Exhibit 10.1
EMPLOYMENT AGREEMENT
     This EMPLOYMENT AGREEMENT (the “Agreement”) is made and entered into on
this 2nd day of October, 2011 by and between Waste Management, Inc. (the
“Company”) and Steven C. Preston (the “Executive”).
     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 begin on
October 1, 2011 (“Employment Date”), and may be terminated by either party
pursuant to Section 5 below. 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 Executive Vice-President — Finance, Recycling,
and Energy Services. In such capacity, Executive shall perform such duties and
have the power, authority, and functions of the Company’s principal financial
officer and head of the Recycling and Energy Services business units, and shall
perform such other duties, and shall have such other power, authority, and
functions as may be deemed appropriate for the position and assigned to
Executive by the Chief Executive Officer or the Board of Directors (the “Board”)
of the Company. Until the first anniversary of the Employment Date, the Company
shall maintain an office for Executive at its Hartford, Connecticut location in
order that Executive may continue to assist in the integration and coordination
of the Oakleaf operations.
     (b) Executive shall devote substantially all of his working time, attention
and energies to the business of the Company, and its 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 10 of this Agreement), be involved in charitable and
professional activities, and, with the prior written 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 or create a
conflict of interest (however, the Board does not typically allow officers to
serve on more than one public company board at a time).
     4. Compensation and Benefits.
     (a) Base Salary. During the Employment Period, the Company shall pay
Executive a base salary at the annual rate of Five Hundred Eighty Thousand and
00/100ths Dollars ($580,000.00) 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

 

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standard payroll practice for its executive officers. Once increased, Base
Salary shall not be reduced except by mutual agreement.
     (b) Annual Bonus. Executive’s guaranteed annual bonus for calendar year
2011 (“2011 Bonus”) shall be Five Hundred Ten Thousand and 00/100ths Dollars
($510,000.00) and based on services rendered from the execution of the Agreement
through December 31, 2011. It is expressly understood and agreed that Executive
will not be eligible for nor will he receive any additional bonus for calendar
year 2011 from either the Company or Oakleaf Global Holdings, Inc., or any of
their affiliates. The 2011 Bonus will be paid in calendar year 2012, at the same
time as similarly situated executive employees receive or otherwise would have
received their bonuses.
     Beginning January 1, 2012 and continuing throughout the Employment Period,
Executive shall be entitled to participate in an annual incentive compensation
plan of the Company, as established by the Management Development and
Compensation Committee (“Compensation Committee”) of the Board from time to
time. The Executive’s target annual bonus will be eighty-five percent (85%) of
his Base Salary in effect for such year (the “Target Bonus”), and his actual
annual bonus may range from 0% to 170% of Base Salary (i.e., a maximum possible
bonus of two times the Target Bonus), and will be determined based upon (i) the
achievement of certain corporate financial and/or performance goals, as may be
established and approved from time to time by the Compensation Committee of the
Board, and (ii) the achievement of personal performance goals as may be
established by the Chief Executive Officer or the Board of Directors. The annual
bonus will be paid at such time and in such manner as set forth in the annual
incentive compensation plan document.
     (c) Benefit Plans and Vacation. Subject to the terms of such plans,
Executive shall be eligible to participate in or receive benefits under any
profit sharing plan, salary deferral 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 similarly-situated executive employees. The Company shall not be obligated to
institute, maintain, or refrain from changing, amending, or discontinuing any
benefit plan, so long as such changes are similarly applicable to
similarly-situated employees generally.
     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. Vacation
not taken in the calendar year in which it is granted cannot be carried forward
to any subsequent year.
     (d) Expense Reimbursement. The Company shall promptly reimburse Executive
for the ordinary and necessary business expenses incurred by Executive in the
performance of his duties hereunder in accordance with the Company’s customary
practices applicable to executive officers. The reimbursement of expenses during
a year will not affect the expenses eligible for reimbursement in any other
year. In no event shall any expense be reimbursed after the last day of the year
following the year in which the expense was incurred.

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     (e) Stock Options. Subject to the approval of the Compensation Committee of
the Board, Executive shall receive a Stock Option Award under the Company’s
Stock Incentive Plan on October 4, 2011. The award, vesting, and exercise of all
options shall be subject to and governed by the provisions of the applicable
Waste Management, Inc. Stock Incentive Plan.
     (f) Relocation to Houston. Prior to the first year anniversary of the
Employment Date, Executive will relocate his primary residence to the Houston,
Texas area. Executive’s relocation of his residence to Houston will be eligible
for coverage under the Company’s relocation policy. It is expressly agreed to
and understood that should Executive resign without “Good Reason” (as that term
is defined in Section 5(d) below) during the twelve-month period following such
relocation, then Executive shall be required to reimburse the Company for the
prorated portion of the relocation expense based on a 365-day proration
schedule.
     (g) Other Perquisites. Executive shall be entitled to all perquisites
provided to Executive and/or Senior Vice Presidents of the Company as approved
by the Compensation Committee of the Board, and as they may exist from time to
time.
     5. Termination of Employment.
     Executive’s employment hereunder may be terminated during the Employment
Period 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’s becoming “Totally Disabled.” For purposes of this
Agreement, Executive shall be considered “Totally Disabled” if Executive has
become physically or mentally disabled so as to render Executive incapable of
performing the essential functions of his position (with or without reasonable
accommodations) and such disability is expected to result in death or to last
for a continuous period of at least 12 months, provided that such condition
constitutes a “disability” within the meaning of Section 409A of the Internal
Revenue Code. Executive’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.
     (c) Termination by the Company for Cause. The Company may terminate
Executive’s employment hereunder for “Cause” at any time after providing a
Notice of Termination for Cause to Executive.

