exv10w2



 





EXHIBIT 10.2




EMPLOYMENT AGREEMENT




     This EMPLOYMENT AGREEMENT (the “Agreement”) is made and entered into on
this 20th day of October, 2004, but as effective as of the date set forth
herein, by and between Waste Management, Inc. (the “Company”), and Duane C.
Woods (the “Executive”).



          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.



     Term of Employment.



     The period of Executive’s employment under this Agreement shall commence
on June 3, 2004 (“Employment Date”), and shall continue for a period of two (2)
years, and shall automatically be renewed for successive one (1) year periods
on each anniversary of the Employment Date thereafter, unless Executive’s
employment is terminated in accordance with Section 5 below. The period during
which Executive is employed hereunder shall be referred to as the “Employment
Period.”



     Duties and Responsibilities.



          Executive shall serve as the Senior Vice President, Western Group. In
such capacity, Executive shall perform such duties and have the power,
authority, and functions commensurate with such position in similarly-sized
public companies, and have and possess such other authority and functions
consistent with such position as may be assigned to Executive from time to time
by the Chief Executive Officer, President, Chief Operating Officer or the Board
of Directors (the “Board”) of the Company.



          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 (however, the
Board does not typically allow officers to serve on more than one public
company board at a time).



     Compensation and Benefits.



          Base Salary. During the Employment Period, the Company shall pay
Executive a base salary at the annual rate of Four Hundred Thousand and Fifty
DOLLARS ($450,000.00) per year, or such higher rate as may be determined from
time to time by the Company (“Base Salary”). Such Base Salary shall be paid in
accordance with the Company’s standard payroll practice for its executive
officers. Once increased, Base Salary shall not be reduced.



          Annual Bonus. During the Employment Period, Executive will be entitled to
participate in an annual incentive compensation plan of the Company, as
established by the Compensation Committee of the Board from time to time. The
Executive’s target annual bonus will be fifty percent (50%) of his Base Salary
in effect for such year (the “Target Bonus”), and his actual annual bonus may



 









 




range from 0% to 200% 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 performance goals, as may be established and
approved by from time to time by the Compensation Committee of the Board, and
(ii) the achievement of personal performance goals as may be established by
Executive’s immediate supervisor. The annual bonus for calendar year 2004 will
be paid in 2005, if earned, at the same time as similarly situated executive
employees receive or would otherwise receive their bonuses, provided that
Executive remains employed through the end of the 2004 calendar year.




     (c) Benefit Plans and Vacation. Subject to the terms of such plans,
Executive shall be eligible to participate in or receive benefits under any
pension plan, 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, or perquisite, 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.



     (d) Expense Reimbursement. The Company shall promptly reimburse Executive
for the ordinary and necessary business expenses incurred by Executive in the
performance of the duties hereunder in accordance with the Company’s customary
practices applicable to its executive officers.



     (e) Other Perquisites. Executive shall be entitled to all perquisites
provided to Senior Vice Presidents of the Company as approved by the
Compensation Committee of the Board, and as they may exist from time to time,
including the following:




	(i)	 	Automobile allowance at the annual rate of Twelve Thousand
Dollars ($12,000.00), payable in accordance with the Company’s
standard payroll practice for its executive officers and prorated in
any year that Executive does not work a full calendar year;


	 
	(ii)	 	Financial planning services at actual cost, and not to exceed
Fifteen Thousand Dollars ($15,000.00) annually;

	 
	(iii)	 	Additional one-time financial planning services at actual
cost, not to exceed $20,000, for services in preparation for
voluntary retirement (for such purposes voluntary retirement means
retirement from the Company after attainment of both (x) the age of
55 and (y) a sum of years of services with the Company plus age equal
to 65 or greater);

	 
	(iv)	 	Social organization initiation fees and dues with a benefit of
a one-time initiation fee at actual cost (not to exceed ten percent
(10%) of Executive’s Base Salary), and monthly dues at actual cost
(not to exceed $500 per month); and

	 
	(v)	 	An annual physical examination on a program designated by the
Company.





          Termination of Employment.



 









 





     Executive’s employment hereunder may be terminated during the Employment
Period under the following circumstances:



     (b) Death. Executive’s employment hereunder shall terminate upon
Executive’s death.



