<PAGE>

                                EXHIBIT 10.40


                            CAMERON & ASSOCIATES
                             424 MADISON AVENUE
                                 FIFTH FLOOR
                              NEW YORK, NY 10017
November 21,1996


CONFIDENTIAL

Waste Recovery, Inc.
309 S. Pearl Expressway
Dallas, Texas 75201

Attention:     Thomas Earnshaw, President

Gentlemen:

This Letter Agreement (this "Agreement"') confirms the understanding among Waste
Recovery, Inc. (the "Company") and Cameron & Associates ("Cameron") relating to
the retention of Cameron as financial advisor to the Company in connection with
a merger or other similar transaction pursuant to which all or substantially all
of the assets and liabilities of U. S. Tire Recycling Partners, L.P. ("U. S.
Tire") will be acquired, directly or indirectly, by the Company (in whatever
form, the "Transaction").

     1.   Subject to the terms and provisions of this Agreement, the Company
hereby retains Cameron as financial advisor and Cameron hereby agrees to provide
the Company with financial advice in connection with the Transaction until the
earlier of the closing of the Transaction or the Termination Date (as
hereinafter defined).

     2.   The services performed and to be performed by Cameron as financial
advisor to the Company have included and will include the following:

          (a)  identification of U. S. Tire as a potential acquisition target;

          (b)  consultation with the Company regarding the structure of the
Transaction;

          (c)  consulting with the Company's counsel and other parties involved
with the Transaction;

          (d)  assistance with closing the Transaction;

          (e)  consultation with the Company regarding the integration of U. S.
Tire with and into the Company.

<PAGE>

     3.   As compensation for Cameron's services hereunder, the Company 
hereby agrees to issue to Cameron or its designees upon the closing of the 
Transaction 243,224 shares of fully paid and non-assessable common stock, no 
par value, of WRI (the "WRI Common Stock"), which shares shall be issued in 
the names and denominations shown on Schedule I hereto and shall have 
registration rights identical to those granted to U.S. Tire or its principals 
and partners in connection with the Transaction.

     4.   Each of the Company and Cameron shall have the right to terminate such
party's obligations under this Agreement upon written notice to the other party
hereto (the date of such termination being sometimes referred to herein as the
"Termination Date"); provided, however, that the termination of this Agreement
shall not affect the right of Cameron to receive compensation set forth in
paragraph 3, supra.

     5.   The Company agrees to indemnify and reimburse Cameron in accordance 
with the Indemnification Provisions attached hereto as Exhibit A as well as 
to provide contribution as therein provided and to perform all of the other 
provisions thereof, such Indemnification Agreement and the provisions thereof 
being incorporated herein in its entirety as if set forth in full.

     6.   The Company recognizes and confirms that Cameron, in acting pursuant
to this Agreement, will be using information from reports and other information
provided by others, including, without limitation, information provided by or on
behalf of the Company, and that Cameron does not assume responsibility for and
may rely, without independent verification, on the accuracy and completeness of
any such reports and information. The Company hereby warrants that any
information relating to the Company that is furnished to Cameron by or on behalf
of the Company will be fair and accurate and will not contain any untrue
statement of a material fact necessary in order to make the statements therein
not misleading in light of the circumstances under which such statements are
made.

     7.   This Agreement (a) shall be governed by and construed in accordance
with the internal laws, and not the law of conflicts, of the State of New York,
(b) incorporates the entire understanding of the parties with respect to the
subject matter hereof and supersedes all previous agreements should they exist
with respect thereto, (c) may not be amended or modified except in a writing
executed by the Company and Cameron and (d) shall be binding upon and inure to
the benefit of the Company and Cameron and their respective successors and
assigns. Each of the parties hereto expressly represents and warrants to the
other that such party has all requisite power and authority to enter into this
agreement and that this agreement constitutes the valid and legally binding
obligation of such party, enforceable in accordance with its terms.

     8.   The Company acknowledges that Cameron, in connection with its
engagement hereunder, is acting as independent contractor and that nothing in
this Agreement is intended to confer upon any other person any rights or
remedies hereunder or by reason hereof.

     9.   The Company acknowledges that Cameron has retained the services of
Crandall S. Connors, a shareholder and director of the Company, in connection
with providing to the Company the services described herein and that Connors
will receive compensation directly or indirectly from Cameron for his services
in connection with the engagement described herein.

     10.  The parties agree that all disputes, controversies or claims that may
arise between them (including their agents and employees) including, without
limitation, any dispute, controversy or claim arising out of or relating to this
Agreement or any other agreement, or the breach, termination or invalidity
thereof, whether entered into or arising prior, on or subsequent to the date
hereof, shall be submitted to, and determined by, binding arbitration and shall
be held in New York, New York. Any arbitration under this paragraph 9 shall be
conducted before a single arbitrator pursuant to the arbitration

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<PAGE>

rules then in effect of the American Arbitration Association, except to the 
extent such rules are inconsistent with this paragraph. The arbitrator shall 
be experienced in the field of corporate finance. The arbitrator shall apply 
the laws of the State of New York (without regard to conflict of law rules) 
in determining the substance of the dispute, controversy or claim and shall 
decide the same in accordance with applicable usages and terms of trade. The 
prevailing party in any such arbitration shall be entitled to recover its 
reasonable attorneys' fees, costs and expenses incurred in connection with 
the arbitration. Any award pursuant to such arbitration shall be final and 
binding upon the parties, and judgment on the award may be entered in any 
federal or state court sitting or located in Dallas County, Texas, or in any 
other court having jurisdiction. The provisions of this paragraph shall 
survive the expiration of the term of this Agreement.

