Document:

exv10w1

 

Exhibit 10.1

EMPLOYMENT AGREEMENT

     This EMPLOYMENT AGREEMENT (the “Agreement”) is made and entered into on this 27th day of March
2006, but as effective as of the date set forth herein, by and between Waste Management, Inc. (the
“Company”), and James Schultz (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.

     Executive acknowledges and represents that, any and all prior employment agreements, including
without limitation certain Employment Agreement between he and the Company dated November 1, 2000,
is terminated, and that any and all obligations of the Company created thereunder, whether express
or implied, are null and void and of no further force or effect, and that the only rights,
obligations and duties between the Company and Executive are those expressly set forth in this
Agreement.

     2. Term of Employment.

     The period of Executive’s employment under this Agreement shall commence on October 30, 2005
(“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.”

     3. Duties and Responsibilities.

     (a) Executive shall serve as the Senior Vice President Employee and Customer Engagement. 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.

     (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 (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 Three Hundred Fifteen Thousand Four Hundred Sixteen Dollars ($315,416.00) 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.

     (b) 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 sixty percent (60%) of
his Base Salary in effect for such year (the “Target Bonus”), and his actual annual bonus may range
from 0% to 120% 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 2005 will be paid in 2006, if earned, at the same
time as similarly situated executive employees receive or would otherwise receive their bonuses,
subject to the terms of the annual incentive program generally applicable to similarly situated
employees.

     (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

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	 	 	 	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.

     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 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.

     (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:
(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

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	 	 	 	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.

     (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 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 the equivalent of a Senior Vice-President of
the Company or such other successor entity 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.
	 
	 	(ii)	 	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

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	 	 	 	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.

     (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 23, 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
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(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

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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.
	 
	 	(ii)	 	Any benefits 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 vacation accrued to the date of termination, and any earned but unpaid
bonuses for any prior calendar year.
	 
	 	(ii)	 	Any benefits 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 vacation accrued to the date of termination, and any earned but unpaid
bonuses for any prior calendar year.
	 
	 	(ii)	 	Any benefits 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) for reasons other than death, Total Disability or Cause,

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or Executive terminates his employment for Good Reason outside of a Change in Control Period,
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.
	 
	 	(ii)	 	Any benefits 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), 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.
	 
	 	(iv)	 	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.
	 
	 	(v)	 	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,

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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).

     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 potential reduction as
may be required by Section 23, 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), 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.
	 
	 	(ii)	 	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.

     (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 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;

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	 	 		(B) 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”);
	 
	 	 		(C) 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
	 
	 	 	 	(D) 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.

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

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	 	 	 	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).

     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 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.

     9. 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.

     10. 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.

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     (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.

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     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

12

 

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

13

 

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.

     13. 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

14

 

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.

     14. 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.

     15. 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.

     16. Withholding of Taxes.

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

     17. 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

15

 

shall be no greater than the right of an unsecured creditor of the Company.

     18. 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).

     19. 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.

     20. 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.

     21. 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.

16

 

     22. 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) 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.

     (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 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.

     23. 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 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)
(“Severance Benefits”) 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) Calculation of Maximum Severance Amount. For purposes of determining the Maximum
Severance Amount under this Section 23, benefits included in the calculation of the Maximum
Severance Amount will include: (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). The calculation of the Maximum Severance Amount will not include the
following benefits: (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

17

 

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 Further Reduction. Following application of Section 23(b), in the event that
the payment of the remaining Severance Benefits to Executive (including any payment or benefit
received in connection with a Change in Control or the termination of Executive’s employment),
would be subject (in whole or part), to any excise tax imposed under section 4999 of the Code (the
“Excise Tax”), then the cash portion of the Severance Benefits shall first be further reduced, and
the non-cash Severance Benefits shall thereafter be further reduced, to the extent necessary so
that no portion of the Severance Benefits is subject to the Excise Tax, but only if (i) the net
amount of the Severance Benefits to be received by Executive, as so additionally reduced by this
Section 23(c) (and after subtracting the net amount of federal, state and local income taxes on
such additionally reduced Severance Benefits and after taking into account the phase out of
itemized deductions and personal exemptions attributable to such additionally reduced Severance
Benefits) is greater than or equal to (ii) the net amount of the Severance Benefits to be received
by Executive without such additional reduction (but after subtracting the net amount of federal,
state and local income taxes on such Severance Benefits and the amount of Excise Tax to which
Executive would be subject in respect of such unreduced Severance Benefits and after taking into
account the phase out of itemized deductions and personal exemptions attributable to such unreduced
Severance Benefits ); provided, however, that Executive may elect to have the non-cash portion of
the Severance Benefits reduced (or eliminated) prior to any reduction of the cash portion of the
Severance Benefits.