  (i)   For purposes of this Agreement, the term “Cause” means any of the
following: Executive’s (A) willful or deliberate and continual refusal to
perform Executive’s employment duties reasonably requested by the Company after
receipt of written notice to Executive of such failure to perform, specifying
such failure (other than as a result of Executive’s sickness, illness or injury)
and Executive’s failure to cure such nonperformance within ten (10) days of
receipt of said written notice;

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    (B)breach of any statutory or common law duty of loyalty to the Company; (C)
conviction of, or plea of nolo contendre to, any felony; (D) willful or
intentional cause of material injury to the Company, its property, or its
assets; (E) disclosure or attempted disclosure to any unauthorized person(s) of
the Company’s proprietary or confidential information; (F) material violation or
a repeated and willful violation of the Company’s published policies or
procedures, including but not limited to, the Company’s Code of Business Conduct
and Ethics (or any successor policy) then in effect; or (G) breach of any of the
covenants set forth in Section 10 hereof.

  (ii)   For purposes of this Agreement, the phrase “Notice of Termination for
Cause” shall mean a written notice that shall indicate the specific termination
provision or provisions in Section 5(c)(i) relied upon, and shall set forth in
reasonable detail the facts and circumstances which provide the basis for
termination for Cause.

     (d) Voluntary Termination by Executive. Executive may terminate his
employment hereunder with or without Good Reason at any time upon written notice
to the Company.

  (i)   A termination for “Good Reason” means a resignation of employment by
Executive by written notice (“Notice of Termination for Good Reason”) given to
the Company’s Chief Executive Officer within ninety (90) days after the
occurrence of the Good Reason event, unless such circumstances are substantially
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: (A) the Company materially diminishes Executive’s core duties or
responsibility for those core duties, so as to effectively cause Executive to
(1) no longer be performing the duties of principal financial officer or (2) no
longer have executive management responsibility over some significant business
operations of the Company (except in each case in connection with the
termination of Executive’s employment for Death, Total Disability, or Cause, or
temporarily as a result of Executive’s illness or other absence); (B) in the
event of the Company’s becoming a fifty percent or more subsidiary of any other
entity, the Company materially diminishes the duties, authority or
responsibilities of the person to whom Executive is required to report;
(C) removal or the non-reelection of the Executive from an officer position with
the Company; (D) any material breach by the Company of any provision of this
Agreement; or (E) 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, resulting in a material negative change in
the employment relationship; or (F) in the event that Executive no longer
directly reports to the current Chief Executive Officer, David P. Steiner.

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  (ii)   A “Notice of Termination for Good Reason” shall mean a notice that
shall indicate the specific termination provision or provisions relied upon and
shall set forth in reasonable detail the facts and circumstances claimed to
provide a basis for Termination for Good Reason. The Notice of Termination for
Good Reason shall provide for a date of termination not less than thirty
(30) 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)(A) or (B), the date may be twenty (20) days after the giving of
such notice.

     (e) Termination by the Company without Cause. The Company may terminate
Executive’s employment hereunder without Cause at any time upon written notice
to Executive.
     (f) Effect of Termination. Upon any termination of employment for any
reason, 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 in a
manner as set forth in Section 5 above, Executive shall be entitled to the
compensation and benefits provided under this Section 6, in each case subject to
potential reduction as may be required by Section 22, as applicable to the form
of 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 accrued but unused vacation to the date of employment
termination, and any earned but unpaid bonuses for any prior calendar year.
Executive shall also be eligible for a pro-rata bonus or incentive compensation
payment for the calendar year of his employment termination to the extent such
awards are made to other senior executives of the Company and paid at the same
time as other senior executives are paid.

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

     (b) Termination by Reason of Total Disability. In the event that
Executive’s employment is terminated by the Company by reason of Executive’s
Total Disability (as determined in accordance with Section 5(b)), the Company
shall pay the following amounts to Executive:

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  (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 accrued but unused vacation to the date of termination, and
any earned but unpaid bonuses for any prior calendar year. Executive shall also
be eligible for a pro-rata bonus or incentive compensation payment for the
calendar year of his employment termination to the extent such awards are made
to other senior executives of the Company and paid at the same time as other
senior executives are paid.

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

     (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 accrued but unused vacation to the date of termination, and
any earned but unpaid bonuses for any prior calendar year.

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

     (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 accrued but unused vacation to the date of termination, and
any earned but unpaid bonuses for any prior calendar year.

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

     (e) Termination by the Company Without Cause Outside a Change in Control
Period; Termination by Executive for Good Reason Outside a Change in Control
Period. In the event that Executive’s employment is terminated by the Company
outside a Change in Control Period (as defined in Section 7 below) for reasons
other than death, Total Disability or Cause, or Executive terminates his
employment for Good Reason outside of a Change in Control Period, the Company
shall pay the following amounts to Executive:

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  (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 accrued but unused vacation to the date of termination, and
any earned but unpaid bonuses for any prior calendar year.

