Exhibit 10.7.2

 

EMPLOYMENT AGREEMENT
ROGER A. WAESCHE, JR.

 

This Employment Agreement (this “Agreement”), is made and entered into as of the
12th day of  September, 2002, by and between Corporate Office Properties L.P., a
Maryland limited liability company (the “Employer”), and Corporate Office
Properties Trust, a Maryland business trust (“COPT”), and Roger A. Waesche, Jr.
(the “Executive”).

 

RECITALS

 

A.                                   The Executive and former Employer Corporate
Office Management Inc. (COMI) and current employer Corporate Office Properties,
L.P. (COPLP) executed an agreement effective as of December 16, 1999 providing
for the employment of the Executive by the former/current Employer upon the
terms and conditions therein stated (the “Prior Agreement”).

 

B.                                     The Employer (as referenced in the first
paragraph) wishes to terminate the Prior Agreement and to renegotiate a new
Agreement to assure itself of the continued services of the Executive for the
period provided in this Agreement and the Executive is willing to continue in
the employ of the Employer on a full-time basis for said period, and upon the
other terms and conditions hereinafter provided.

 

C.                                     The Employer recognizes that
circumstances may arise in which a change of control of the Employer or COPT,
through acquisition or otherwise, may occur, thereby causing uncertainty of
employment without regard to the competence or past contributions of the
Executive, and that such uncertainty may result in the loss of valuable services
of the Executive. Accordingly, the Employer and the Executive wish to provide
reasonable security to the Executive against changes in the employment
relationship in the event of any such change of control.

 

D.                                    COPT has agreed to become a party to this
Agreement for the purpose of assuming the liabilities, obligations and duties of
the Employer to the extent provided herein.

 

E.                                      It is the intention of the Employer and
the Executive that, notwithstanding the date of execution hereof, the Prior
Agreement shall be terminated and this Agreement shall become effective as of
July 1, 2002.

 

NOW, THEREFORE, in consideration of the premises and of the covenants and
agreements hereinafter contained, it is covenanted and agreed by and between the
parties hereto as follows:

 

AGREEMENTS

 

1.                                       TERMINATION OF PRIOR AGREEMENT.  The
Prior Agreement is hereby terminated and this Agreement shall become effective
as of July 1, 2002 (the “Effective Date”).

 

2.                                       POSITION AND DUTIES.  As of the
Effective Date, the Employer hereby employs the Executive as Senior
Vice-President and Chief Financial Officer of the Employer, or in such other
capacity as shall be mutually agreed between the Employer and the Executive.

 

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During the period of the Executive’s employment hereunder, the Executive shall
devote his best efforts and full business time, energy, skills and attention to
the business and affairs of the Employer.  The Executive’s duties and authority
shall consist of and include all duties and authority customarily performed and
held by persons holding equivalent positions with business organizations similar
in nature and size to the Employer, as such duties and authority are reasonably
defined, modified and delegated from time to time by the Board of Trustees of
the Employer (the “Board”). The Executive shall have the powers necessary to
perform the duties assigned to him, and shall be provided such supporting
services, staff, secretarial and other assistance, office space and
accouterments as shall be reasonably necessary and appropriate in the light of
such assigned duties.

 

3.                                       COMPENSATION.  As compensation for the
services to be provided by the Executive hereunder, the Executive shall receive
the following compensation and other benefits:

 

(a)                                  BASE SALARY.  The Executive shall receive
an aggregate annual minimum “Base Salary” at the annualized rate of Two Hundred
Sixty Five Thousand Dollars ($265,000.00) per annum, payable in periodic
installments in accordance with the regular payroll practices of the Employer.
Such Base Salary shall be subject to review annually by the Board and
Compensation Committee of COPT (“Compensation Committee”) during the term
hereof, in accordance with the established compensation policies of the
Compensation Committee.

 

(b)                                 PERFORMANCE BONUS.  The Executive shall be
entitled to an annual cash “Performance Bonus,” payable within ninety (90) days
after the end of the fiscal year of the Employer the amount (if any) of which
shall be determined by the Board based upon the recommendation of the
Compensation Committee.

 

(c)                                  STOCK OPTION/RESTRICTED SHARES.  Executive
shall be entitled to stock options and/or restricted shares as determined by the
Compensation Committee and the Board.