     (d) Calculation of Excise Tax. For purposes of determining whether and the extent to which
portions of the Severance Benefits will be subject to the Excise Tax, (i) no portion of the
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 section 280G(b) of the Code
shall be taken into account, (ii) no portion of the 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 section 280G(b)(2) of the Code (including by reason of section 280G(b)(4)(A) of the
Code) and, in calculating the Excise Tax, no portion of such 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 section 280G(b)(4)(B) of the Code, in excess of the “base
amount” (as defined in section 280G(b)(3) of the Code) allocable to such reasonable compensation,
and (iii) the value of any non-cash benefit or any deferred payment or benefit included in the
Severance Benefits shall be determined by the Auditor in accordance with the principles of sections
280G(d)(3) and (4) of the Code.

18

 

     (e) Determination of Present Value. For purposes of this Section 23, the present value of
Severance Benefits shall be determined in accordance with section 280G(d)(4) of the Code.

     24. Code Section 409A.

It is the intention of the Company and Executive that his Agreement not result in an unfavorable
tax consequences to Executive under section 409A of the Code. Accordingly, Executive consents to
any amendment of this Agreement as the Company may reasonably make in furtherance of such
intention, and the Company shall promptly provide, or make available to, Executive a copy of such
amendment.

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

	 	 	 	 	 	 	 
	     /s/ James Schultz	 	WASTE MANAGEMENT, INC.	 	 
	 	 	 	 	 	 	 
	James Schultz	 	(The “Company”)	 	 
	(“Executive”)
	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	By: 
	      /s/ Jimmy LaValley	 	 
	 	 	 	 	   	 	 
	Home Address

	 	 	 	Jimmy LaValley	 	 
	 

	 	 	 	Senior Vice President & Chief

People Officer	 	 
	 
	 	 	 	 	 	 
	 	 	 	 	 	 	 
	City, State, ZIP Code
	 	 	 	 	 	 

19<PAGE>
                                                                   EXHIBIT 10.33

                               DEED OF TRUST NOTE
                          (CONSTRUCTION TO PERMANENT)
                                    MARYLAND

November 3, 2005

BORROWER: POINTER RIDGE OFFICE INVESTMENT, LLC, a limited liability company
organized under the laws of the State of Maryland. Address of residence/chief
executive office: 2995 Crain Highway, Waldorf, Maryland 20601.

BANK: MANUFACTURERS AND TRADERS TRUST COMPANY, a New York banking company, with
offices located at One Fountain Plaza, Buffalo, New York 14203. Attn: Commercial
Lending Services.

1. DEFINITIONS. Each capitalized term shall have the meaning specified herein
and the following terms shall have the indicated meanings:

a.    "BASE RATE" means the rate of interest announced by the Bank from time to
      time as its prime rate of interest.

b.    "BUSINESS DAY" means any day of the year other than a day on which banking
      institutions in New York, New York are authorized or required by law or
      other governmental action to close.

c.    "CONSTRUCTION LOAN" has the meaning ascribed to such term in the Loan
      Agreement.

c.    "CONSTRUCTION LOAN PERIOD" means the period from the date of this Note to,
      but not including the Conversion Date, during which the Bank is advancing
      sums to Borrower pursuant to the Loan Agreement.

d.    "CONVERSION DATE" has the same meaning ascribed to that term in the Loan
      Agreement.

e.    "DEED OF TRUST" means that certain Deed of Trust and Security Agreement
      dated as of November 3, 2005, from Borrower to certain trustees for the
      benefit of the Bank, as the same may be amended, modified or replaced from
      time to time.

f.    "DEFAULT" has the meaning set forth in Section 12 of this Note.

g.    "DEFAULT RATE" has the meaning ascribed in Section 5.

h.    "ESCROW" means the escrow required under the Deed of Trust for the payment
      of taxes and/or other charges.

i.    "EXPENSES" has the meaning ascribed in Section 15.