  (ii)   Any benefits accrued through the date of termination to which Executive
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)   Subject to Executive’s execution of the Release (as defined in
Section 7), Executive shall 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’s employment is terminated.

  (iv)   Subject to Executive’s execution of the Release (as defined in
Section 7), an amount equal to two (2) times the sum of Executive’s Base Salary
plus his Target Annual Bonus (in each case, as then in effect), of which
one-half of such amount shall be paid in a lump sum within the calendar quarter
in which the 60th day following Executive’s employment termination date falls
and one-half of such amount shall be paid during the two (2) year period
beginning in the calendar quarter within which the 60th day following
Executive’s employment termination date falls and continuing at the same time
and in the same manner as Base Salary would have been paid if Executive had
remained in active employment until the end of such period.

  (v)   Subject to Executive’s execution of the Release (as defined in
Section 7) and Executive’s completion of required enrollment elections, the
Company will continue for Executive and Executive’s spouse and eligible
dependents coverage under the Company’s health benefit plan and disability
benefit plans, in which Executive was a participant at any time during the
twelve-month period prior to the date of termination (subject to the payment by
Executive of the applicable premium at the same rate as an active employee would
pay for the same coverage), until the earliest to occur of (A) twenty-four
(24) months after the employment termination date; (B) Executive’s death
(provided that benefits provided to Executive’s spouse and dependents shall not
terminate until twenty-four (24) months after the employment termination date);
or (C) with respect to any particular plan, the date Executive becomes eligible
to participate in a comparable benefit provided by a subsequent employer. In the
event that Executive’s continued participation in any such Company plan is
prohibited, the Company will arrange to provide Executive with benefits
substantially similar to those which Executive would have been entitled to
receive under this paragraph on a basis which provides Executive with no
additional after-tax cost. Such continued coverage under this paragraph shall be
in satisfaction of the Company’s obligation under COBRA.

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     (f) Suspension and Refund of Termination Benefits for Subsequently
Discovered Cause. Notwithstanding any provision of this Agreement to the
contrary, if within one (1) year of Executive’s employment termination date for
any reason other than for Cause, it is determined by the Company that Executive
could have been terminated for Cause, then to the extent permitted by law:

  (i)   the Company may elect to cancel any and all payments of any benefits
otherwise due Executive, but not yet paid, under this Agreement or otherwise;
and

  (ii)   upon written demand by the Company, Executive shall refund to the
Company any amounts, plus interest, previously paid by Company to Executive
pursuant to Subsections 6(e)(iii), 6(e)(iv) or 6(e)(v), less one thousand
dollars ($1,000) which Executive shall be entitled to retain as fully sufficient
consideration to support and maintain in effect any contractual obligations that
Executive has to the Company prior to the refund, including the Release as
defined herein.

     7. Resignation by Executive for Good Reason or Termination by Company
Without Cause During a Change in Control Period.
     (a) Certain Terminations During a Change in Control Period. Subject to
reduction required by Section 22, in the event a Change in Control occurs and
(x) Executive terminates his employment for Good Reason during a Change in
Control Period, or (y) the Company terminates Executive’s employment without
Cause (and for reason other than Death of Total Disability) during a Change in
Control Period, the Company shall, subject to Executive’s execution of the
Release (as defined in this Section 7), pay the following amounts to Executive:

  (i)   The payments and benefits provided for in Section 6(e)(iv) and (v) in
the same form as provided for therein.

  (ii)   Executive shall also receive a bonus or incentive compensation payment
for the calendar year of the employment termination, payable at 100% of the
maximum bonus available to Executive, pro-rated as of the employment termination
date. Such bonus payment shall be payable within five (5) days after the later
of the effective date of Executive’s termination or the Change in Control.

     (b) Certain Definitions.

  (i)   For purposes of this Agreement, “Change in Control” means the first to
occur on or after the date on which this Agreement is first signed, the
occurrence of any of the following events:

  (A)   any Person, or Persons acting as a group (within the meaning of
Section 409A of the Internal Revenue Code), directly or indirectly, including by
purchases, mergers, consolidation or otherwise, acquires ownership of securities
of the Company that, together with stock held by such Person or

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      Persons, represents fifty percent (50%) or more of the total voting power
or total fair market value of the Company’s then outstanding securities;

  (B)   any Person, or Persons acting as a group (within the meaning of
Section 409A of the Internal Revenue Code), acquires, (or has acquired during
the 12-month period ending on the date of the most recent acquisition by such
Person or Persons) directly or indirectly, including by purchases, merger,
consolidation or otherwise, ownership of the securities of the Company that
represent thirty percent (30%) or more of the total voting power of the
Company’s then outstanding voting securities;

  (C)   the following individuals cease for any reason to constitute a majority
of the number of directors then serving during any 12-month period: individuals
who, at the beginning of the 12-month period, 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 or 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 at least
a majority of the directors before the date of such appointment or election or
whose appointment, election or nomination for election was previously so
approved or recommended;

  (D)   a Person or Persons acting as a group acquires (or has acquired during
the 12-month period ending on the date of the most recent acquisition by such
Person or Persons) assets from the Company that have a total gross fair market
value equal to or more than forty percent (40%) of the total gross fair market
value of all of the assets of the Company immediately before such acquisition or
acquisitions, other than a sale or disposition by the Company of such assets to
an entity, at least fifty percent (50%) of the combined voting power of the
voting securities of which are owned by the Company or by the stockholders of
the Company in substantially the same proportions as their ownership of the
Company immediately prior to such sale.