 

(d)                                 BENEFITS.  The Executive shall be entitled
to all perquisites extended to similarly situated executives, as such are stated
in the Employer’s Executive Perquisite Policy (the “Perquisite Policy”)
promulgated for the Board or the Compensation Committee, and which Perquisite
Policy is hereby incorporated by reference, as amended by the Board or the
Compensation Committee from time to time. In addition, the Executive shall be
entitled to participate in all plans and benefits generally, from time to time,
accorded to employees of the Employer (“Benefit Plans”), all as determined by
the Board from time to time based upon the input of the Compensation Committee.
Executive shall also receive additional benefits as follows:

 

(i)                                     a $1,000.00 dollars ($1,000.00) per
month automobile allowance; and

 

(ii)                                  five thousand dollars ($5,000.00) per year
for personal financial planning and personal income tax preparation.

 

(e)                                  WITHHOLDING.  The Employer shall be
entitled to withhold, from amounts payable to the Executive hereunder, any
federal, state or local withholding or other

 

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taxes or charges which it is from time to time required to withhold. The
Employer shall be entitled to rely upon the opinion of its independent
accountants, with regard to any question concerning the amount or requirement of
any such withholding.

 

4.                                       TERM AND TERMINATION.

 

(a)                                  BASIC TERM.  The Executive’s employment
hereunder shall be for a six (6) year basic term (the “Basic Term”), commencing
as of the Effective Date. If either the Executive or the Employer notifies the
Compensation Committee in writing at least six (6) months but not more than one
(1) year prior to the expiration of the Basic Term that the Agreement is set to
terminate at the end of the Basic Term, the Agreement shall automatically be
extended after the Basic Term for a continuous, self-renewing one (1) year term
without further action of the parties unless, within ninety (90) days after
receiving such notice, the Compensation Committee notifies the parties in
writing that this Agreement shall not be extended beyond the end of the Basic
Term.  If this Agreement is extended beyond the Basic Term, either party may at
any time thereafter give written notice to the other party that the term of this
Agreement will expire on the date that is one (1) year following the date of
such written notice.  Subject to the foregoing and other applicable terms of
this Agreement, the Executive’s employment may be terminated by either party,
with or without cause, effective as of the first (1st) business day after
written notice to that effect is delivered to the other party.

 

(b)                                 POST-TERMINATION SALARY CONTINUATION. After
the expiration of the Basic Term, or after the expiration of any renewal term,
the Employer shall continue payment of the Executive’s Base Salary in periodic
installments corresponding to the regular payroll periods of the Employer for a
period of one year from the date of the expiration of the term of this
Agreement.

 

(c)                                  PREMATURE TERMINATION.

 

(i)                                     In the event of the termination of the
employment of the Executive under this Agreement by the Employer for any reason
other than expiration of the Basic Term hereof or any renewal term, termination
upon disability in accordance with the provisions of paragraph (g) of this
Section 4, or a “for-cause” termination in accordance with the provisions of
paragraph (e) of this Section 4, then notwithstanding any actual or allegedly
available alternative employment or other mitigation of damages by or available
to the Executive, the Executive shall be entitled to a “Premature Termination
Payment” equal to the sum of:  (w) three (3) times the rate of annualized Base
Salary then payable to the Executive, plus (x) three (3) times the average of
the three (3) most recent annual Performance Bonuses that the Executive
received. In the event of a termination governed by this subparagraph (c) of
Section 4, the Employer shall also: (y) allow a period of eighteen (18) months
following the termination of employment for the Executive (but in no event
beyond the expiration of any option term or period specified in the option
agreement with the Executive) to exercise any options granted under any stock
option or share incentive plan established by Employer or COPT (“Stock Plan”);
and (z) continue for the Executive (provided that such items are not available
to him by virtue of other employment secured after termination) the

 

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perquisites, plans and benefits provided under the Employer’s Perquisite Policy
and Benefit Plans as of and after the date of termination, [all items in (z)
being collectively referred to as “Post-Termination Perquisites and Benefits”],
for the lesser of the number of full months the Executive has theretofore been
employed by the Employer (but not less than twelve (12) months) or twenty four
(24) months following such termination. The payments and benefits provided under
(w), (x), (y) and (z) above by the Employer shall not be offset against or
diminish any other compensation or benefits accrued as of the date of
termination.

 

(ii)                                  Notwithstanding the vesting schedule
otherwise applicable, in the event of a termination governed by this
subparagraph (c) of Section 4, the Executive shall be fully vested in all of the
Executive’s options and restricted shares under any Stock Plan or similar
program.

 

(iii)                               Any cash payments to the Executive under
this Section 4(c) will be made monthly over twelve (12) months, unless otherwise
mutually agreed by the parties to minimize the Executives’ tax burden in any
year.

