65B - INITIATION OF NEW SOLID WASTE SRVS CONTRACT PROCESS

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WASTE MANAGEMENT HOLDINGS INC. (W IH) GUARANTEE Name of Underlying Contract: Fourth Amended and Restated Agreement for Collection and Handling of Solid Waste Generated and/or Accumulated in the City of Santa Ana Date of Underlying Contract: June 19,1997 Beneficiary: CITY OF SANTA ANA, a municipal corporation of the State of California Address: 20 Civic Center Plaza, Santa Ana, CA 92701 WMH Contracting Company: USA Waste of California, Inc., a Delaware corporation TO THE BENEFICIARY IDENTIFIED ABOVE: With respect to that certain underlying contract identified above (hereinafter the "Agreement") dated as of the above specified date by and between the WMH Contracting Company identified above (the "Contractor") and the beneficiary identified above (the "Beneficiary"), and subject to the terms of this letter agreement (the "Guarantee"), Waste Management Holdings Inc., a Delaware corporation (hereinafter "WMH ), hereby irrevocably and unconditionally guarantees to the Beneficiary the performance of all obligations and the due and punctual payment of all amounts payable by the Contractor to the Beneficiary under the Agreement when the same shall become due and payable in accordance with the terms of the Agreement. Upon failure of the Contractor punctually to perform or pay any such amounts, and upon written demand by the Beneficiary to WMH at its address set forth below (or to such other address or person as WMH may specify in writing), WMH agrees to perform or cause to be _performed and to py or cause to be paid such amounts._.. Notwithstanding the foregoing, WMH's obligations hereunder as to any claim, suit, proceeding, event or other matter in respect of which the Beneficiary at any time shall be seeking payment hereunder (referred to herein as "Guarantee Events") shall be subject to the preconditions that (i) the Beneficiary shall have given written notice of such Guarantee Event to the Contractor promptly after learning thereof, (ii) in the case of any failure by the Contractor to perform any obligation under the Agreement, shall have afforded WMH a reasonable opportunity to cure such failure, and (iii) there shall not have occurred and be continuing any material breach by the Beneficiary of its obligations under the Agreement. WMH hereby agrees that, except as expressly provided herein, its obligations hereunder will be unconditional and will not be discharged except by complete payment or other lawful discharge (other than by operation of Bankruptcy law) of the amounts due under the Agreement, irrespective of any claim as to the lack of authority of the Contractor to execute or deliver the Agreement, the absence of any action to enforce the Agreement, the failure to obtain any judgment against the Contractor, the failure to commence any action to enforce a judgment against the Contractor under the Agreement or any similar circumstance which might otherwise constitute a legal or equitable discharge or defense of a guarantor generally. 33 65B-44