<PAGE>

j.    "FINANCING DOCUMENTS" has the meaning ascribe to such term in the Loan
      Agreement.

k.    "LIBOR" means the rate obtained by dividing (i) the one month interest
      period London Interbank Offered Rate as fixed by the British Bankers
      Association for United States dollar deposits in the London Interbank
      Eurodollar Market at approximately 11:00 a.m. London, England time (or as
      soon thereafter as practicable) each day (or if such day is a non Business
      Day, as fixed in the same manner on the immediately preceding Business
      Day, which day's rate shall apply to the immediately succeeding non
      Business Days), as determined by the Bank from any broker, quoting service
      or commonly available source utilized by the Bank, by (ii) a percentage
      equal to 100% minus the stated maximum rate of all reserves required to be
      maintained against "Eurocurrency Liabilities" as specified in Regulation D
      (or against any other category of liabilities, which includes deposits by
      reference to which the interest rate on Loans accruing interest at the
      LIBOR Rate is determined, or any category of extensions of credit or other
      assets which includes loans by a non-United States' office of a bank to
      United States' residents) on such date to any member bank of the Federal
      Reserve System.

l.    "LIBOR RATE" means the floating and fluctuating per annum rate of interest
      equal on any day to 1.85% above LIBOR on such day.

m.    "LOAN AGREEMENT" means that certain Loan Agreement dated as of November 3,
      2005, by between Borrower and the Bank, as the same may be amended,
      modified or replaced from time to time.

n.    "MATURITY DATE" shall be determined in accordance with Section 6 hereof.

o.    "MAXIMUM LEGAL RATE" has the meaning ascribed in Section 4.

p.    "OBLIGATIONS" means collectively and includes all present and future
      indebtedness, liabilities and obligations of any kind and nature
      whatsoever of the Borrower to the Bank both now existing and hereafter
      arising under, as a result of, on account of, or in connection with, (a)
      the Loan Agreement and any and all amendments thereto, restatements
      thereof, supplements thereto and modifications thereof made at any time
      and from time to time hereafter, (b) this Note and any and all amendments
      thereto, restatements thereof, supplements thereto, modifications thereof,
      replacements thereof and substitutions therefor made at any time and from
      time to time hereafter, or (c) the other Financing Documents, including,
      without limitation, future advances, principal, interest, other fees, late
      charges, enforcement costs and other costs and expenses whether direct,
      contingent, joint, several, matured or unmatured.

q.    "PERIOD OF AMORTIZATION" means twenty five (25) years. This is the
      approximate number of years, starting on or about the Conversion Date,
      needed to result in the Principal Sum being fully paid if amortized over
      this period (which is longer than the period from the Conversion Date to
      the Maturity Date).

                                       2
<PAGE>

r.    "PERMANENT LOAN" has the meaning ascribed to such term in the Loan
      Agreement.

s.    "PERMANENT LOAN PERIOD" means the period from and including the Conversion
      Date to the Maturity Date, during which Borrower will repay the
      outstanding Principal Sum, with interest, as set forth below.

t.    "PRINCIPAL SUM" means Five Million Eight Hundred Forty Thousand Dollars
      ($5,840,000.00). The outstanding Principal Sum during the Construction
      Loan Period constitutes the Construction Loan, and outstanding Principal
      Sum during the Permanent Loan Period constitutes the Permanent Loan.

2. PROMISE TO PAY. For value received, and intending to be legally bound, the
undersigned Borrower promises to pay to the order of the Bank at its office
identified above in lawful money of the United States and in immediately
available funds, the Principal Sum or so much thereof as may be advanced, plus
interest on the unpaid portion of the Principal Sum, all amounts required for
Escrow, and all Expenses at the times and in the manner herein set forth.