 

(d)                                 CONSTRUCTIVE TERMINATION. If at any time
during the term of this Agreement, except in connection with a “for-cause”
termination pursuant to paragraph (e) of this Section 4, the Executive is
Constructively Discharged (as hereinafter defined), then the Executive shall
have the right, by written notice to the Employer given within one hundred and
twenty (120) days of such Constructive Discharge, to terminate his services
hereunder, effective as of thirty (30) days after such notice, and the Executive
shall have no rights or obligations under this Agreement other than as provided
in Sections 5 and 6 hereof.  The Executive shall in such event be entitled to a
termination payment as well as all of the Post-Termination Perquisites and
Benefits, as if such termination of his employment had been effectuated pursuant
to paragraph (c) of this Section 4.

 

For purposes of this Agreement, the Executive shall be deemed to have been
“Constructively Discharged” upon the occurrence of any one of the following
events:

 

(i)                                     The Executive is not re-elected to, or
is removed from, the position with the Employer as set forth in Section 2
hereof, other than as a result of the Executive’s election or appointment to
positions of equal or superior scope and responsibility; or

 

(ii)                                  The Executive shall fail to be vested by
the Employer with the powers, authority and support services normally attendant
to any of said offices; or

 

(iii)                               The Employer shall notify the Executive that
the employment of the Executive will be terminated or materially modified in the
future or that the Executive will be Constructively Discharged in the future; or

 

(iv)                              The Employer changes the primary employment
location of the Executive to a place that is more than fifty (50) miles from the
primary

 

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employment location, 8815 Centre Park Drive, Columbia, Maryland 21045, as of the
Effective Date of this Agreement; or

 

(v)                                 The Employer otherwise commits a material
breach of its obligations under this Agreement.

 

(e)                                  TERMINATION FOR CAUSE. The employment of
the Executive and this Agreement may be terminated “for-cause” as hereinafter
defined. Termination “for-cause” shall mean the termination of employment on the
basis or as a result of (i) a material violation by the Executive of any
applicable material law or regulation respecting the business of the Employer;
(ii) the Executive being found guilty of, or being publicly associated with, to
the Employer’s detriment, a felony or an act of dishonesty in connection with
the performance of his duties as an officer of the Employer, or the Executive’s
commission of an act which in the opinion of a reasonable third party
disqualifies the Executive from serving as an officer or director of the
Employer; or (iii) the willful or negligent failure of the Executive to perform
his duties hereunder in any material respect. The Executive shall be entitled to
at least thirty (30) days’ prior written notice of the Employer’s intention to
terminate his employment for any cause (except the Executive’s death),
specifying the grounds for such termination, affording the Executive a
reasonable opportunity to cure any conduct or act (if curable) alleged as
grounds for such termination, and a reasonable opportunity to present to the
Board his position regarding any dispute relating to the existence of such
cause.  In the event the Employer terminates the Executive’s employment “for
cause” the Executive shall be entitled only to the Base Salary through the date
of the termination of the Executive’s employment “for cause” and any other
additional benefit in accordance with applicable plans, programs or agreements
with the Employer.

 

(f)                                    TERMINATION UPON DEATH. In the event
payments are due and owing under this Agreement at the death of the Executive,
such payments shall be made to such beneficiary, designee or fiduciary as
Executive may have designated in writing, or failing such designation, to the
executor or administrator of his estate, in full settlement and satisfaction of
all claims and demands on behalf of the Executive. Such payments shall be in
addition to any other death benefits of the Employer made available for the
benefit of the Executive, and in full settlement and satisfaction of all
payments provided for in this Agreement.  Notwithstanding the vesting schedule
otherwise applicable in the event of a termination governed by this subparagraph
(f) of Section 4, all of options and restricted shares granted to the Executive
under any Stock Plan or similar program shall be fully vested.

 

(g)                                 TERMINATION UPON DISABILITY. The Employer
may terminate the Executive’s employment after the Executive is determined to be
disabled under the long-term disability program of the Employer then covering
the Executive or by a physician engaged by the Employer and reasonably approved
by the Executive. In the event of a dispute regarding the Executive’s
“disability,” such dispute shall be resolved through arbitration as provided in
paragraph (d) of Section 11 hereof, except that the arbitrator appointed by the
American Arbitration Association shall be a duly licensed medical doctor. The
Executive shall be entitled to the compensation and benefits provided for under
this Agreement during any period of incapacitation occurring during the term of
this Agreement, and occurring prior to the establishment of the Executive’s
“disability” during which the Executive is unable to work due to

 

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a physical or mental infirmity. Notwithstanding anything contained in this
Agreement to the contrary, until the date specified in a notice of termination
relating to the Executive’s disability, the Executive shall be entitled to
return to his positions with the Employer as set forth in this Agreement, in
which event no disability of the Executive will be deemed to have occurred. 
Notwithstanding the vesting schedule otherwise applicable, in the event of a
termination governed by this subparagraph (g) of Section 4, the Executive shall
be fully vested in all of the Executive’s options and restricted shares under
any Stock Plan or similar program.

