Conformed Copy
GUARANTEE
BY WASTE MANAGEMENT HOLDINGS, INC.
(formerly known as Waste Management, Inc.)
in Favor of the Holders
of Certain Debt Securities of
WASTE MANAGEMENT, INC.
(formerly known as USA Waste Services, Inc.)
4 1/2% Convertible Subordinated Notes Due 2001
GUARANTEE, dated as of July 16, 1998, made by Waste
Management Holdings, Inc. (formerly known as Waste Management, Inc.), a Delaware
corporation (the "Guarantor"), in favor of the holders of the 4 1/2% Convertible
Subordinated Notes Due 2001 (the "Debt Securities") of United Waste Systems,
Inc. ("United"), a Delaware corporation and a wholly owned subsidiary of Waste
Management, Inc. (formerly known as USA Waste Services, Inc.), a Delaware
corporation (the "Co-Obligor").
W I T N E S S E T H:
SECTION 1. Guarantee. (a) The Guarantor hereby
unconditionally guarantees the punctual payment when due, whether at stated
maturity, by acceleration or otherwise, of the principal of, premium, if any,
and interest on the Debt Securities (the "Obligations"), according to the terms
of the Debt Securities and as more fully described in the Indenture, dated as of
June 5, 1996, between United and Bankers Trust Company, as trustee (the
"Trustee"), as supplemented and amended by the First Supplemental Indenture,
dated as of August 26, 1997, by and among United, the Co-Obligor and the Trustee
(as amended, modified or otherwise supplemented from time to time, the
"Indenture").
(b) It is the intention of the Guarantor that this Guarantee
not constitute a fraudulent transfer or conveyance for purposes of Bankruptcy
Law, the Uniform Fraudulent Conveyance Act, the Uniform Fraudulent Transfer Act
or any similar federal or state law to the extent applicable to this Guarantee.
To effectuate the foregoing intention, the Obligations of the Guarantor under
this Guarantee shall be limited to the maximum amount as will, after giving
effect to such maximum amount and all other contingent and fixed liabilities of
the Guarantor (other than guarantees of the Guarantor in respect of subordinated
debt) that are relevant under such laws, result in the Obligations of the
Guarantor under this Guarantee not constituting a fraudulent transfer or
conveyance. For purposes hereof, "Bankruptcy Law" means Title 11, U.S.
Code, or any similar Federal or state law for the relief of debtors.
SECTION 2. Guarantee Absolute. The Guarantor guarantees that
the Obligations will be paid strictly in accordance with the terms of the
Indenture, regardless of any law, regulation or order now or hereafter in effect
in any jurisdiction affecting any of such terms or the rights of holders of the
Debt Securities with respect thereto. The liability of the Guarantor under this
Guarantee shall be absolute and unconditional irrespective of:
(i) any lack of validity or enforceability of the Indenture
or any other agreement or instrument relating thereto;
(ii) any change in the time, manner or place of payment of,
or in any other term of, all or any of the Obligations, or any other
amendment or waiver of or any consent to departure from the Indenture;
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(iii) any exchange, release or non-perfection of any
collateral, or any release or amendment or waiver of or consent to
departure from any other guaranty, for all or any of the Obligations;
or
(iv) any other circumstance which might otherwise constitute
a defense available to, or a discharge of, the Co-Obligor, or a
guarantor.
SECTION 3. Subordination. The Guarantor covenants and agrees
that its obligation to make payments of the Obligations hereunder constitutes an
unsecured obligation of the Guarantor ranking (a) subordinate and junior in
right of payment to all "Senior Indebtedness" (as such term is defined in the
Indenture, dated as of January 24, 1995, between the Guarantor and NationsBank
of Georgia, National Association, as supplemented by the First Supplemental
Indenture, dated as of July 16, 1998, among the Guarantor, the Issuer and Harris
Trust and Savings Bank, as trustee), "Senior Debt" (as such term is defined in
the Indenture, dated as of November 1, 1988, between the Guarantor and Harris
Trust and Savings Bank), and "Senior Indebtedness" (as such term is defined in
the Indenture, dated as of August 1, 1990, between Chemical Waste Management,
Inc. ("CWM") and Harris Trust and Savings Bank, as supplemented by the First
Supplemental Indenture, dated as of January 24, 1995, among CWM, the Guarantor,
as successor to CWM, and Harris Trust and Savings Bank) of the Guarantor
(collectively, the "Guarantor's Senior Debt") to the same extent as the
Guarantor's guarantees of the Issuer's 5% Convertible Subordinated Notes due
2006 and 4% Convertible Subordinated Debentures due 2002 (the "Guarantor's
Subordinated Guarantees") and (b) pari passu with the Guarantor's Subordinated
Guarantees and the Guarantor's Liquid Yield Option Notes due 2010 (Zero Coupon
- -- Subordinated), Liquid Yield Option Notes due 2012 (Zero Coupon
- --Subordinated) and Convertible Subordinated Notes due 2005.