3. PAYMENT OF INTEREST. Except after the occurrence and continuance of a
Default, so long as any portion of the Principal Sum remains outstanding
hereunder, the unpaid Principal Sum outstanding hereunder shall accrue interest
at a per annum rate equal to LIBOR Rate. Borrower shall pay such interest to the
Bank on the first day of December 1, 2005 and on the first day of each
subsequent month thereafter to and including the Maturity Date. Interest will be
calculated on the basis of a 360-day year for the actual number of days of each
year (365 or 366). Interest will continue to accrue until payment is actually
received.

4. MAXIMUM LEGAL RATE. It is the intent of the Bank and Borrower that in no
event shall such interest be payable at a rate in excess of the maximum rate
permitted by applicable law (the "Maximum Legal Rate"). Solely to the extent
necessary to prevent interest under this Note from exceeding the Maximum Legal
Rate, any amount that would be treated as excessive under a final judicial
interpretation of applicable law shall be deemed to have been a mistake and
automatically canceled and if received by the Bank shall be refunded to
Borrower.

5. DEFAULT RATE. If a Default occurs, the interest rate on the unpaid Principal
Amount shall immediately be automatically increased to two percent (2%) per year
above the Base Rate (the "Default Rate"), and any judgment entered hereon or
otherwise in connection with any suit to collect amounts due hereunder shall
bear interest at such Default Rate. Any judgment entered hereon or otherwise in
connection with any suit to collect amounts due hereunder shall bear interest at
such Default Rate. No failure to impose or delay in imposing this Default Rate
shall be construed as a waiver by the Bank of its right to collect, and
Borrower's obligation to pay, interest at the Default Rate effective as of the
date of maturity (whether due to the Maturity Date, by acceleration or
otherwise).

6. DETERMINATION OF PERMANENT LOAN PERIOD. When the Borrower delivers to the
Bank the notice pursuant to Section 2.13 of the Loan Agreement, the Borrower
shall elect, in writing, a five (5) year or ten (10) year term for the Permanent
Loan Period. Provided the

                                       3

<PAGE>
conditions precedent for the advance of the Permanent Loan are satisfied (in
accordance with the terms of the Loan Agreement), if the Borrower elects a five
(5) year Permanent Loan Period, the "Maturity Date" shall be the first day of
the sixtieth (60th) month following the Conversion Date. Provided the conditions
precedent for the advance of the Permanent Loan are satisfied (in accordance
with the terms of the Loan Agreement), if the Borrower elects a ten (10) year
Permanent Loan Period, the "Maturity Date" shall be the first day of the one
hundred twentieth (120th) month following the Conversion Date.

7. REPAYMENT OF PRINCIPAL. If the Borrower fails to satisfy the conditions
precedent to the advance of the Permanent Loan (in accordance with the terms of
the Loan Agreement) by December 1, 2006, the outstanding Principal Sum
(constituting the Construction Loan) shall become due and payable without notice
or demand by the Bank to the Borrower on such date. Provided the conditions
precedent for the advance of the Permanent Loan are satisfied (in accordance
with the terms of the Loan Agreement), during the Permanent Loan Period,
Borrower shall pay the Principal Sum owing pursuant to this Note to the Bank in
installments as follows:

      (a) if the Borrower elects a five (5) year Permanent Loan Period, the
Borrower shall pay the outstanding Principal Sum in sixty (60) consecutive
monthly installments each being due and payable on the first day of each month
commencing with the first month following the Conversion Date; consisting of
fifty-nine (59) consecutive level monthly installments of principal due and
payable commencing on the first day of each month commencing with the first
month following the Conversion Date, with each installment being in the amount
that would result in the Principal Sum outstanding under this Note on the
Conversion Date being fully paid if amortized over the Period of Amortization,
and ONE (1) FINAL INSTALLMENT on the Maturity Date in an amount equal to the
outstanding Principal Sum at that time together with all other amounts
outstanding hereunder including, without limitation, accrued interest, costs and
Expenses.

      (b) if the Borrower elects a ten (10) year Permanent Loan Period, the
Borrower shall pay the outstanding Principal Sum in one hundred twenty (120)
consecutive monthly installments each being due and payable on the first day of
each month commencing with the first month following the Conversion Date;
consisting of one hundred nineteen (119) consecutive level monthly installments
of principal due and payable commencing on the first day of each month
commencing with the first month following the Conversion Date, with each
installment being in the amount that would result in the Principal Sum
outstanding under this Note on the Conversion Date being fully paid if amortized
over the Period of Amortization, and ONE (1) FINAL INSTALLMENT on the Maturity
Date in an amount equal to the outstanding Principal Sum at that time together
with all other amounts outstanding hereunder including, without limitation,
accrued interest, costs and Expenses.