     (c) Total Disability. The Company may terminate Executive’s employment
hereunder upon Executive becoming “Totally Disabled.” For purposes of this
Agreement, Executive shall be considered “Totally Disabled” if Executive has
been physically or mentally incapacitated so as to render Executive incapable
of performing the essential functions of Executive’s position with or without
reasonable accommodation. 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; provided, however, that in the absence of Executive’s receipt
of such long-term disability benefits or Social Security benefits, the
Company’s Board may, in their reasonable discretion (but based upon appropriate
medical evidence), determine that Executive is Totally Disabled.



     (d) 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.




     For purposes of this Agreement, the term “Cause” means any of
the following: (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 fails to cure
such nonperformance within ten (10) days of receipt of said written
notice; (B) breach of any statutory or common law duty of loyalty to
the Company; (C) has been convicted of, or pleaded nolo contendre
to, any felony; (D) willfully or intentionally caused material
injury to the Company, its property, or its assets; (E) disclosed to
unauthorized person(s) proprietary or confidential information of
the Company; (F) any material violation or a repeated and willful
violation of Company 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 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.
Further, a Notification of Termination for Cause shall be required to
include a copy of a resolution duly adopted by at least two-thirds
(2/3) of the entire membership of the Board of Directors at a meeting
of the Board which was called for the purpose of considering such
employment termination, and at which Executive and his representative
had the right to attend and address the Board, finding that, in the
good faith belief of the Board, Executive engaged in conduct set
forth in Section 5(c)(i) herein and specifying the particulars
thereof in reasonable detail. The date of termination for Cause
shall be the date indicated in the Notice of Termination for Cause.
Any purported termination for Cause which is held by an arbitrator
not to have been based on the grounds set forth in this Agreement or
not to have followed the




 









 












	 	 	procedures set forth in this Agreement shall be deemed a termination
by the Company without Cause.





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




     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 or
President 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
substantially changes Executive’s core duties or removes Executive’s
responsibility for those core duties, so as to effectively cause
Executive to no longer be performing the duties of his position
(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);
provided that if the Company becomes a fifty percent or more
subsidiary of any other entity, Executive shall be deemed to have a
substantial change in the core duties of his position unless he is
also Senior Vice-President of the ultimate parent entity; (B)
removal or the non-reelection of the Executive from the officer
position with the Company specified herein, or removal of the
Executive from any of his then officer positions; (C) any material
breach by the Company of any provision of this Agreement, including
without limitation Section 10 hereof; or (D) 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; or (E) the reassignment of
Executive to a geographic location more than fifty (50) miles from
his then business office location.




     A “Notice of Termination for Good Reason” shall mean a notice
that shall indicate the specific termination provision relied upon
and shall set forth in reasonable detail the facts and circumstances
claimed to provide a basis for Termination for Good Reason. The
failure by Executive to set forth in the Notice of Termination for
Good Reason any facts or circumstances which contribute to the
showing of Good Reason shall not waive any right of Executive
hereunder or preclude Executive from asserting such fact or
circumstance in enforcing his rights hereunder. The Notice of
Termination for Good Reason shall provide for a date of termination
not less than ten (10) nor more than sixty (60) days after the date
such Notice of Termination for Good Reason is given, provided that
in the case of the events set forth in Sections 5(d)(i)(A) or (B),
the date may be five (5) business days after the giving of such
notice. The Company, at its sole discretion, may waive this
requirement.



             Termination by the Company without Cause. The Company may terminate
Executive’s employment hereunder without Cause at any time upon written notice
to Executive.


(e) 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.





          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, as applicable to the
form of termination:



          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:




     Any accrued but unpaid Base Salary for services rendered to the
date of death, any accrued but unpaid expenses required to be
reimbursed under this Agreement, any vacation accrued to the date of
termination, any earned but unpaid bonuses for any prior calendar
year, and, to the extent not otherwise paid, a pro-rata bonus or
incentive compensation payment for the current calendar year to the
extent payments are awarded to senior executives of the Company and
paid at the same time as senior executives are paid.




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





     (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:




	(i)	 	Any accrued but unpaid Base Salary for services rendered to the
date of termination, any accrued but unpaid expenses required to be
reimbursed under this Agreement, any vacation accrued to the date of
termination, and any earned but unpaid bonuses for any prior calendar
year. Executive shall also be eligible for a pro-rata bonus or
incentive compensation payment for the current calendar year to the
extent such awards are made to senior executives of the Company for the
year in which Executive is terminated, and to the extent not otherwise
paid to the Executive.






