties as may be assigned to
         Employee from time to time by the Company.

(b)      Employee shall faithfully serve the Company and/or its affiliated
         corporations, devote Employee's full working time, attention and
         energies to the business of the Company and/or its affiliated
         corporations, and perform the duties under this Agreement to the best
         of Employee's abilities.

(c)      Employee shall (i) comply with all applicable laws, rules and
         regulations, and all requirements of all applicable regulatory,
         self-regulatory, and administrative bodies; (ii) comply with the
         Company's rules, procedures, policies, requirements, and directions;
         and (iii) not engage in any other business or employment without the
         written consent of the Company, except as otherwise specifically
         provided herein.

4. COMPENSATION AND BENEFITS.

(a)      BASE SALARY. During the Employment Term, the Company shall pay Employee
         a base salary at the annual rate of Two Hundred Fifty Thousand
         ($250,000) Dollars 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 employees.

(b)      EXPENSE REIMBURSEMENT. The Company shall promptly reimburse Employee
         for the ordinary and necessary business expenses incurred by Employee
         in the performance of Employee's duties hereunder in accordance with
         the Company's


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         customary practices applicable to employees, provided that such
         expenses are incurred and accounted for in accordance with the
         Company's policy.

(c)      BENEFIT PLANS. Employee 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, supplemental and/or incentive compensation plans, or
         any other benefit plan or arrangement generally made available by the
         Company to employees of similar status and responsibilities
         (hereinafter referred to as "similarly situated employees").

(d)      INCENTIVE/BONUS. Employee shall be eligible for a bonus or incentive
         compensation payment ("bonus"). Qualification for the bonus shall be
         pursuant to the applicable Bonus Plan in effect for the year in which
         the bonus is earned.

(e)      STOCK OPTIONS. Employee shall be awarded Twenty-Five Thousand (25,000)
         WM stock options, subject to the approval of the Compensation Committee
         of the Board of Directors. The award, vesting and exercise of all
         options shall be subject to the provisions of the Waste Management,
         Inc. Stock Incentive Plan.

5. TERMINATION OF EMPLOYMENT.

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

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

(b)      TOTAL DISABILITY. The Company may terminate Employee's employment
         hereunder upon Employee's becoming "Totally Disabled". For purposes of
         this Agreement, Employee shall be "Totally Disabled" if Employee is
         physically or mentally incapacitated so as to render Employee incapable
         of performing Employee's usual and customary duties under this
         Agreement. Employee's receipt of disability benefits under the
         Company's long-term disability plan, or receipt of Social Security
         disability benefits, shall be deemed conclusive evidence of Total
         Disability for purpose of this Agreement; provided, however, that in
         the absence of Employee's receipt of such long-term disability benefits
         or Social Security benefits, the Company may, in its reasonable
         discretion (but based upon appropriate medical evidence), determine
         that Employee is Totally Disabled.

(c)      TERMINATION BY THE COMPANY FOR CAUSE. The Company may terminate
         Employee's employment hereunder for "Cause" at any time after providing
         written notice to Employee.

         (i)      For purposes of this Agreement, the term "Cause" shall mean
                  any of the following: (a) conviction of a crime (including
                  conviction on a nolo contendere plea) involving a felony or,
                  in the good faith judgment of the Company, fraud, dishonesty,
                  or moral turpitude; (b) deliberate and continual refusal to
                  perform employment duties reasonably requested by the Company
                  or an affiliate after thirty (30) days' written notice by
                  certified mail of such


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                  failure to perform, specifying that the failure constitutes
                  cause (other than as a result of vacation, sickness, illness
                  or injury); (c) fraud or embezzlement determined in accordance
                  with the Company's normal, internal investigative procedures
                  consistently applied in comparable circumstances; (d) gross
                  misconduct or gross negligence in connection with the business
                  of the Company or an affiliate which has substantial effect on
                  the Company or the affiliate; or (e) breach of any of the
                  covenants set forth in Section 8 hereof.