  (ii)   For purposes of this Agreement, “Change in Control Period” means the
period commencing on the date occurring six months immediately prior to the date
on which a Change in Control occurs and ending on the second anniversary of the
date on which a Change in Control occurs.

  (iii)   For purposes of this Agreement, “Exchange Act” means the Securities
and Exchange Act of 1934, as amended from time to time.

  (iv)   For purposes of this Section 7, “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

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      Company, (3) an employee benefit plan of the Company, (4) an underwriter
temporarily holding securities pursuant to an offering of such securities or
(5) 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.

  (v)   For purposes of this Agreement, “Release” means that specific document
which the Company shall present to Executive for consideration and execution
after any applicable termination of employment, wherein if he agrees to such, he
will irrevocably and unconditionally release and forever discharge the Company,
it subsidiaries, affiliates and related parties from any and all causes of
action which Executive at that time had or may have had against the Company
(excluding any claim for indemnity under this Agreement, any claim under state
workers’ compensation or unemployment laws, or any claim under the Consolidated
Omnibus Budget Reconciliation Act of 1985 (“COBRA”)).

     8. No Other Benefits or Compensation. Except as may be provided under this
Agreement, or under the terms of any incentive compensation, employee benefit,
or fringe benefit plan applicable to Executive at the time of Executive’s
employment termination or resignation, 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 employment termination or
resignation.
     9. No Mitigation. In the event of any termination of employment hereunder,
Executive shall be under no obligation to seek other employment, and there shall
be no offset against any amounts due Executive under this Agreement on account
of any remuneration attributable to any subsequent employment that Executive may
obtain.

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     10. Protective Covenants. In reliance upon Executive’s promise to abide by
the various protective covenants and restrictions provided for below, the
Company will continue to provide Executive with one or more of the following:
(i) portions of the Company’s Confidential Information (through a computer
password or other means) and updates thereto; (ii) authorization to communicate
with customers and prospective customers, and other business relationship
providers, to help Executive develop goodwill for Company; and/or
(iii) authorization to participate in specialized training related to Company’s
business. Executive agrees that each of Executive’s covenants in Section 10 of
this Agreement (the “Protective Covenants”) is reasonable and necessary to
protect a legitimate business interest of the Company, and that no one
restriction or obligation (such as the confidentiality obligations) would be
sufficient to protect the Company’s interests standing alone due to the variety
of different interests involved, the difficulty of identifying and addressing a
breach before irreparable harm has occurred, and the need to prevent irreparable
harm. Employee understands and agrees that one purpose of this Agreement is to
enhance, maintain, and not diminish, all common law and contract protections
that have been in effect for the parties concerning Confidential Information
that Employee has received in the past. In addition, Executive agrees that any
and all rights Executive may have to incentive compensation, stock or
stock-related compensation, and/or severance compensation, whether provided for
in this Agreement or elsewhere, are provided in reliance upon Executive’s
agreement to abide by and not challenge the validity of the Protective Covenants
described below.
     (a) Company Property, Computer Systems, and Inventions. All written
materials, records, data, and other documents prepared or possessed by Executive
during Executive’s employment with the Company are the Company’s property.
Executive understands that access to the Company’s computer systems is
authorized for activities that are consistent with the business purposes of the
Company, that benefit the Company (consistent with Company policies and/or
guidelines as they may be modified from time to time), and that do not knowingly
cause harm to the Company. The use of the Company computer systems to pursue a
competing enterprise, or prepare to compete with the Company, is unauthorized
and strictly prohibited. All information, ideas, concepts, improvements,
discoveries, and inventions that are conceived, made, developed, or acquired by
Executive individually or in conjunction with others during Executive’s
employment (whether during business hours or not and whether on the Company’s
premises or not) which relate to or are derived from the Company’s business,
products, property, resources or services are the Company’s sole and exclusive
property. Executive does hereby grant and assign to the Company (or its nominee)
Executive’s entire right, title and interest in and to all inventions, original
works of authorship, developments, concepts, improvements, designs, discoveries,
and ideas of commercial use or value that either: (i) relate to the Company’s
business, or actual or demonstrably anticipated research or development activity
of the Company; or (ii) are derived from, suggested by, or result of work
performed for the Company, or were created, discovered, or conceived with the
aid of Company property (“Company IP”). While employed, and as necessary
thereafter, Executive will assist Company to obtain patents or copyrights on
Company IP, and will upon request execute all documents and otherwise cooperate
in the Company’s efforts to obtain the copyrights, patents, licenses, and other
rights and interests that would be necessary to secure for the Company the
complete benefit of Company IP. To the extent state law where Executive resides
requires it (such as under Cal. Lab. Code, § 2870, or comparable laws),
Executive is notified that no provision in this Agreement requires