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



     (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:




	(ii)	 	Any accrued but unpaid Base Salary for services rendered to the
date of termination, any accrued but unpaid expenses required to be
reimbursed under this Agreement, any vacation accrued to the date of
termination, and any earned but unpaid bonuses for any prior calendar
year.




 









 












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



     (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:




	(iii)	 	Any accrued but unpaid Base Salary for services rendered to the
date of termination, any accrued but unpaid expenses required to be
reimbursed under this Agreement, any vacation accrued to the date of
termination, and any earned but unpaid bonuses for any prior calendar
year.






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



     (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) 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:




	(iv)	 	Any accrued but unpaid Base Salary for services rendered to the
date of termination, any accrued but unpaid expenses required to be
reimbursed under this Agreement, any vacation accrued to the date of
termination, and any earned but unpaid bonuses for any prior calendar
year.






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




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




     Subject to Executive’s execution of the Release (as defined in
Section 7), the Company at its expense will continue for Executive
and Executive’s spouse and dependents, all health benefit plans,
programs or arrangements, whether group or individual, disability,
and other benefit plans, in which Executive was entitled to



 









 





participate at any time during the twelve-month period prior to the
date of termination, until the earliest to occur of (A) two years
after the date of termination; (B) Executive’s death (provided that
benefits provided to Executive’s spouse and dependents shall not
terminate upon Executive’s death); or (C) with respect to any
particular plan, program or arrangement, 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, program, or arrangement is
prohibited, the Company will arrange to provide Executive with
benefits substantially similar to those which Executive would have
been entitled to receive under such plan, program, or arrangement,
for such period on a basis which provides Executive with no
additional after tax cost.



     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 is
terminated.


(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 termination of employment of Executive by the Company
for any reason other than for Cause, it is determined by 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)	 	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) or 6(e)(v).





          Resignation by Executive for Good Reason or Termination by Company Without
Cause During a Change in Control Period.




	(f)	 	Certain Terminations During a Change in Control Period. 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:






     The payments and benefits provided for in Section 6(e), except
that (A) the amount and period with respect to which severance is
calculated pursuant to Section 6(e)(iii) will be three (3) years and
the amount shall be paid in a lump-sum and (B) the benefit
continuation period in Section 6(e)(iv) shall be for three (3)
years.




     Executive shall also receive a bonus or incentive compensation
payment for the calendar year of the termination, payable at 100% of
the maximum bonus available to Executive, pro-rated as of the
effective date of the termination. Such bonus payment shall be
payable within five (5) days after the effective date of Executive’s
termination. Except as may be provided under this Section 7 or
under the terms of any incentive compensation, employee benefit, or
fringe benefit plan applicable to Executive at the time of
Executive’s termination of employment, Executive shall have no right
to receive any other




 










 






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



           Certain Additional Payments by the Company.




	(i)	 	In the event that the Executive shall become entitled to payments
and/or benefits provided by this Agreement or any other amounts in the
“nature of compensation” (whether pursuant to the terms of this
Agreement or any other plan, arrangement or agreement with the Company,
any person whose actions result in a change of ownership or effective
control covered by Section 280G(b)(2) of the Code or any person
affiliated with the Company or such person) as a result of such change
in ownership or effective control (collectively the “Company
Payments”), and such Company Payments will be subject to the tax (the
“Excise Tax”) imposed by Section 4999 of the Code (and any similar tax
that may hereafter be imposed by any taxing authority) the Company
shall pay to the Executive at the time specified in subsection (iv)
below an additional amount (the “Gross-up Payment”) such that the net
amount retained by the Executive, after deduction of any Excise Tax on
the Company Payments and any U.S. federal, state, and for local income
or payroll tax upon the Gross-up Payment provided for by this Section
7(b), but before deduction for any U.S. federal, state, and local
income or payroll tax on the Company Payments, shall be equal to the
Company Payments.