     This agreement may be executed in two or more counterparts, each of which
shall be deemed to be an original, but all of which shall constitute one and the
same agreement. Please confirm that the foregoing is in accordance with your
understanding of our agreement by signing and returning to us a copy of this
letter.

                                        Very truly yours,
                                        CAMERON & ASSOCIATES



                                        Bv:
                                            ----------------------------------
                                        C. Rodney O'Connor, Its
                                                                ---------------

AGREED TO as of the date set forth
   above:


WASTE RECOVERY, INC.


By:
    --------------------------------
Thomas Earnshaw, Its President

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<PAGE>

                                  SCHEDULE I

     The WRI Common Stock to be issued as compensation to Cameron in connection
with the Engagement Letter dated November 20, 1996, shall be issued in the
following names and denominations.

     Registered Holder                            Number of Shares
     -----------------                            ----------------












<PAGE>

                                  EXHIBIT A

                         INDEMNIFICATION PROVISIONS

     Recognizing that transactions of the type contemplated in this 
engagement sometimes result in litigation and that Cameron's role is 
advisory, the Company agrees to indemnify and hold harmless Cameron and its 
affiliates, officers, directors, employees, agents and controlling persons, 
and specifically, but without limitation, Crandall S. Connors (collectively, 
the "Indemnified Parties"), from and against any losses, claims, damages and 
liabilities, joint or several, related to or arising in any manner out of any 
transaction, proposal or any other matter (collectively, the "Matters") 
related in any way to the engagement of Cameron hereunder, and will promptly 
reimburse the Indemnified Parties for all reasonable expenses (including 
reasonable fees and expenses of legal counsel) as incurred in connection with 
the investigation of, preparation for or defense of any pending or threatened 
claim related to or arising in any manner out of any Matter related in any 
way to the engagement of Cameron hereunder, or any action or other proceeding 
arising therefrom (collectively, "Proceedings"), whether or not such 
Indemnified Party is a formal party to any such Proceeding. Notwithstanding 
the foregoing, the Company shall not be liable in respect of any losses, 
claims, damages, liabilities or expenses that a court of competent 
jurisdiction shall have determined by final judgment resulted solely from the 
gross negligence, bad faith or willful misconduct of an Indemnified Party. 
The Company further agrees that it will not, without the prior written 
consent of Cameron, settle, compromise or consent to the entry of any 
judgment in any pending or threatened Proceeding in respect of which 
indemnification may be sought hereunder (whether or not either of Cameron or 
any Indemnified Party is an actual or potential party to such Proceeding), 
unless such settlement, compromise or consent includes an unconditional 
release of Cameron and each other Indemnified Party hereunder from all 
liability arising out of such Proceeding. It is further agreed that neither 
Cameron nor any other Indemnified Party will settle, compromise or consent to 
the entry of any judgment in any pending or threatened proceeding in respect 
of which indemnification may be sought hereunder without the prior written 
consent of the Company, which consent shall not be unreasonable withheld.

     The Company agrees that if any indemnification or reimbursement sought 
pursuant to this letter were for any reason not to be available to any 
Indemnified Party or insufficient to hold it harmless as and to the extent 
contemplated by this letter, then the Company shall contribute to the amount 
paid or payable by such Indemnified Party in respect of losses, claims, 
damages and liabilities in such proportion as is appropriate to reflect the 
relative benefits to the Company and its stockholders on the one hand, and 
Cameron on the other, in connection with the Matters to which such 
indemnification or reimbursement relates or, if such allocation is not 
permitted by applicable law, not only such relative benefits but also the 
relative faults of such parties as well as any other equitable 
considerations. It is hereby agreed that the relative benefits to the Company 
and/or its stockholders and to Cameron with respect to Cameron's engagement 
shall be deemed to be in the same proportion as (i) the total value paid or 
received or to be paid or received by the Company and/or its stockholders 
pursuant to the Matters (whether or not consummated) for which Cameron is 
engaged to render financial advisory services bears to (ii) the fees paid to 
Cameron in connection with such engagement. In no event shall the Indemnified 
Parties contribute or otherwise be liable for an amount in excess of the 
aggregate amount of fees actually received by Cameron pursuant to such 
engagement (excluding amounts received by Cameron as reimbursement of 
expenses).

     The Company further agrees that no Indemnified Party shall have any
liability (whether direct or indirect, in contract or tort or otherwise) to the
Company for or in connection with Cameron's engagement hereunder except for
losses, claims, damages, liabilities or expenses that a court of competent
jurisdiction shall have determined by final judgment result solely from the
gross negligence,

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<PAGE>

bad faith or willful misconduct of such Indemnified Party. The indemnity, 
reimbursement and contribution obligations of the Company shall be in 
addition to any liability which the Company may otherwise have and shall be 
binding upon and inure to the benefit of any successors, assigns, heirs and 
personal representatives of the Company or an Indemnified Party.

     The indemnity, reimbursement and contribution provisions set forth 
herein shall remain operative and in full force and effect regardless of (i) 
any withdrawal, termination or consummation of or failure to initiate or 
consummate any Matter referred to herein, (ii) any investigation made by or 
on behalf of any party hereto or any person controlling (within the meaning 
of Section 15 of the Securities Act of 1933, as amended, or Section 20 of the 
Securities Exchange Act of 1934, as amended) any party hereto, (iii) any 
termination or the completion or expiration of this letter or Cameron's 
engagement and (iv) whether or not Cameron shall, or shall not, be called 
upon to render any formal or informal advice in the course of such engagement.






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