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Executive to assign any of rights to an invention for which no equipment,
supplies, facility, or trade secret information of the Company was used and
which was developed entirely on Executive’s own time, unless (i) the invention
relates at the time of conception or reduction to practice of the invention,
(A) to the business of the Company, or (B) to the Company’s actual or
demonstrably anticipated research or development, or (ii) the invention results
from any work performed by Executive for the Company. This paragraph is intended
to compliment and supplement, not replace, any additional written agreement(s)
the parties may have regarding Company IP. All memoranda, notes, records, files,
correspondence, drawings, manuals, models, specifications, computer programs,
maps, and all other documents, data, or materials of any type embodying such
information, ideas, concepts, improvements, discoveries, and inventions are the
Company’s property. At the termination of Executive’s employment with the
Company for any reason, Executive shall return all of the Company’s documents,
data, or other Company property to the Company and shall not retain any copies
of such property, in any form (tangible or intangible), without the express
written consent of the Company.
     (b) Confidential Information; Non-Disclosure. Executive acknowledges that
the business of the Company is highly competitive and that Executive’s position
is one where the Company will provide Executive with access to “Confidential
Information” relating to the business of the Company and its affiliates.
Executive further acknowledges that protection of such Confidential Information
against unauthorized disclosure and use is of critical importance to the Company
and its affiliates in maintaining their competitive advantage. Executive
understands that it shall be his responsibility to handle and use “Confidential
Information” in a manner that does not violate Company policies or knowingly
cause harm to the Company. Accordingly, during employment and for so long
thereafter as the information remains qualified as “Confidential Information,”
Executive agrees to maintain the confidentiality of “Confidential Information”
and not to engage in any unauthorized use or disclosure of such information.
     For purposes of this Agreement, “Confidential Information” refers to an
item of information, or a compilation of information, in any form (tangible or
intangible), related to the Company’s business that (i) the Company has not
intentionally made public or authorized public disclosure of, and (ii) is not
generally known to the public or to other persons who might obtain value or
competitive advantage from its disclosure or use, through proper means.
Confidential Information will not lose its protected status under this Agreement
if it becomes known to the public or to other persons through improper means
such as the unauthorized use or disclosure of the information by Executive or
another person. Confidential Information includes, but is not limited to: (i)
Market Business Strategy (MBS) data, the Company Transformation Change
processes, MBS Plans, Business Improvement Process (BIP), Fleet Planning, Public
Sector Pro-formas, Letters of Intent, Route Manager and District Manager
Training Programs, internal information regarding acquisition targets,
divestiture targets, and mergers, Real Estate Market Area Analysis Mapping and
Real Estate Owned and Leased Property Data and Reporting; (ii) Company’s
business plans and analysis, customer and prospect lists; compilations of names
and other individualized information concerning customers, investors, and
business affiliates (such as contact name, service provided, pricing for that
customer, type and amount of services used, credit and financial data, and/or
other information relating to the Company’s relationship with that customer);
pricing strategies and price curves; marketing plans and strategies, research
and development data, buying practices, human resource information and personnel
files (including

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salaries of management level personnel), financial data, operational data,
methods, techniques, technical data, know-how, innovations, computer programs,
un-patented inventions, and trade secrets; and (iii) information about the
business affairs of third parties (including, but not limited to, clients and
acquisition targets) that such third parties provide to Company in confidence.
     Confidential Information will include trade secrets, but an item of
Confidential Information need not qualify as a trade secret to be protected by
this Agreement. Company’s confidential exchange of information with a third
party for business purposes will not remove it from protection under this
Agreement. Executive acknowledges that items of Confidential Information are
Company’s valuable assets and have economic value, actual or potential, because
they are not generally known by the public or others who could use them to their
own economic benefit and/or to the competitive disadvantage of the Company, and
thus, should be treated as Company’s trade secrets.
     (c) Unfair Competition Restrictions. Ancillary to the rights provided to
Executive following employment termination, the Company’s provision of
Confidential Information, specialized training, and/or goodwill support to
Executive, and Executive’s agreements regarding the use of same, and in order to
protect the value of any restricted stock, stock options, or other stock-related
compensation, training, goodwill support and/or the Confidential Information
described above, the Company and Executive agree to the following provisions
against unfair competition. Executive agrees that for a period of two (2) years
following the termination of employment for any reason (“Restricted Term”),
Executive will not, directly or indirectly, for Executive or for others,
anywhere in the United States (including all parishes in Louisiana, and Puerto
Rico), Canada, the United Kingdom, or the People’s Republic of China (the
“Restricted Area”) do the following, unless expressly authorized to do so in
writing by the Chief Executive Officer of the Company:

      Engage in, or assist any person, entity, or business engaged in, the
selling or providing of products or services that would displace the products or
services that (i) the Company is currently in the business of providing and was
in the business of providing, or was planning to be in the business of
providing, at the time Executive was employed with the Company, and (ii) that
Executive had involvement in or received Confidential Information about in the
course of employment; the foregoing is expressly understood to include, without
limitation, the business of solid waste disposal, collection, transfer, storage,
recycling and resource recovery, waste-to-energy conversion, landfill operation,
waste compacting, management and/or brokering of waste disposal, reduction,
recycling and related services, and development of beneficial-use projects for
landfill gas.