         (ii)     An individual will be considered to have been terminated for
                  Cause if the Company determines that the individual engaged in
                  an act constituting Cause at any time prior to a payment date
                  for an award, regardless of whether the individual terminates
                  employment voluntarily or is terminated involuntarily, and
                  regardless of whether the individual's termination initially
                  was considered to have been for Cause.

         (iii)    Any determination of Cause under this Agreement shall be made
                  by the Company after giving Employee a reasonable opportunity
                  to be heard.

(d)      VOLUNTARY TERMINATION BY EMPLOYEE. Employee may terminate employment
         hereunder at any time after providing ninety (90) days' written notice
         to the Company.

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

6. COMPENSATION FOLLOWING TERMINATION OF EMPLOYMENT.

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

(a)      TERMINATION BY REASON OF DEATH. In the event that Employee's employment
         is terminated by reason of Employee's death, the Company shall pay the
         following amounts to Employee'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, and any vacation accrued
                  to the date of death.

         (ii)     Any benefits to which Employee may be entitled pursuant to the
                  plans, policies and arrangements referred to in Section 4(c)
                  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 Employee's death) which would have been payable
                  to Employee if Employee had continued in employment until the
                  end of the 30 day period beginning on


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                  the date of Employee's death. Such amount shall be paid in a
                  single lump sum cash payment within thirty (30) days after
                  Employee's death.

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

         (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. Employee shall also be
                  entitled to a bonus or incentive compensation payment to the
                  extent such awards are made to similarly situated executives,
                  pro-rated for the year in which Executive is terminated and
                  paid at the same time as similarly situated executives are
                  paid.

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

         (iii)    An amount equal to

                  (a)      the Base Salary (at the rate in effect as of the date
                           of Employee's Total Disability) which would have been
                           payable to Employee if Employee had continued in
                           active employment until the end of the 12-month
                           period beginning on the date of Employee's
                           termination; reduced by

                  (b)      the maximum annual amount of the long term disability
                           benefits payable to Employee under the Company's
                           long-term disability plan as determined prior to the
                           reduction of such benefits under the terms of the
                           plan for other disability income.

                  Payment shall be made at the same time and in the same manner
                  as such compensation would have been paid if Employee had
                  remained in active employment until the end of such period.

(c)      TERMINATION FOR CAUSE OR VOLUNTARY TERMINATION BY EMPLOYEE. In the
         event that Employee's employment is terminated by the Company for Cause
         pursuant to Section 5(c), or Employee terminates employment pursuant to
         Section 5(d), the Company shall pay the following amounts to Employee:

         (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.


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

(d)      TERMINATION BY THE COMPANY WITHOUT CAUSE. In the event that Employee's
         employment is terminated by the Company pursuant to Section 5(e) for
         reasons other than death, Total Disability or Cause, the Company shall
         pay the following amounts to Employee:

         (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.

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

         (iii)    The Base Salary (at the rate in effect as of the date of
                  Employee's termination) which would have been payable to
                  Employee if Employee had continued in active employment until
                  the later of: (a) the period ending on the last day of the
                  Initial Term; or (b) the end of the 12-month period beginning
                  on the date of Employee's termination. Payment shall be made
                  at the same time and in the same manner as such compensation
                  would have been paid if Employee had remained in active
                  employment until the end of such period. The Employee shall
                  also be eligible for a bonus or incentive compensation
                  payment, to the extent bonuses are paid to similarly situated
                  employees, pro-rated for the year in which the Employee is
                  terminated, and paid at the same time as similarly situated
                  employees are paid.