 

(h)                                 TERMINATION UPON CHANGE OF CONTROL.

 

(i)                                     In the event of a Change in Control (as
defined below) and the termination of the Executive’s employment by Executive or
by the Employer under either 1 or 2 below, the Executive shall be entitled to a
Termination Payment equal to the sum of: (w) three (3) times the rate of
annualized Base Salary then payable to the Executive, plus (x) three (3) times
the average of the three (3) most recent annual Performance Bonuses that the
Executive received.  The Employer shall also continue for the Executive the
Post-Termination Perquisites and Benefits for the same period and to the same
extent as provided in paragraph (c) of this Section 4; provided, however, that
notwithstanding the vesting schedule otherwise applicable, immediately following
a Change in Control (whether or not the Executive’s employment is terminated),
the Executive shall be fully vested in all of Executive’s options and restricted
shares outstanding under any Stock Plan or similar program and shall be allowed
a period of eighteen (18) months following the termination of employment of the
Executive for the Executive’s exercise of such options. The following shall
constitute termination under this paragraph:

 

1 .                                    The Executive terminates his employment
under this Agreement pursuant to a written notice to that effect delivered to
the Board within six (6) months after the occurrence of the Change in Control.

 

2.                                       Executive’s employment is terminated,
including Constructively Discharged, by the Employer or its successor either in
contemplation of or after Change in Control, other than on a for-cause basis.

 

(ii)                                  For purposes of this paragraph, the term
“Change in Control” shall mean the following occurring after the date of this
Agreement:

 

1.                                       The consummation of the acquisition by
any person, (as such term is defined in Section 13(d) or 14(d) of the Securities
Exchange Act of 1934, as amended (the “1934 Act”) of beneficial ownership
(within the meaning of Rule 13d-3 promulgated under the 1934 Act) of fifty
percent (50%) or more of the combined voting power embodied in the then
outstanding voting securities of COPT or the Employer; or

 

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2.                                       Approval by the stockholders of COPT or
the Employer of: (1) a merger or consolidation of COPT or the Employer, if the
stockholders of COPT or the Employer immediately before such merger or
consolidation do not, as a result of such merger or consolidation, own, directly
or indirectly, more than fifty percent (50%) of the combined voting power of the
then outstanding voting securities of the entity resulting from such merger or
consolidation in substantially the same proportion as was represented by their
ownership of the combined voting power of the voting securities of COPT or the
Employer outstanding immediately before such merger or consolidation; or (2) a
complete or substantial liquidation or dissolution, or an agreement for the sale
or other disposition, of all or substantially all of the assets of COPT or the
Employer.

 

Notwithstanding the foregoing, a Change in Control shall not be deemed to occur
solely because fifty percent (50%) or more of the combined voting then
outstanding securities is acquired by: (1) a trustee or other fiduciary holding
securities under one or more employee benefit plans maintained for employees of
the entity; or (2) any corporation or other entity which, immediately prior to
such acquisition, is owned directly or indirectly by the stockholders of COPT or
the Employer in the same proportion as their ownership of stock in COPT or the
Employer immediately prior to such acquisition.

 

(iii)                               If it is determined, in the opinion of the
Employer’s independent accountants, in consultation with the Employer’s
independent counsel, that any amount payable to the Executive by the Employer
under this Agreement, or any other plan or agreement under which the Executive
participates or is a party, would constitute an “Excess Parachute Payment”
within the meaning of Section 280G of the Internal Revenue Code of 1986, as
amended (the “Code”) and be subject to the excise tax imposed by Section 4999 of
the Code (the “Excise Tax”), the Employer shall pay to the Executive a
“grossing-up” amount equal to the amount of such Excise Tax and all federal and
state income or other taxes with respect to payment of the amount of such Excise
Tax, including all such taxes with respect to any such grossing-up amount. If at
a later date, the Internal Revenue Service assesses a deficiency against the
Executive for the Excise Tax which is greater than that which was determined at
the time such amounts were paid, the Employer shall pay to the Executive the
amount of such unreimbursed Excise Tax plus any interest, penalties and
professional fees or expenses, incurred by the Executive as a result of such
assessment, including all such taxes with respect to any such additional amount.
The highest marginal tax rate applicable to individuals at the time of payment
of such amounts will be used for purposes of determining the federal and state
income and other taxes with respect thereto. The Employer shall withhold from
any amounts paid under this Agreement the amount of any Excise Tax or other
federal, state or local taxes then required to be withheld. Computations of the
amount of any grossing-up supplemental compensation paid under this subparagraph
shall be made by the Employer’s independent accountants, in consultation with
the Employer’s independent legal counsel. The Employer shall pay all accountant
and legal counsel fees and expenses.