      (c) Since the period of time from the Conversion Date to the Maturity Date
is less than the Period of Amortization, there will be a balloon payment of
principal due on the Maturity Date. Absent manifest error, the Bank's
determination of the final installment shall be conclusive.

                                       4
<PAGE>

8. LATE CHARGE. If Borrower fails to pay the whole or any installment of
principal or interest owing pursuant to this Note, the Deed of Trust or the Loan
Agreement including any Escrow payment owing pursuant to the Deed of Trust or
the Loan Agreement within ten (10) days of its due date, Borrower shall
immediately pay to the Bank a late charge equal to five percent (5%) of the
delinquent amount.

9. APPLICATION OF PAYMENTS. Payment made under this Note may be applied in any
order in the sole discretion of the Bank, but prior to a Default or maturity,
each payment shall be applied first to accrued and unpaid interest, next to
Principal, next to the Escrow, next to late charges, and finally to Expenses.

10. PREPAYMENT. The Borrower may prepay any, all or any portion of the Principal
Sum, at any time from time to time, and any such prepayment need not be
accompanied by payment of interest on the amount prepaid except, that any
prepayment which constitutes a final payment of all of the Principal Sum shall
be accompanied by payment of all interest thereon accrued through the date of
prepayment.

11. BUSINESS PURPOSE. This Note is being given by Borrower to the Bank in
connection with the construction and the financing of improvements to be
constructed on the real property described in the Deed of Trust, and Borrower
represents and warrants that the indebtedness evidenced by this Note is for a
business purpose, and that this Note evidences a commercial loan and an
extension of credit for a commercial purpose within the meaning of Md. Code,
Commercial Law Art.

12. DEFAULT. The occurrence of any one or more of the following events shall
constitute a default under the provisions of this Note, and the term "Default"
shall mean, whenever it is used in this Note, any one or more of the following
events: (a) the failure of the Borrower to pay any of the Obligations as and
when due and payable in accordance with the provisions of this Note, the Loan
Agreement and/or any of the other Financing Documents, whether at the due date
thereof or at a date fixed for prepayment thereof or by acceleration thereof or
otherwise, and such failure shall continue uncured for a period of five (5)
days; (b) the failure of the Borrower to perform, observe or comply with any of
the provisions of the Note other than payment; (c) the occurrence of a Default
(as defined and described therein) under the provisions of the Loan Agreement or
any of the other Financing Documents which is not cured within applicable cure
periods, if any; (d) if proceedings in bankruptcy, or for reorganization of the
Borrower, or for the readjustment of any of the Borrower's debts, under the
United States Bankruptcy Code (as amended) or any part thereof, or under any
other applicable laws, whether state or federal, for the relief of debtors, now
or hereafter existing, shall be commenced against or by the Borrower and, except
with respect to any such proceedings instituted by the Borrower, shall not be
discharged within thirty (30) days of their commencement; and (e) a receiver or
trustee shall be appointed for the Borrower or for any substantial part of the
Borrower's assets, or any proceedings shall be instituted for the dissolution or
the full or partial liquidation of the Borrower and, except with respect to any
such appointments requested or instituted by the Borrower, such receiver or
trustee shall not be discharged within thirty (30) days of his or her
appointment, and, except with respect to any such proceedings instituted by the
Borrower, such proceedings shall not be discharged within thirty (30) days of
their commencement.