     For purposes of determining whether any of the Company Payments
and Gross-up Payments (collectively the “Total Payments”) will be
subject to the Excise Tax and the amount of such Excise Tax, (x) the
Total Payments shall be treated as “parachute payments” within the
meaning of Section 280G(b)(2) of the Code, and all “parachute
payments” in excess of the “base amount” (as defined under Code
Section 280G(b)(3) of the Code) shall be treated as subject to the
Excise Tax, unless and except to the extent that, in the opinion of
the Company’s independent certified public accountants appointed
prior to any change in ownership (as defined under Code Section
280G(b)(2) or tax counsel selected by such accountants (the
“Accountants”) such Total Payments (in whole or in part) either do
not constitute “parachute payments,” represent reasonable
compensation for services actually rendered within the meaning of
Section 280G(b)(4) of the Code in excess of the “base amount” or are
otherwise not subject to the Excise Tax, and (y) the value of any
non-cash benefits or any deferred payment or benefit shall be
determined by the Accountants in accordance with the principles of
Section 280G of the Code.




     For purposes of determining the amount of the Gross-up Payment,
the Executive shall be deemed to pay U.S. federal income taxes at
the highest marginal rate of U.S.
federal income taxation in the calendar year in which the Gross-up
Payment is to be made and state and local income taxes at the
highest marginal rate of taxation in the state and locality of the
Executive’s residence for the calendar year in which the Company
Payment is to be made, net of the maximum reduction in U.S. federal
income taxes which could be obtained from deduction of such state
and local taxes if paid in such year. In the event that the Excise
Tax is subsequently determined by the Accountants to be less than
the amount taken into account hereunder at the time the Gross-up
Payment is made, the Executive shall repay to the Company, at the
time that the amount of such reduction in Excise Tax is finally
determined, the portion of the prior Gross-up Payment attributable
to such reduction



 









 






(plus the portion of the Gross-up Payment
attributable to the Excise Tax and U.S. federal, state and local
income tax imposed on the portion of the Gross-up Payment being
repaid by the Executive if such repayment results in a reduction in
Excise Tax or a U.S. federal, state and local income tax deduction),
plus interest on the amount of such repayment at the rate provided
in Section 1274(b)(2)(B) of the Code. Notwithstanding the
foregoing, in the event any portion of the Gross-up Payment to be
refunded to the Company has been paid to any U.S. federal, state and
local tax authority, repayment thereof (and related amounts) shall
not be required until actual refund or credit of such portion has
been made to the Executive, and interest payable to the Company
shall not exceed the interest received or credited to the Executive
by such tax authority for the period it held such portion. The
Executive and the Company shall mutually agree upon the course of
action to be pursued (and the method of allocating the expense
thereof) if the Executive’s claim for refund or credit is denied.




In the event that the Excise Tax is later determined by the
Accountant or the Internal Revenue Service to exceed the amount
taken into account hereunder at the time the Gross-up Payment is
made (including by reason of any payment the existence or amount of
which cannot be determined at the time of the Gross-up Payment), the
Company shall make an additional Gross-up Payment in respect of such
excess (plus any interest or penalties payable with respect to such
excess) at the time that the amount of such excess is finally
determined.




     The Gross-up Payment or portion thereof provided for in
subsection (iii) above shall be paid not later than the thirtieth
(30th) day following an event occurring which subjects the Executive
to the Excise Tax; provided, however, that if the amount of such
Gross-up Payment or portion thereof cannot be finally determined on
or before such day, the Company shall pay to the Executive on such
day an estimate, as determined in good faith by the Accountant, of
the minimum amount of such payments and shall pay the remainder of
such payments (together with interest at the rate provided in
Section 1274(b)(2)(B) of the Code), subject to further payments
pursuant to subsection (iii) hereof, as soon as the amount thereof
can reasonably be determined, but in no event later than the
ninetieth day after the occurrence of the event subjecting the
Executive to the Excise Tax. In the event that the amount of the
estimated payments exceeds the amount subsequently determined to
have been due, such excess shall constitute a loan by the Company to
the Executive, payable on the fifth day after demand by the Company
(together with interest at the rate provided in Section
1274(b)(2)(B) of the Code).




     In the event of any controversy with the Internal Revenue
Service (or other taxing
authority) with regard to the Excise Tax, the Executive shall permit
the Company to control issues related to the Excise Tax (at its
expense), provided that such issues do not potentially materially
adversely affect the Executive, but the Executive shall control any
other issues. In the event the issues are interrelated, the
Executive and the Company shall in good faith cooperate so as not to
jeopardize resolution of either issue, but if the parties cannot
agree the Executive shall make the final determination with regard
to the issues. In the event of any conference with any taxing
authority as to the Excise Tax or associated income taxes, the
Executive shall permit the representative of the Company to
accompany the Executive, and the Executive and the Executive’s
representative shall cooperate with



 









 






the Company and its representative.