 

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(i)                                     VOLUNTARY TERMINATION.  In the event of
a termination of employment by the Executive on his own initiative, other than a
termination due to death, disability or a Constructive Discharge, the Executive
shall have the same entitlements as provided in paragraph (e) of this Section 4
for a termination “for-cause.”

 

5.                                       CONFIDENTIALITY AND LOYALTY. The
Executive acknowledges that heretofore or hereafter during the course of his
employment he has produced and received, and may hereafter produce, receive and
otherwise have access to various materials, records, data, trade secrets and
information not generally available to the public (collectively, “Confidential
Information”) regarding the Employer and its subsidiaries and affiliates.
Accordingly, during and subsequent to termination of this Agreement, the
Executive shall hold in confidence and not directly or indirectly disclose, use,
copy or make lists of any such Confidential Information, except to the extent
that such information is or thereafter becomes lawfully available from public
sources, or such disclosure is authorized in writing by the Employer, required
by law or by any competent administrative agency or judicial authority, or
otherwise as reasonably necessary or appropriate in connection with the
performance by the Executive of his duties hereunder. All records, files,
documents, computer diskettes, computer programs and other computer-generated
material, as well as all other materials or copies thereof relating to the
Employer’s business, which the Executive shall prepare or use, shall be and
remain the sole property of the Employer, shall not be removed from the
Employer’s premises without its written consent, and shall be promptly returned
to the Employer upon termination of the Executive’s employment hereunder. The
Executive agrees to abide by the Employer’s reasonable policies, as in effect
from time to time, respecting confidentiality and the avoidance of interests
conflicting with those of the Employer.

 

6.                                       NON-COMPETITION COVENANT.

 

(a)                                  RESTRICTIVE COVENANT. The Employer and the
Executive have jointly reviewed the tenant lists, property submittals, logs,
broker lists, and operations of the Employer, and have agreed that as an
essential ingredient of and in consideration of this Agreement and the payment
of the amounts described in Sections 3 and 4 hereof, the Executive hereby agrees
that, except with the express prior written consent of the Employer, for a
period equal to either (i) twelve (12) months if the Executive’s employment is
terminated as a result of the expiration of the term of this Agreement or (ii)
twenty-four (24) months after the termination of the Executive’s employment with
the Employer for any other reason, (the “Restrictive Period”), he will not
directly or indirectly compete with the business of the Employer, including, but
not by way of limitation, by directly or indirectly owning, managing, operating,
controlling, financing, or by directly or indirectly serving as an employee,
officer or director of or consultant to, or by soliciting or inducing, or
attempting to solicit or induce, any employee or agent of Employer to terminate
employment with Employer and become employed by any person, firm, partnership,
corporation, trust or other entity which owns or operates a business similar to
that of the Employer (the “Restrictive Covenant”). For purposes of this
subparagraph (a), a business shall be considered “similar” to that of the
Employer if it is engaged in the acquisition, development, ownership, operation,
management or leasing of suburban office property in any geographic market or
submarket in which the Employer owns more than 750,000 s.f. of properties either
as of the date hereof or as of the date of termination of the Executive’s
employment. If the Executive violates the Restrictive Covenant and the Employer
brings legal

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action for injunctive or other relief, the Employer shall not, as a result of
the time involved in obtaining such relief, be deprived of the benefit of the
full period of the Restrictive Covenant. Accordingly, the Restrictive Covenant
shall be deemed to have the duration specified in this paragraph (a) computed
from the date the relief is granted but reduced by the time between the period
when the Restrictive Period began to run and the date of the first violation of
the Restrictive Covenant by the Executive. In the event that a successor of the
Employer assumes and agrees to perform this Agreement or otherwise acquires the
Employer, this Restrictive Covenant shall continue to apply only to the primary
service area of the Employer as it existed immediately before such assumption or
acquisition and shall not apply to any of the successor’s other offices or
markets. The foregoing Restrictive Covenant shall not prohibit the Executive
from owning, directly or indirectly, capital stock or similar securities which
are listed on a securities exchange or quoted on the National Association of
Securities Dealers Automated Quotation System which do not represent more than
five percent (5%) of the outstanding capital stock of any corporation.