                                       5
<PAGE>

13. REMEDIES. If any Default shall occur and be continuing, the Bank may declare
the unpaid principal amount of this Note, together with accrued and unpaid
interest thereon, and all other Obligations then outstanding to be immediately
due and payable, whereupon the same shall become and be forthwith due and
payable by the Borrower to the Bank, without presentment, demand, protest or
notice of any kind, all of which are expressly waived by the Borrower; provided,
that, in the case of any Default referred to in subsections (d) and (e) of
Section 12 above, the Outstanding Principal Amount, together with accrued and
unpaid interest thereon, and all other Obligations then outstanding shall be
automatically and immediately due and payable by the Borrower to the Bank
without notice, presentment, demand, protest or other action of any kind, all of
which are expressly waived by the Borrower. Upon the occurrence and during the
continuation of any Default, then in each and every case, the Bank shall be
entitled to exercise in any jurisdiction in which enforcement thereof is sought,
the rights and remedies set forth herein, in addition to the rights and remedies
available to the Bank under the other Financing Documents, the rights and
remedies of a secured party under the Maryland Uniform Commercial Code and all
other rights and remedies available to the Bank under applicable law, all such
rights and remedies being cumulative and enforceable alternatively, successively
or concurrently.

14. RIGHT OF SETOFF. If a Default occurs, the Bank shall have, in addition to
its other rights, the right to set off against the amounts owing under this Note
any deposit account or other property held by the Bank or its affiliates in any
capacity for Borrower or any guarantor. Such right of setoff shall be deemed to
have been exercised immediately at the time of such election.

15. EXPENSES. Borrower shall pay to the Bank on demand each cost and expense
(including, but not limited to, the reasonable fees and disbursements of counsel
to the Bank, whether internal or external and whether retained for advice, for
litigation or for any other purpose) incurred by the Bank or its agents either
directly or indirectly in connection with this Note including, without
limitation, endeavoring to (1) collect any amount owing pursuant to this Note or
negotiate or document a workout or restructuring; (2) enforce or realize upon
any guaranty, endorsement or other assurance, any collateral or other security,
or any subordination, directly or indirectly securing or otherwise directly or
indirectly applicable in any such amount; or (3) preserve or exercise any right
or remedy of the Bank pursuant to this Note (the "Expenses").

16. INABILITY TO DETERMINE LIBOR RATES, INCREASED COSTS, ILLEGALITY.

      a) INCREASED COSTS. If the Bank shall determine that, due to either (a)
the introduction of any change (other than any change by way of imposition of or
increase in reserve requirements included in the calculation of the LIBOR) in or
in the interpretation of any requirement of law or (b) the compliance with any
guideline or request from any central bank or other governmental authority
(whether or not having the force of law), there shall be any increase in the
cost to the Bank of agreeing to make or making, funding or maintaining any loans
based on LIBOR, then Borrower shall be liable for, and shall from time to time,
upon demand therefor by the Bank and pay to the Bank such additional amounts as
are sufficient to compensate the Bank for such increased costs.

                                       6
<PAGE>

      b) INABILITY TO DETERMINE RATES. If the Bank shall determine that for any
reason adequate and reasonable means do not exist for ascertaining LIBOR for the
Interest Period specified above, the Bank will give notice of such determination
to Borrower. Thereafter, the Bank may not maintain the loan hereunder at the
LIBOR Rate until the Bank revokes such notice in writing and, until such
revocation, the Bank may convert the Applicable Rate from the LIBOR Rate to the
Base Rate.

      c) ILLEGALITY. If the Bank shall determine that the introduction of any
law (statutory or common), treaty, rule, regulation, guideline or determination
of an arbitrator or of a governmental authority or in the interpretation or
administration thereof, has made it unlawful, or that any central bank or other
governmental authority has asserted that it is unlawful for the Bank to make
loans at based on LIBOR then, on notice thereof by the Bank to Borrower, the
Bank may suspend the maintaining of the loan hereunder at the LIBOR Rate until
the Bank shall have notified Borrower that the circumstances giving rise to such
determination shall no longer exist. If the Bank shall determine that it is
unlawful to maintain the loan hereunder based on LIBOR, the Bank may convert the
Applicable Rate from the LIBOR Rate to the Base Rate.