     The Company shall be responsible for all charges of the
Accountant.




     The Company and the Executive shall promptly deliver to each
other copies of any written communications, and summaries of any
verbal communications, with any taxing authority regarding the
Excise Tax covered by this Section 7(b).




Certain Definitions.




     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:




     any Person is or becomes the Beneficial Owner, directly or
indirectly, of securities of the Company representing twenty-five
percent (25%) or more of the combined voting power of the Company’s
then outstanding Voting Securities;




     the following individuals cease for any reason to constitute a
majority of the number of directors then serving: individuals who,
on the Commencement Date, constitute the Board and any new director
(other than a director whose initial assumption of office is in
connection with an actual or threatened election contest, including
but not limited to a consent solicitation, relating 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 two-thirds (2/3rds) of
the directors then still in office who either were directors on the
Commencement Date or whose appointment, election or nomination for
election was previously so approved or recommended (the “Incumbent
Board”);




     there is a consummated merger or consolidation of the Company
with any other corporation, other than (1) a merger or consolidation
which would result in the Voting Securities of the Company
outstanding immediately prior thereto continuing to represent
(either by remaining outstanding or by being converted into Voting
Securities of the surviving or parent entity) more than fifty
percent (50%) of the combined voting power of the Voting Securities
of the Company or such surviving or parent entity outstanding
immediately after such merger or consolidation or (2) a merger or
consolidation effected to implement a recapitalization of the
Company (or similar transaction) in which no Person,
directly or indirectly, acquired twenty-five percent (25%) or more
of the combined voting power of the Company’s then outstanding
securities; or




     the stockholders of the Company approve a plan of complete
liquidation of the Company or there is consummated an agreement for
the sale or disposition by the Company of all or substantially all
of the Company’s assets (or any transaction having a similar
effect), other than a sale or disposition by the Company of all or
substantially all of the Company’s assets to an entity, at least
fifty percent (50%) of the combined voting power of the Voting
Securities of which are owned by stockholders of the Company in



 









 






substantially the same proportions as their ownership of the Company
immediately prior to such sale.




     For purposes of this Section 7, “Beneficial Owner” shall have
the meaning set forth in Rule 13d-3 under the Exchange Act;




     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.




     For purposes of this Agreement, “Exchange Act’ means the
Securities and Exchange Act of 1934, as amended from time to time;



(v) 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 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.




	(vi)	 	For purposes of this Agreement, “Release” means that specific
document which the Company shall present to Executive for
consideration and execution after any termination of employment
pursuant to Section 5(e) and Section 6(e), 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 COBRA).





              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
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 termination or resignation.



             No Mitigation; No Set-Off. In the event of any termination of employment
hereunder, Executive shall be under no obligation to seek other employment, and
there shall be no offset against any amounts due Executive under this Agreement
on account of any remuneration attributable to any subsequent employment that
Executive may obtain. The amounts payable hereunder shall not be subject to
setoff, counterclaim, recoupment, defense or other right which the Company may
have against the Executive or others, except upon obtaining by the Company of a
final non-appealable judgment against Executive.



 









 





           Covenants



     (a) Company Property. 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. 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 and whether on the
Company’s premises or otherwise) which relate to the Company’s business,
products, or services are the Company’s sole and exclusive property. 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.



     (b) Confidential Information; Non-Disclosure. Executive acknowledges that
the business of the Company is highly competitive and that the Company has
provided and will continue to provide Executive with access to “Confidential
Information” relating to the business of the Company and its affiliates.