         (iv)     The Company, completely at its expense, will continue for
                  Employee and Employee's spouse and dependents, group health
                  plans, programs or arrangements, in which Employee was
                  entitled to participate at any time during the twelve-month
                  period prior to the date of termination, until the earlier of:
                  (a) last day of period during which Employee receives payment
                  in accordance with clause (iii) above; (b) Employee's death
                  (provided that benefits payable to Employee's beneficiaries
                  shall not terminate upon Employee's death); or (c) with
                  respect to any particular plan, program or arrangement, the
                  date Employee becomes covered by a comparable benefit provided
                  by a subsequent employer.

(e)      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 Employee at the time of
         Employee's termination or resignation of employment, Employee shall
         have no right to receive any other


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         compensation, or to participate in any other plan, arrangement or
         benefit, with respect to future periods after such termination or
         resignation.

(F)      SUSPENSION OR TERMINATION OF BENEFITS AND COMPENSATION. In the event
         that the Company, in its sole discretion determines that, without the
         Company's express written consent, Employee has

         (i)      directly or indirectly engaged in, assisted or have any active
                  interest or involvement whether as an employee, agent,
                  consultant, creditor, advisor, officer, director, stockholder
                  (excluding holding of less than 1% of the stock of a public
                  company), partner, proprietor, or any type of principal
                  whatsoever, in any person, firm, or business entity which is
                  directly or indirectly competitive with the Company or any of
                  its affiliates, or

         (ii)     directly or indirectly, for or on behalf of any person, firm,
                  or business entity which is directly or indirectly competitive
                  with the Company or any of its affiliates (a) solicited or
                  accepted from any person or entity who is or was a client of
                  the Company during the term of Employee's employment hereunder
                  or during any of the twelve calendar months preceding or
                  following the termination of Employee's employment any
                  business for services similar to those rendered by the
                  Company, (b) requested or advised any present or future
                  customer of the Company to withdraw, curtail or cancel its
                  business dealings with the Company, or (c) requested or
                  advised any employee of the Company to terminate his or her
                  employment with the Company;

         the Company shall have the right to suspend or terminate any or all
         remaining benefits payable pursuant to Section 6 of this Agreement.
         Such suspension or termination of benefits shall be in addition to and
         shall not limit any and all other rights and remedies that the Company
         may have against Employee.

7. RESTRICTIVE COVENANTS

(a)      COMPETITIVE ACTIVITY. Employee covenants and agrees that at all times
         during Employee's period of employment with the Company, and while
         Employee is receiving payments pursuant to Section 6 of this Agreement,
         Employee will not, directly or indirectly, 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 1% 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 engaged in
         the same business as that conducted and carried on by the Company,
         without the Company's specific written consent to do so. Furthermore,
         for a period of one (1) year after the date of termination of
         Employee's employment, whether such termination is voluntary or
         involuntary, by wrongful discharge, or otherwise, or one (1) year
         following the cessation of payments made pursuant to Section 6 of this
         Agreement, or for a period of one (1) year following the date of
         termination, whichever date is later, Employee will not directly or
         indirectly, within 75 miles of the principal place of


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         business of the Company, the principal place of business of any
         corporation or other entity owned, controlled by (or otherwise
         affiliated with) the Company by which Employee may also be employed or
         served by Employee, or any other geographic location in which Employee
         has specifically represented the interests of the Company or such other
         affiliated entity, during the twelve (12) months prior to the
         termination of Employee's employment, 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 1% 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 engaged in
         the same business as that conducted and carried on by the Company,
         without the Company's specific written consent to do so.

(b)      NON-SOLICITATION. Employee covenants and agrees that at all times
         during Employee's period of employment with the Company, and for a
         period of one (1) year after the date of termination of Employee's
         employment, whether such termination is voluntary or involuntary by
         wrongful discharge, or otherwise, or the date of the cessation of
         payments made to the Employee pursuant to Section 6 of this Agreement,
         whichever date is later. Employee will not directly or indirectly (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) canvass, solicit or accept any
         similar business from any customer of the Company or corporations
         affiliated with the Company; (iii) directly or indirectly 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; (iv) directly or indirectly disclose to any other person,
         firm or corporation the names or addresses of any of the customers of
         the Company or corporations affiliated with the Company; or (v)
         individually of through any person, firm, association or corporation
         with which Employee is now or may hereafter become associated, cause,
         solicit, entice, or induce any present or future employee of the
         Company, or any corporation affiliated with the Company to leave the
         employ of the Company, or such other corporation to accept employment
         with, or compensation from, the Employee or any such person, firm,
         association or corporation without the prior written consent of the
         Company.