17. MISCELLANEOUS. This Note contains the entire agreement between the Bank and
Borrower with respect to the loan it evidences and supersedes every course of
dealing, other conduct, oral agreement and representation previously made by the
Bank with respect thereto. All rights and remedies of the Bank under applicable
law, the Deed of Trust, the Loan Agreement, this Note or any document in
connection with the transaction contemplated hereby or amendment thereof are
cumulative and not exclusive. No single, partial or delayed exercise by the Bank
of any right or remedy shall preclude the subsequent exercise by the Bank at any
time of any right or remedy of the Bank without notice. No waiver or amendment
of any provision of this Note shall be effective unless made specifically in
writing by the Bank. No course of dealing or other conduct, no oral agreement or
representation made by the Bank, and no usage of trade, shall operate as a
waiver of any right or remedy of the Bank. Borrower agrees that in any legal
proceeding, a copy of this Note kept in the Bank's course of business may be
admitted into evidence as an original. This Note is a binding obligation
enforceable against Borrower and its successors and assigns and shall inure to
the benefit of the Bank and its successors and assigns. If a court deems any
provision of this Note invalid, the remainder of the Note shall remain in
effect. Section headings are for convenience only. Singular number includes
plural and neuter gender includes masculine and feminine as appropriate.

18. NOTICES. Any demand or notice hereunder or under any applicable law
pertaining hereto shall be in writing and duly given if delivered to Borrower
(at its address on the Bank's records) or to the Bank (at the address on page
one and separately to the Bank officer responsible for Borrower's relationship
with the Bank). Such notice or demand shall be deemed sufficiently given for all
purposes when delivered (i) by personal delivery and shall be deemed effective
when delivered, or (ii) by mail or courier and shall be deemed effective three
(3) business days after deposit in an official depository maintained by the
United States Post Office for the collection of mail or one (1) business day
after delivery to a nationally recognized overnight courier service (E.G.,
Federal Express). Notice by e-mail is not valid notice under this or any other
agreement between Borrower and the Bank.

                                       7
<PAGE>

19. GOVERNING LAW AND JURISDICTION. This Note has been delivered to and accepted
by the Bank and will be deemed to be made in the State of Maryland. This Note
will be interpreted in accordance with the laws of the State of Maryland
excluding its conflict of laws rules. BORROWER HEREBY IRREVOCABLY CONSENTS TO
THE EXCLUSIVE JURISDICTION OF ANY STATE OR FEDERAL COURT IN THE STATE OF
MARYLAND IN A COUNTY OR JUDICIAL DISTRICT WHERE THE BANK MAINTAINS A BRANCH AND
CONSENTS THAT THE BANK MAY EFFECT ANY SERVICE OF PROCESS IN THE MANNER AND AT
BORROWER'S ADDRESS SET FORTH ABOVE FOR PROVIDING NOTICE OR DEMAND; PROVIDED THAT
NOTHING CONTAINED IN THIS NOTE WILL PREVENT THE BANK FROM BRINGING ANY ACTION,
ENFORCING ANY AWARD OR JUDGMENT OR EXERCISING ANY RIGHTS AGAINST BORROWER
INDIVIDUALLY, AGAINST ANY SECURITY OR AGAINST ANY PROPERTY OF BORROWER WITHIN
ANY OTHER COUNTY, STATE OR OTHER FOREIGN OR DOMESTIC JURISDICTION. Borrower
acknowledges and agrees that the venue provided above is the most convenient
forum for both the Bank and Borrower. Borrower waives any objection to venue and
any objection based on a more convenient forum in any action instituted under
this Note.

20. WAIVER OF JURY TRIAL. BORROWER AND THE BANK HEREBY KNOWINGLY, VOLUNTARILY,
AND INTENTIONALLY WAIVE ANY RIGHT TO TRIAL BY JURY BORROWER AND THE BANK MAY
HAVE IN ANY ACTION OR PROCEEDING, IN LAW OR IN EQUITY, IN CONNECTION WITH THIS
NOTE OR THE TRANSACTIONS RELATED HERETO. BORROWER REPRESENTS AND WARRANTS THAT
NO REPRESENTATIVE OF THE BANK HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT THE
BANK WILL NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THIS JURY TRIAL
WAIVER. BORROWER ACKNOWLEDGES THAT THE BANK HAS BEEN INDUCED TO ENTER INTO THIS
NOTE BY, AMONG OTHER THINGS, THE PROVISIONS OF THIS SECTION.