During the Restricted Term, Executive cannot engage in any of the enumerated
prohibited activities in the Restricted Area by means of telephone,
telecommunications, satellite communications, correspondence, or other contact
from outside the Restricted Area. Executive further understands that the
foregoing restrictions may limit his ability to engage in certain

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businesses during the Restricted Term, but acknowledges that these restrictions
are necessary to protect the Confidential Information the Company has provided
to Executive.
     A failure to comply with the foregoing restrictions will create a
presumption that Executive is engaging in unfair competition. Executive agrees
that this Section defining unfair competition with the Company does not prevent
Executive from using and offering the skills that Executive possessed prior to
receiving access to Confidential Information, confidential training, and
knowledge from the Company. This Agreement creates an advance approval process,
and nothing herein is intended, or will be construed as, a general restriction
against the pursuit of lawful employment in violation of any controlling state
or federal laws. Executive shall be permitted to engage in activities that would
otherwise be prohibited by this covenant if such activities are determined in
the sole discretion of the Chief Executive Officer of the Company in writing to
be of no material threat to the legitimate business interests of the Company.
     (d) Non-Solicitation of Customers. For the Restricted Term, Executive will
not, in person or through the direction or control of others, call on, service,
or solicit competing business from a Covered Customer, or induce or encourage
any such Covered Customer or other source of ongoing business to stop doing
business with Company. A “Covered Customer” is any Company customer (person or
entity) for which Executive had business-related contact or dealings with, or
received Confidential Information about, in the two (2) year period preceding
the termination of Executive’s employment with the Company for any reason.
     (e) Non-Solicitation of Employees. During Executive’s employment, and for
the Restricted Term, Executive will not, in person or through the direction or
control of others, call on, solicit, encourage, or induce any other employee or
officer of the Company or its affiliates whom Executive had contact with,
knowledge of, or association within the course of employment with the Company to
terminate his or her employment, and will not assist any other person or entity
in such a solicitation.
     (f) Non-Disparagement. During Executive’s employment, and for the
Restricted Term, Executive covenants and agrees that Executive 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.
     (g) Protected Communications. Nothing in this Agreement (particularly
nothing in Paragraphs 10(b) and (f) regarding non-disclosure and
non-disparagement) is intended or to be construed to prohibit or interfere with
any and all rights Executive may have to report a violation of state or federal
law to appropriate federal or state law enforcement officials, or to cooperate
with a duly authorized government investigation. In addition, nothing herein
prohibits Executive from engaging in a disclosure of information that is
required by law (such as by court order or subpoena). Provided, however, that if
Executive believes that the disclosure of Confidential Information is required
by a subpoena, court order, or similar legal mandate, then Executive will
provide the Company reasonable notice and opportunity to protect any legitimate
business

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interests it may have in maintaining Confidential Information as confidential
(through protective order or other means) before engaging in such a disclosure.
     11. Enforcement of Protective Covenants.
     (a) Termination of Employment and Forfeiture of Compensation. Executive
agrees that any breach by Executive of any of the Protective Covenants set forth
in Section 10 during Executive’s employment with the Company shall be grounds
for immediate employment termination of Executive for Cause pursuant to
Section 5(c)(i), which shall be in addition to and not exclusive of any and all
other rights and remedies the Company may have against Executive.
     In the event that Executive violates one of the Protective Covenants,
(i) the Company shall have the right to immediately cease making any payments
that it may otherwise owe to Executive, if any, (ii) Executive will forfeit any
remaining rights to payments or continuing benefits provided by this Agreement,
if there are any, and (iii) upon the Company’s demand, Executive will refund to
the Company any amounts, plus interest, previously paid by Company to Executive
pursuant to Subsections 6(e)(iii), 6(e)(iv), 6(e)(v), 7(a)(i) or 7(a)(ii), less
one thousand dollars ($1,000) which Executive shall be entitled to retain as
fully sufficient consideration to support and maintain in effect any contractual
obligations that Executive has to the Company prior to the refund, including the
Release as defined herein.
     (b) Right to Injunction. Executive acknowledges that a breach of a
Protective Covenant set forth in Section 10 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 any breach or anticipatory breach
of a Protective Covenant by Executive, Executive and the Company agree that the
Company shall be entitled to seek 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 Executive 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 pursue the remedies provided for in
this Section of the Agreement to enforce the Protective Covenants.
     (c) Reformation of Covenants. The Protective Covenants set forth in
Section 10 constitute a series of separate but ancillary 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 Protective Covenants set forth in Section 10 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 provide for a restriction with the maximum time, geographic, or
occupational limitations permitted by such laws to protect the Company’s
business interests. 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.