     For purposes of this Agreement, “Confidential Information” means and
includes the Company’s confidential and/or proprietary information and/or trade
secrets that have been developed or used and/or will be developed and that
cannot be obtained readily by third parties from outside sources. Confidential
Information includes, by way of example and without limitation, the following
information regarding customers, employees, contractors, and the industry not
generally known to the public; strategies, methods, books, records, and
documents; technical information concerning products, equipment, services, and
processes; procurement procedures and pricing techniques; the names of and
other 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; positions, plans, and strategies for expansion or
acquisitions; budgets; customer lists; research; weather data; financial and
sales data; trading methodologies and terms; evaluations, opinions, and
interpretations of information and data; marketing and merchandising
techniques; prospective customers’ names and marks; grids and maps; electronic
databases; models; specifications; computer programs; internal business
records; contracts benefiting or obligating the Company; bids or proposals
submitted to any third party; technologies and methods; training methods and
training processes; organizational structure; personnel information, including
salaries of personnel; payment amounts or rates paid to consultants or other
service providers; and other such confidential or proprietary information.
Information need not qualify as a trade secret to be protected as Confidential
Information under this Agreement, and the authorized and
controlled disclosure of Confidential Information to authorized parties by
Company in the pursuit of its business will not cause the information to lose
its protected status under this Agreement. Executive acknowledges that this
Confidential Information constitutes a valuable, special, and unique asset used
by the Company or its affiliates in their businesses to obtain a competitive
advantage over their competitors. 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 position.



 









 





     Executive has and will continue to have access to, or knowledge of,
Confidential Information of third parties, such as actual and potential
customers, suppliers, partners, joint venturers, investors, financing sources,
and the like, of the Company and its affiliates.



     The Company also agrees to provide Executive with one or more of the
following: access to Confidential Information; specialized training regarding
the Company’s methodologies and business strategies, and/or support in the
development of goodwill such as introductions, information and reimbursement of
customer development expenses consistent with Company policy. The foregoing is
not contingent on continued employment, but is contingent upon Executive’s use
of the Confidential Information access, specialized training, and goodwill
support provided by Company for the exclusive benefit of the Company and upon
Executive’s full compliance with the restrictions on Executive’s conduct
provided for in this Agreement.



     In addition to the requirements set forth in Section 5(c)(i), Executive
agrees that Executive will not after Executive’s employment with the Company,
make any unauthorized disclosure of any then Confidential Information or
specialized training of the Company or its affiliates, or make any use thereof,
except in the carrying out of his employment responsibilities hereunder.
Executive also agrees to preserve and protect the confidentiality of third
party Confidential Information to the same extent, and on the same basis, as
the Company’s Confidential Information.



     (c) Unfair Competition Restrictions. The Company agrees to and shall
provide Executive with immediate access to Confidential Information. 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 the above-referenced stock options,
any restricted stock, 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) (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 the collection, transfer, recycling and
resource recovery, or disposal of solid waste, hazardous
or other waste, including the operation of
waste-to-energy facilities.



     It is further agreed that 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 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 to be no material threat to the legitimate business interests of
the Company.



     (d) Non-Solicitation of Customers. For a period of two (2) years
following the termination of employment for any reason, Executive will not call
on, service, or solicit competing business from customers of the Company or its
affiliates whom Executive, within the previous twelve (12) months, (i) had or
made contact with, or (ii) had access to information and files about, or induce
or encourage any such customer or other source of ongoing business to stop
doing business with Company.



     (e) Non-Solicitation of Employees. During Executive’s employment, and for
a period of two (2) years following the termination of employment for any
reason, Executive will not, either directly or indirectly, 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 employment, and will
not assist any other person or entity in such a solicitation.



     (f) Non-Disparagement. 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.



     11. Enforcement of Covenants.



     (a) Termination of Employment and Forfeiture of Compensation. Executive
agrees that any breach by Executive of any of the covenants set forth in
Section 10 hereof during Executive’s employment by the Company, shall be
grounds for immediate dismissal 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.



     (b) Right to Injunction. Executive acknowledges that a breach of the
covenants 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 breach or anticipatory breach of the
covenants set forth in this section 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:
(A) 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 (B) recovery of all reasonable sums as determined by a court
of competent jurisdiction expended and costs, including reasonable attorney’s
fees, incurred by the Company to enforce the covenants set forth in this
section.




     (c) Separability of Covenants. The covenants contained in Section 10
hereof 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 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 the
maximum time, geographic, or occupational limitations permitted by such laws.
Further, in the event a court shall hold unenforceable any of the separate
covenants deemed included herein, then such unenforceable covenant or covenants
shall be deemed eliminated from the provisions of this Agreement for the
purpose of such proceeding to the extent necessary to permit the remaining
separate covenants to be enforced in such proceeding. Executive and the
Company further agree that the covenants in Section 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 covenants of Section
10.



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.



          Arbitration.



Except with respect to enforcement of the covenants contained in Section 11
herein, 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. 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 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 shall be enforceable through a court of law upon motion of either party.




 









 








          Disputes and Payment of Attorney’s Fees.