21. POWER TO CONFESS JUDGMENT. BORROWER HEREBY EMPOWERS ANY ATTORNEY OF ANY
COURT OF RECORD, AFTER THE OCCURRENCE OF ANY DEFAULT HEREUNDER, TO APPEAR FOR
BORROWER AND, WITH OR WITHOUT COMPLAINT FILED, CONFESS JUDGMENT, OR A SERIES OF
JUDGMENTS, AGAINST BORROWER IN FAVOR OF THE BANK OR ANY HOLDER HEREOF FOR THE
ENTIRE PRINCIPAL BALANCE OF THIS NOTE, ALL ACCRUED INTEREST AND ALL OTHER
AMOUNTS DUE HEREUNDER, TOGETHER WITH COSTS OF SUIT AND AN ATTORNEY'S COMMISSION
OF THE GREATER OF FIFTEEN PERCENT (15%) OF SUCH PRINCIPAL AND INTEREST OR $1,000
ADDED AS A REASONABLE ATTORNEY'S FEE, AND FOR DOING SO THIS NOTE OR A COPY
VERIFIED BY AFFIDAVIT SHALL BE A SUFFICIENT WARRANT. BORROWER HEREBY FOREVER
WAIVES AND RELEASES ALL ERRORS IN SAID PROCEEDINGS AND ALL RIGHTS OF APPEAL AND
ALL RELIEF FROM ANY AND ALL APPRAISEMENT, STAY OR EXEMPTION LAWS OF ANY STATE
NOW IN FORCE OR HEREAFTER ENACTED. INTEREST ON ANY SUCH JUDGMENT SHALL ACCRUE AT
THE DEFAULT RATE. NO SINGLE EXERCISE OF THE FOREGOING POWER TO CONFESS JUDGMENT,
OR A SERIES OF JUDGMENTS, SHALL BE DEEMED TO EXHAUST THE POWER, WHETHER OR NOT
ANY SUCH EXERCISE SHALL BE HELD BY ANY COURT TO BE INVALID, VOIDABLE, OR VOID,
BUT THE POWER SHALL CONTINUE UNDIMINISHED AND IT MAY BE EXERCISED FROM TIME TO
TIME AS OFTEN

                                       8
<PAGE>

AS THE BANK SHALL ELECT UNTIL SUCH TIME AS THE BANK SHALL HAVE RECEIVED PAYMENT
IN FULL OF THE DEBT, INTEREST AND COSTS.

22. PREAUTHORIZED TRANSFERS FROM DEPOSIT ACCOUNT. If a deposit number is
provided in the following blank, Borrower hereby authorizes the Bank to debit
Borrower's deposit account # __________________ with the Bank automatically for
the full amount of each payment which becomes due under this Note.

23. ACKNOWLEDGMENT. Borrower acknowledges that it has read and understands all
the provisions of this Note, including the CONFESSION OF JUDGMENT, GOVERNING
LAW, JURISDICTION AND WAIVER OF JURY TRIAL, and has been advised by counsel as
necessary or appropriate.

WITNESS the due execution hereof as a SEALED INSTRUMENT the day and year first
above written.

Tax ID #_________________________________
WITNESS/ATTEST:                                 POINTER RIDGE OFFICE INVESTMENT,
                                                LLC
/s/ Richard J. Ham                     BY: /s/ Gregory S. Wilby         (SEAL)
----------------------------------         -----------------------------
    Richard J. Ham
----------------------------------      ----------------------------------------
               Name                     Name                            Title

                                 ACKNOWLEDGMENT

State of Maryland, TO WIT:

      I HEREBY CERTIFY, that on this ______day of November 3, 2005, before me,
the undersigned Notary Public of Prince Georges County, personally appeared ,
who acknowledged himself/herself to be the Manager of Pointer Ridge Office
Investment, LLC, a  MD limited liability company, known to me (or satisfactorily
proven) to be the person whose name is subscribed to the within instrument, and
acknowledged that he executed the same for the purposes therein contained on
behalf of Pointer Ridge Office Investment, LLC as the duly authorized Manager of
said limited liability company by signing the name of the limited liability
company by himself as Manager

WITNESS my hand and Notarial Seal.

/s/ Richard J. Ham
----------------------------------
Notary Public
My Commission Expires

                              FOR INTERNAL USE ONLY

Authorization Confirmed:_____________________________

                                       9

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