IESI CORPORATION

                             1999 Stock Option Plan
                      Non-Qualified Stock Option Agreement


                                 January 1, 2004


To:  Charles F. Flood
     ----------------
         Employee/Optionee

         This Agreement confirms the grant of an option to you effective as of
January 1, 2004 (the "Effective Date") under the IESI Corporation 1999 Stock
Option Plan (as amended, the "Plan"), upon the terms and conditions described
herein. A copy of the Plan is being furnished to you concurrently with the
execution of this Agreement.

1.       Grant of Option.

         1.1 Pursuant to action of the Committee under the Plan, IESI
         Corporation (the "Company") hereby grants to you an option to purchase
         (hereinafter called the "Option"), subject to the terms and conditions
         hereinafter set forth, an aggregate of 14,670 shares of the Class A
         Voting Common Stock (the "Common Stock") of the Company (the "Option
         Shares") at a per share purchase price equal to One Hundred Dollars
         ($100.00) (the "Exercise Price"). This grant is a matter of separate
         inducement and is not in lieu of salary or other compensation for your
         services.

         1.2 The number of Option Shares and the Exercise Price shall be
         adjusted by the Committee, and you shall be entitled to such
         adjustment, upon the occurrence of any event described in Section 5 of
         the Plan. An equitable adjustment shall be determined by the Committee
         in good faith.

2.       Exercise and Term of the Option.

         2.1 Upon consummation of a firm commitment underwritten initial public
         offering (an "IPO") prior to January 1, 2005, the Option shall expire
         in its entirety and be null and void.

         2.2 Unless accelerated under paragraph 2.3 below or terminated pursuant
         to paragraph 2.1 above, this Option should become vested and fully
         exercisable on the eighth anniversary of the Effective Date.

         2.3 Notwithstanding the foregoing, the Option shall become fully vested
         and exercisable upon a Change in Control (as defined in your employment
         agreement in effect at such time). In the event that neither a Change
         in Control nor an IPO occurs prior to January 1, 2005, upon the
         effective date for the filing of a Registration Statement on Form S-1
         for an IPO after January 1, 2005 (the "Second IPO"), the exercisability
         of the Option shall be accelerated with respect to an additional 25% of
         the Option Shares on each January 1 after the Effective Date (including
         each January 1 occurring prior to the Second IPO).


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         2.4 In the event of your death or permanent disability or upon
         termination of your employment by the Company without Cause (as defined
         in your employment agreement in effect at such time) or by you with
         Good Reason (as defined in your employment agreement in effect at such
         time), this Option shall be exercisable pursuant to its terms by you
         (or your successor, administrator or executors in the case of your
         death) during the ten years (plus any replacement options or time
         extension to the Option) that this Option is outstanding.

3.       Certain Exercise Requirements.

         3.1 If fewer than the number of Option Shares then available for
         purchase pursuant to the Option are purchased at any time under this
         Agreement, you may purchase the remaining Option Shares at any
         subsequent time during the term of the Option. The Option shall expire
         in its entirety on the tenth anniversary of the Effective Date subject
         to earlier termination or expiration as herein provided. The Option
         shall not be exercised for fractional shares. Notation of any partial
         exercise will be made by the Company on Schedule 1 attached hereto.

         3.2 The Option is exercisable by you only while you are in the employ
         of, or providing service to, the Company or its subsidiaries as an
         employee, member of the Board or advisor or consultant, except as
         otherwise provided in the Plan.

4.       Method of Exercise and Payment.

         4.1 Exercise of the Option shall be by written notice, in a form
         substantially as attached to this Agreement as Exhibit A, delivered or
         mailed to the Secretary of the Company at its principal office
         specifying the number of Option Shares as to which the Option is being
         exercised, and identifying the Option by date of grant. Such notice
         shall be accompanied by the full amount of the Exercise Price for the
         Option Shares to be purchased in cash or by certified check, or by
         delivery of whole shares of Common Stock owned by you for at least six
         months ("Purchased Stock") in full or partial payment of the Exercise
         Price. You will receive a credit against the purchase price of the
         Option Shares as to which the Option is being exercised equal to the
         Fair Market Value of such Purchased Stock as of the close of the
         business day immediately preceding the date of delivery of the notice
         of election to exercise the Option. Any Purchased Stock being delivered
         must be accompanied by a duly executed assignment to the Company in
         blank or with stock powers attached, together with a written
         representation that such shares of Purchased Stock are owned by you
         free and clear of all liens, claims and encumbrances and such other
         representations as the Company shall determine. Only whole shares of
         Purchased Stock with a Fair Market Value up to, but not exceeding, the
         Exercise Price of the Option Shares as to which the Option is being
         exercised will be accepted hereunder. Purchased Stock may be delivered
         at the office of the Company or at the offices of the transfer agent
         appointed for the transfer of shares of the Company. The Committee may,
         in its discretion, refuse to accept any tendered payment in the form of
         Purchased Stock, in which case it shall deliver the tender back to you
         and notify you of its refusal. In order to preserve your rights under
         any Option, you must, within three business days after such
         notification, tender to the Company the cash or certified check
         required to pay for the Option Shares with respect to which such Option
         is being exercised.

         4.2 It shall be a condition to the Company's obligation to deliver the
         Option Shares upon exercise of any portion of the Option that you pay,
         or make provisions satisfactory to the Company, for the payment of any

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         taxes which the Company or any subsidiary is obligated to withhold or
         collect with respect to such exercise or otherwise with respect to the
         Option.

5. Transferability. Except as provided herein, your rights under the Option may
not be transferred or encumbered by transferred by you, except by will or the
laws of descent and distribution, or pursuant to a qualified domestic relations
order (as defined in Section 414(p) of the Code).