If at any time during the term of this Agreement or afterwards there should
arise any dispute as to the validity, interpretation or application of any term
or condition of this Agreement, the Company agrees, upon written demand by
Executive (and Executive shall be entitled upon application to any court of
competent jurisdiction, to the entry of a mandatory injunction, without the
necessity of posting any bond with respect thereto, compelling the Company) to
promptly provide sums sufficient to pay on a current basis (either directly or
by reimbursing Executive) Executive’s costs and reasonable attorney’s fees
(including expenses of investigation and disbursements for the fees and
expenses of experts, etc.) incurred by Executive in connection with any such
dispute or any litigation, provided that Executive shall repay any such amounts
paid or advanced if Executive is not the prevailing party with respect to at
least one material claim or issue in such dispute or litigation. The
provisions of this Section 11, without implication as to any other section
hereof, shall survive the expiration or termination of this Agreement and of
Executive’s employment hereunder.




          Requirement of Timely Payments.



If any amounts which are required, or determined to be paid or payable, or
reimbursed or reimbursable, to Executive under this Agreement (or any other
plan, agreement, policy or arrangement with the Company) are not so paid
promptly at the times provided herein or therein, such amounts shall accrue
interest, compounded daily, at an 8% annual percentage rate, from the date such
amounts were required or determined to have been paid or payable, reimbursed or
reimbursable to Executive, until such amounts and any interest accrued thereon
are finally and fully paid, provided, however, that in no event shall the
amount of interest contracted for, charged or received hereunder, exceed the
maximum non-usurious amount of interest allowed by applicable law.




          Withholding of Taxes.



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



          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.



          Assignment.



     Except as otherwise provided in this Agreement, this Agreement shall inure
to the benefit of and be binding upon the parties hereto and their respective
heirs, representatives, successors and assigns. This Agreement shall not be
assignable by Executive (but any payments due hereunder which would be payable
at a time after Executive’s death shall be paid to Executive’s designated
beneficiary or, if none, his estate) and shall be assignable by the Company
only to any financially solvent corporation or other entity resulting from the
reorganization, merger or consolidation of the Company with any other
corporation or entity or any corporation or entity to or with which the
Company’s business or substantially all of its business or assets may be sold,
exchanged or transferred, and it must be so assigned by the Company to, and
accepted as binding upon it by, such other corporation or entity in connection



 









 





with any such reorganization, merger, consolidation, sale, exchange or
transfer in a writing delivered to Executive in a form reasonably acceptable to
Executive (the provisions of this sentence also being applicable to any
successive such transaction).




          Entire Agreement; Amendment.



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



          Governing Law.



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



          Notices.



     Any notice, consent, request or other communication made or given in
connection with this Agreement shall be in writing and shall be deemed to have
been duly given when delivered or mailed by registered or certified mail,
return receipt requested, or by facsimile or by hand delivery, to those listed
below at their following respective addresses or at such other address as each
may specify by notice to the others:



	 	 	 
	To the Company:

	 	Waste Management , Inc.
	

	 	1001 Fannin, Suite 4000
	

	 	Houston, Texas 77002
	

	 	Attention: Corporate Secretary
	 
	 	 
	To Executive:

	 	At the address for Executive set forth below.







     Miscellaneous.



          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.



     Separability. 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.



     Headings. Section headings are used herein for convenience of reference
only and shall not affect the meaning of any provision of this Agreement.



     Rules of Construction. Whenever the context so requires, the use of the
singular shall be deemed to include the plural and vice versa.



 









 





     Counterparts. This Agreement may be executed in any number of
counterparts, each of which so executed shall be deemed to be an original, and
such counterparts will together constitute but one Agreement.



 









 





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



	 	 	 	 	 
	 	 	/s/ Duane C. Woods
	 	 	

	 	 	Duane C. Woods
	 	 	(“Executive”)
	 
	 	 	 	 
	 	 	 
	 	 	

	 	 	Home Address
	 
	 	 	 	 
	 	 	 
	 	 	

	 	 	City, State, ZIP Code
	 
	 	 	 	 
	 	 	WASTE MANAGEMENT, INC.
	 	 	(The “Company”)
	 
	 	 	 	 
	

	 	By:
	 	/s/ David P. Steiner
	

	 	 	 	
 
	

	 	 	 	David P. Steiner
	

	 	 	 	Chief Executive Officer