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     (d) Survival. Executive and the Company further agree that the protective
Covenants set forth in Section 10 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 Protective Covenants.
The Protective Covenants will survive the termination of Executive’s employment
with Company, regardless of the cause of the termination. If Executive violates
one of the Protective Covenants for which there is a specific time limitation,
the time period for that restriction will be extended by one day for each day
Executive violates it, up to a maximum extension equal to the length of time
prescribed for the restriction, so as to give Company the full benefit of the
bargained-for length of forbearance. If Executive becomes employed with an
affiliate of the Company without signing a new agreement, the affiliate will
step into Company’s position under this Agreement, and will be entitled to the
same protections and enforcement rights as the Company.
     12. 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 Period in the same amount
and to the same extent as the Company covers its other officers and directors.
     13. Arbitration.
     The parties agree that any dispute relating to this Agreement, or to the
breach of this Agreement, arising between Executive and the Company shall be
settled by arbitration in accordance with the Federal Arbitration Act and the
commercial arbitration rules of the American Arbitration Association (“AAA”), or
any other mutually agreed upon arbitration service; provided, however, that
temporary and preliminary injunctive relief to enforce the covenants contained
in Section 10 of this Agreement, and related expedited discovery, may be pursued
in a court of law to provide temporary injunctive relief pending a final
determination of all issues of final relief through arbitration. The arbitration
proceeding, including the rendering of an award, shall take place in Houston,
Texas, and shall be administered by the AAA (or any other mutually agreed upon
arbitration service). The arbitrator shall be jointly selected by the Company
and Executive within thirty (30) days of the notice of dispute, or if the
parties cannot agree, in accordance with the commercial arbitration rules of the
AAA (or any other mutually agreed upon arbitration service). All fees and
expenses associated with the arbitration shall be borne equally by Executive and
the Company during the arbitration, pending final decision by the arbitrator as
to who should bear fees, unless otherwise ordered by the arbitrator. The
arbitrator shall not be authorized to create a cause of action or remedy not
recognized by applicable state or federal law. The arbitrator shall be
authorized to award final injunctive relief.

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The award of the arbitrator shall be final and binding upon the parties without
appeal or review, except as permitted by the arbitration laws of the State of
Texas. The award, inclusive of any and all injunctive relief provided for
therein, shall be enforceable through a court of law upon motion of either
party.
     14. 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 5% 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.
     15. Withholding of Taxes.
     The Company may withhold from any compensation and benefits payable under
this Agreement all applicable federal, state, local, or other taxes.
     16. 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.
     17. Assignment.
     This Agreement shall inure to the benefit of the Company, its subsidiaries,
affiliates, successors, and assigns. Except as otherwise provided in this
Agreement, this Agreement shall inure to the benefit of Executive, and
Executive’s heirs, representatives, and successors. 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 estate).
     18. 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; provided, however, that if all or any
material part of the Protective Covenants provided for in this

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Agreement are deemed void or unenforceable, then any prior agreement between the
parties (or any of its subsidiaries, including Oakleaf Waste Management, Inc.)
covering the same or substantially similar restrictions on Executive shall
resume effect to the extent necessary to maintain protection of the Company’s
legitimate protectable interests covered by the Protective Covenants. This
Agreement may not be amended except by a written agreement signed by both
parties. No material term or obligation of a party may be waived except through
written agreement by the party with the authority to enforce such right or
obligation.
     19. Governing Law and Venue.
     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. The parties agree
that any legal action arising from this Agreement that is not required to be
resolved through arbitration pursuant to Section 13 must be pursued in a court
of competent jurisdiction that is located in Houston, Texas.
     20. 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: General Counsel
 
       
 
  To Executive:   At the address for Executive set forth below.

     21. 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) Severability. Subject to Section 11 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

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        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.
        22. Potential Limitation on Severance Benefits.
        (a) Maximum Severance Amount. Notwithstanding any provision in this
Agreement to the contrary, in the event of a qualifying termination (or
resignation) under Section 6(e) or Section 7 of this Agreement it is determined
by the Company that the Severance Benefits (as defined in Section 22(b) below)
would exceed 2.99 times the sum of the Executive’s then current base salary and
target bonus (the “Maximum Severance Amount”), then the aggregate present value
of the Severance Benefits provided to the Executive shall be reduced by the
Company to the Reduced Amount. The “Reduced Amount” shall be an amount,
expressed in present value, that maximizes the aggregate present value of the
Severance Benefits without exceeding the Maximum Severance Amount.
        (b) Severance Benefits. For purposes of determining Severance Benefits
under Section 22(a) above, Severance Benefits means the present value of
payments or distributions by the Company, its subsidiaries or affiliated
entities to or for the benefit of the Executive (whether paid or provided
pursuant to the terms of this Agreement or otherwise), and
(A) including: (i) cash amounts payable by the Company in the event of
termination of Executive’s employment; and (ii) the present value of benefits or
perquisites provided for periods after termination of employment (but excluding
benefits or perquisites provided to employees generally); and
(B) excluding: (i) payments of salary, bonus or performance award amounts that
had accrued at the time of termination; (ii) payments based on accrued qualified
and non-qualified deferred compensation plans, including retirement and savings
benefits; (iii) any benefits or perquisites provided under plans or programs
applicable to employees generally; (iv) amounts paid as part of any agreement
intended to “make-whole” any forfeiture of benefits from a prior employer;
(v) amounts paid for services following termination of employment for a
reasonable consulting agreement for a period not to exceed one year;
(vi) amounts paid for post-termination covenants (such as a covenant not to
compete); (vii) the value of accelerated vesting or payment of any outstanding
equity-based award; and (viii) any payment that the Board or any committee
thereof determines in good faith to be a reasonable settlement of any claim made
against the Company.
        (c)  Possible 280G Reduction. Following application of Section 22(a), in
the event that the payment of the remaining Severance Benefits to Executive plus
any other payments to Executive which would be subject to Internal Revenue Code
Section 280G (including any reduced Severance Benefits) (“280G Severance
Benefits”) would be subject (in whole or part), to any excise tax imposed under
Internal Revenue Code Section 4999 (the “Excise Tax”), then the