6. Registration. The Company shall not be obligated to file any registration
statement under the Act or any applicable state securities laws to permit
exercise of the Option or to issue any Option Shares in violation of the Act or
any applicable state securities laws. Certificates for Option Shares, when
issued, shall have substantially the following legend, or statements of other
applicable restrictions, endorsed thereon, and may not be immediately
transferable:

                  THE SHARES OF STOCK REPRESENTED BY THIS CERTIFICATE HAVE NOT
                  BEEN REGISTERED UNDER THE SECURITIES ACT OF 1993, AS AMENDED,
                  OR ANY STATE SECURITIES LAWS. THE SHARES MAY NOT BE OFFERED
                  FOR SALE, SOLD, PLEDGED, TRANSFERRED OR OTHERWISE DISPOSED OF
                  UNTIL THE HOLDER HEREOF PROVIDES EVIDENCE SATISFACTORY TO THE
                  ISSUER (WHICH, IN THE DISCRETION OF THE ISSUER, MAY INCLUDE AN
                  OPINION OF COUNSEL SATISFACTORY TO THE ISSUER) THAT SUCH
                  OFFER, SALE, PLEDGE TRANSFER OR OTHER DISPOSITION WILL NOT
                  VIOLATE APPLICABLE FEDERAL OR STATE LAWS.

         The foregoing legend may not be required for Option Shares issued
pursuant to an effective registration statement under the Act and in accordance
with applicable state securities laws.

7. Incorporation of Plan Provisions. This Agreement is made pursuant to the Plan
and is subject to all the terms and provisions of the Plan as if the same were
fully set forth herein. Capitalized terms not otherwise defined herein shall
have the meanings set forth for such terms in the Plan.

8. Shareholder Rights. You shall not be, nor have any of the rights or
privileges of, a holder of Common Stock in respect of any Option Shares
purchasable upon the exercise of the Option, including any rights regarding
voting or payment of dividends, unless and until a certificate representing such
Option Shares has been delivered to you.

9. Miscellaneous. This Agreement: (a) shall be binding upon and inure to the
benefit of any successor of the Company and your successors, assigns and estate,
including your executors, administrators and trustees; (b) shall be governed by
the laws of the State of Delaware and any applicable laws of the United States;
and (c) may not be amended except in writing and signed by both parties hereto.

         It is your intent and that of the Company that this Option is not
classified as an "incentive stock option" within the meaning of Section 422(b)
of the Code, and that any ambiguities in construction shall be interpreted in
order to effectuate such intent.



<PAGE>


         To confirm your acceptance of the foregoing, please sign and return one
copy of this Agreement to Thomas J. Cowee, Senior VP and CFO, IESI Corporation.

                               AGREED AND ACCEPTED
                                 JANUARY 1, 2004


 /s/ Charles F. Flood                           IESI CORPORATION
--------------------------------------
Employee/Optionee


Charles F. Flood                                By: /s/ Jeffrey J. Keenan
--------------------------------------            ------------------------------
Print Employee/Optionee Name                      Jeffrey J. Keenan
                                                  Chairman


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                                                                       EXHIBIT A

                                IESI CORPORATION

                           Stock Option Exercise Form

                                 --------------
                                     (Date)



IESI Corporation
6125 Airport Freeway
Suite 202
Haltom City, TX 76117
Attention: Thomas J. Cowee, Senior VP and CFO


Dear Sir/Madam:

         The undersigned elects to exercise the Option to purchase ______ shares
of the Class A Voting Common Stock of IESI Corporation (the "Company") under and
pursuant to the Non-Qualified Stock Option Agreement (the "Agreement") between
the Company and the undersigned dated as of January 1, 2004.

                  Delivered herewith in payment of the option price is:

                  1.       a check in the amount of $_____ and/or

                  2.       certificates for ___ shares of common stock of the
                           Company, valued at $___________ with appropriate
                           stock powers attached thereto, which shares are owned
                           by the undersigned free and clear of all liens,
                           claims and encumbrances.

         If the shares of the Company's Class A Voting Common Stock to be
delivered to the undersigned upon this Option exercise are not subject to a
current registration statement filed under the Securities Act of 1933, as
amended (the "Act"), I hereby represent and agree that all of the shares of
common stock being purchased hereunder are being acquired for investment and not
with the view to the sale or distribution thereof, and that I understand that
such shares of common stock are not currently registered under the Act and may
not be sold, pledged, hypothecated, alienated or otherwise assigned or
transferred in the absence of registration under the Act or an opinion of
counsel, which opinion is satisfactory to the Company to the effect that such
registration is not required.

         I hereby authorize the Company or any subsidiary corporation by which I
am employed to withhold from any cash compensation paid to me, or in my behalf,
an amount sufficient to discharge any Federal, State and local wage withholding
taxes imposed on the Company, or the subsidiary corporation by which I am
employed, in respect of my Option exercise of the Option. I agree that the
Company, or the subsidiary corporation by which I am employed, may, in its
discretion, hold the stock certificate to which I am entitled upon exercise of

<PAGE>

the Option, as security for the payment of the aforementioned withholding tax
liability, until cash sufficient to pay that liability has been accumulated.

                                                Sincerely,




                                                Employee/Optionee




                                                Print Employee/Optionee Name


<PAGE>


SCHEDULE 1
NOTATION AS TO PARTIAL EXERCISE

                Number of        Balance of      Company Secretary
Date of         Shares           Shares on       or Ass't Secretary     Notation
Exercise        Purchased        Option          Signature              Date
--------        ---------        ------          ---------              ----