SECTION 4. Waiver; Subrogation. (a) The Guarantor hereby
waives diligence, presentment, demand of payment, filing of claims with a court
in the event of merger or bankruptcy of the Co-Obligor, any right to require a
proceeding filed first against the Co-Obligor, protest or notice with respect to
the Debt Securities or the indebtedness evidenced thereby and all demands
whatsoever.
(b) The Guarantor shall be subrogated to all rights of the
Trustee or the holders of any Debt Securities against the Issuer in respect of
any amounts paid to the Trustee or such holder by the Guarantor pursuant to the
provisions of this Guarantee; provided, however, that the Guarantor shall not be
entitled to enforce, or to receive any payments arising out of or based upon,
such right of subrogation until all Obligations shall have been paid in full.
SECTION 5. No Waiver; Remedies. No failure on the part of any
holder of the Debt Securities to exercise, and no delay in exercising, any right
hereunder shall operate as a waiver thereof; nor shall any single or partial
exercise of any right hereunder preclude any other
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or further exercise thereof or the exercise of any other right. The remedies
herein provided are cumulative and not exclusive of any remedies provided by
law.
SECTION 6. Continuing Guarantee; Transfer of Interest. This
Guarantee is a continuing guaranty and shall (i) remain in full force and effect
until the earliest to occur of (A) the date, if any, on which the Guarantor
shall consolidate with or merge into the Co-Obligor or any successor thereto,
(B) the date, if any, on which the Co-Obligor or any successor thereto shall
consolidate with or merge into the Guarantor, (C) payment in full of the
Obligations and (D) the release by (1) the Banks under the Loan Agreement, dated
as of July 16, 1998, by and among the Issuer, the Guarantor (as guarantor) and
the Banks, the Administrative Agent, the Documentation Agent and the Syndication
Agents named therein (or under any replacement or new principal credit facility
of the Issuer) of the guarantee of the Guarantor thereunder and (2) the Banks
under the Second Amended and Restated Revolving Credit Agreement, dated as of
July 16, 1998, by and among the Issuer, the Guarantor (as guarantor), Bank of
America National Trust and Savings Association, Morgan Guaranty Trust Company of
New York and each of the Banks named therein (or under any replacement or new
principal credit facility of the Issuer) of the guarantee of the Guarantor
thereunder, (ii) be binding upon the Guarantor, its successors and assigns, and
(iii) inure to the benefit of and be enforceable by any holder of Debt
Securities, the Trustee, and by their respective successors, transferees, and
assigns.
SECTION 7. Reinstatement. This Guarantee shall continue to be
effective or be reinstated, as the case may be, if at any time any payment of
any of the Obligations is rescinded or must otherwise be returned by any holder
of the Debt Securities or the Trustee upon the insolvency, bankruptcy or
reorganization of the Co-Obligor or otherwise, all as though such payment had
not been made.
SECTION 8. Amendment. The Guarantor may amend this Guarantee
at any time for any purpose without the consent of the Trustee or any holder of
the Debt Securities.
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SECTION 9. Governing Law. THIS GUARANTEE SHALL BE GOVERNED
BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW
YORK, WITHOUT REGARD TO THE PROVISIONS THEREOF RELATING TO
CONFLICT OF LAWS.
IN WITNESS WHEREOF, the Guarantor has caused this Guarantee
to be duly executed and delivered by its officer thereunto duly authorized as of
the date first above written.
WASTE MANAGEMENT HOLDINGS, INC.
(formerly known as Waste Management, Inc.)
By: /s/ Gregory T. Sangalis
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Name: Gregory T. Sangalis
Title: Vice President and Secretary