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cash portion of the 280G Severance Benefits shall first be further reduced, and
the non-cash 280G Severance Benefits shall thereafter be further reduced, to the
extent necessary so that no portion of the 280G Severance Benefits is subject to
the Excise Tax, but only if (i) the amount of the 280G Severance Benefits to be
received by Executive, as so reduced by this Section 22(c) and after subtracting
the amount of federal, state and local income taxes on such reduced 280G
Severance Benefits (after taking into account the phase out of itemized
deductions and personal exemptions attributable to such reduced 280G Severance
Benefits) is greater than or equal to (ii) the amount of the 280G Severance
Benefits to be received by Executive without such reduction by this Section
22(c) after subtracting the amount of federal, state and local income taxes on
such 280G Severance Benefits and the amount of the Excise Tax to which Executive
would be subject in respect of such unreduced 280G Severance Benefits (after
taking into account the phase out of itemized deductions and personal exemptions
attributable to such unreduced 280G Severance Benefits ).
     (d) Calculation of 280G Severance Benefits. For purposes of determining the
280G Severance Benefits, (i) no portion of the 280G Severance Benefits, the
receipt or enjoyment of which Executive shall have waived at such time and in
such manner as not to constitute a “payment” within the meaning of Internal
Revenue Code Section 280G(b), shall be taken into account, (ii) no portion of
the 280G Severance Benefits shall be taken into account which, in the opinion of
tax counsel (“Tax Counsel”) who is reasonably acceptable to Executive and
selected by the accounting firm (the “Auditor”) which was, immediately prior to
the Change in Control, the Company’s independent auditor, does not constitute a
“parachute payment” within the meaning of Internal Revenue Code
Section 280G(b)(2) (including by reason of Internal Revenue Code
Section 280G(b)(4)(A)); (iii) no portion of the 280G Severance Benefits shall be
taken into account which, in the opinion of Tax Counsel, constitutes reasonable
compensation for services actually rendered, within the meaning of Internal
Revenue Code Section 280G(b)(4)(B), in excess of the “base amount” (as defined
in Internal Revenue Code Section 280G(b)(3)) allocable to such reasonable
compensation, and (iv) the value of any non-cash benefit or any deferred payment
or benefit included in the 280G Severance Benefits shall be determined by the
Auditor in accordance with the principles of Internal Revenue Code
Sections 280G(d)(3) and (4).
     (e) Determination of Present Value. For purposes of this Section 22, the
present value of Severance Benefits and 280G Severance Benefits 280G shall be
determined in accordance with Internal Revenue Code Section 280G(d)(4).
     23. Compliance with Internal Revenue Code Section 409A.
     (a) Compliance. It is the intention of the Company and Executive that this
Employment Agreement not result in unfavorable tax consequences to Executive
under Internal Revenue Code Section 409A. This Section 23 does not create an
obligation on the part of Company to modify the Employment Agreement in the
future and does not guarantee that the amounts or benefits owed under the
Employment Agreement will not be subject to interest and penalties under
Internal Revenue Code Section 409A.
     (b) Payment Timing. The payments of severance under Sections 6(e)(iii) and
(iv) and Sections 7(a)(i) and (ii) above (“Separation Payments”) are designated
as separate payments for purposes of the short-term deferral rules under
Treasury Regulation Section 1.409A-

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1(b)(4)(i)(F), and, with respect to such Separation Payments, the exemption for
involuntary terminations under separation pay plans under Treasury
Regulation Section 1.409A-1(b)(9)(iii). As a result, (A) Separation Payments
that are by their terms scheduled to be made on or before March 15th of the
calendar year following the applicable year of termination, (B) any additional
Separation Payments that are made on or before December 31st of the second
calendar year following the year of Executive’s termination and do not exceed
the lesser of two times Base Salary or two times the limit under Internal
Revenue Code Section 401(a)(17) then in effect, and (C) any Separation Payments
under Section 7(a) made on account of a 409A Change in Control within the
meaning of Internal Revenue Code Section 409A are exempt from the requirements
of Internal Revenue Code Section 409A. If Executive is designated as a
“specified employee” within the meaning of Internal Revenue Code Section 409A,
then to the extent the Disability Payments and Separation Payments to be made
during the first six month period following Executive’s termination of
employment exceed such exempt amounts, the payments shall be withheld and the
amount of the payments withheld will be paid in a lump sum, with interest (at
the Company’s then applicable overnight rate), on the date that is six
(6) months and one (1) day after Executive’s termination. Continued medical
benefits under Sections 6(e)(v) and 7(a)(i) above are intended to satisfy the
exemption for medical expense reimbursements under Treasury Regulation Section
1.409A-1(b)(9)(v)(B).

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     IN WITNESS WHEREOF, this Agreement is EXECUTED as of the date first set
forth above and effective as set forth therein.

            STEVEN C. PRESTON
(“Executive”)
      /s/ Steven C. Preston       Steven C. Preston   

         
 
      (Address)
 
       
 
             

            WASTE MANAGEMENT, INC.
(The “Company”)
      By:   /s/ David P. Steiner         David P. Steiner        President and
Chief Executive Officer     

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