(c)      NON-DISPARAGEMENT. Employee covenants and agrees that Employee shall
         not engage in any pattern of conduct that involves the making or
         publishing of written or oral statements or remarks (including, without
         limitation, the repetition or distribution of derogatory rumors,
         allegations, negative reports or comments) which are disparaging,
         deleterious or damaging to the integrity, reputation or good will of
         the Company, its management, or of management of corporations
         affiliated with the Company.

(c)      PROTECTED INFORMATION. Employee recognizes and acknowledges that
         Employee 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


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         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 business opportunities,
         marketing or business diversification plans, business development and
         bidding techniques, methods and processes, financial data and the like
         (collectively, the "Protected Information"). Employee therefore
         covenants and agrees that Employee 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.

8. ENFORCEMENT OF COVENANTS.

(a)      TERMINATION OF EMPLOYMENT AND FORFEITURE OF COMPENSATION. Employee
         agrees that any breach by Employee of any of the covenants set forth in
         Section 7 hereof during Employee's employment by the Company, shall be
         grounds for immediate dismissal of Employee and forfeiture of any
         accrued and unpaid salary, bonus, commissions or other compensation of
         such Employee as liquidated damages, which shall be in addition to and
         not exclusive of any and all other rights and remedies the Company may
         have against Employee.

(b)      RIGHT TO INJUNCTION. Employee acknowledges that a breach of the
         covenants set forth in Section 7 hereof will cause irreparable damage
         to the Company with respect to which the Company's remedy at law for
         damages will be inadequate. Therefore, in the event of breach of
         anticipatory breach of the covenants set forth in this section by
         Employee, Employee 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; (i) injunctions,
         both preliminary and permanent, enjoining or restraining such breach or
         anticipatory breach and Employee hereby consents to the issuance
         thereof forthwith and without bond by any court of competent
         jurisdiction; and (ii) recovery of all reasonable sums expended and
         costs, including reasonable attorney's fees, incurred by the Company to
         enforce the covenants set forth in this section.

(c)      SEPARABILITY OF COVENANTS. The covenants contained in Section 7 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 7 exceed the
         time, geographic, or occupational limitations permitted by applicable
         laws, Employee 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


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         proceeding. Employee and the Company further agree that the covenants
         in Section 7 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 Employee 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 7.

9. WITHHOLDING OF TAXES.

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

10. NON-DISCLOSURE OF AGREEMENT TERMS.

Employee agrees that Employee will not disclose the terms of this Agreement to
any third party other than Employee's immediate family, attorney, accountants,
or other consultants or advisors or except as may be required by any
governmental authority.

11. 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. Employee 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.

12. 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 Employee.

13. ENTIRE AGREEMENT; AMENDMENT.

This Agreement shall supersede any and all existing oral or written agreements,
representations, or warranties between Employee and the Company or any of its
subsidiaries or affiliated entities relating to the terms of Employee's
employment by the Company. It may not be amended except by a written agreement
signed by both parties.

14. GOVERNING LAW.

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


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15. 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 Employee:          At the address for Employee set forth below.

16. 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 8 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.


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


WHEELABRATOR TECHNOLOGIES, INC.


By:  /s/ Rodney R. Proto
    ---------------------------

Name:
      -------------------------

Title:  President/COO
       ------------------------

Date:
      -------------------------



EMPLOYEE


     /s/ Richard T. Felago
-------------------------------

Date:
      -------------------------

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


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

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