 

(b)                                 REMEDIES FOR BREACH OF RESTRICTIVE COVENANT.
The Executive acknowledges that the restrictions contained in Sections 5 and 6
of this Agreement are reasonable and necessary for the protection of the
legitimate proprietary business interests of the Employer; that any violation of
these restrictions would cause substantial injury to the Employer and such
interests; that the Employer would not have entered into this Agreement with the
Executive without receiving the additional consideration offered by the
Executive in binding himself to these restrictions; and that such restrictions
were a material inducement to the Employer to enter into this Agreement. In the
event of any violation or threatened violation of these restrictions, the
Employer shall be relieved of any further obligations under this Agreement,
shall be entitled to any rights, remedies or damages available at law, in equity
or otherwise under this Agreement, and shall be entitled to preliminary and
temporary injunctive relief granted by a court of competent jurisdiction to
prevent or restrain any such violation by the Executive and any and all persons
directly or indirectly acting for or with him, as the case may be, while
awaiting the decision of the arbitrator selected in accordance with paragraph
(d) of Section 11 of this Agreement, which decision, if rendered adverse to the
Executive, may include permanent injunctive relief to be granted by the court.

 

7.                                       INTERCORPORATE TRANSFERS. If the
Executive shall be voluntarily transferred to an affiliate of the Employer, such
transfer shall not be deemed to terminate or modify this Agreement, and the
employing corporation to which the Executive shall have been transferred shall,
for all purposes of this Agreement, be construed as standing in the same place
and stead as the Employer as of the date of such transfer. For purposes hereof,
an affiliate of the Employer shall mean any corporation or other entity directly
or indirectly controlling, controlled by, or under common control with the
Employer. The Employer shall be secondarily liable to the Executive for the
obligations hereunder in the event the affiliate of the Employer cannot or
refuses to honor such obligations. For all relevant purposes hereof, the tenure
of the Executive shall be deemed to include the aggregate term of his employment
by the Employer or its affiliate.

 

8.                                       INTEREST IN ASSETS. Neither the
Executive nor his estate shall acquire hereunder any rights in funds or assets
of the Employer, otherwise than by and through the actual payment of amounts
payable hereunder; nor shall the Executive or his estate have any power to
transfer, assign (except into a trust for purposes of estate planning),
anticipate, hypothecate or

 

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otherwise encumber in advance any of said payments; nor shall any of such
payments be subject to seizure for the payment of any debt, judgment, alimony,
separate maintenance or be transferable by operation of law in the event of
bankruptcy, insolvency or otherwise of the Executive.

 

9.                                       INDEMNIFICATION.

 

(a)                                  The Employer shall provide the Executive
(including his heirs, personal representatives, executors and administrators),
during the term of this Agreement and thereafter throughout all applicable
limitations periods, with coverage under the Employer’s then-current directors’
and officers’ liability insurance policy, at the Employer’s expense.

 

(b)                                 In addition to the insurance coverage
provided for in paragraph (a) of this Section 9, the Employer shall defend, hold
harmless and indemnify the Executive (and his heirs, personal representatives,
executors and administrators) to the fullest extent permitted under applicable
law, and subject to the requirements, limitations and specifications set forth
in the Bylaws and other organizational documents of the Employer, against all
expenses and liabilities reasonably incurred by him in connection with or
arising out of any action, suit or proceeding in which he may be involved by
reason of his having been an officer of the Employer (whether or not he
continues to be an officer at the time of incurring such expenses or
liabilities), such expenses and liabilities to include, but not be limited to,
judgments, court costs and attorneys’ fees and the cost of reasonable
settlements.

 

(c)                                  In the event the Executive becomes a party,
or is threatened to be made a party, to any action, suit or proceeding for which
the Employer has agreed to provide insurance coverage or indemnification under
this Section 9, the Employer shall, to the full extent permitted under
applicable law, advance all expenses (including the reasonable attorneys’ fees
of the attorneys selected by Employer and approved by Executive for the
representation of the Executive), judgments, fines and amounts paid in
settlement (collectively “Expenses”) incurred by the Executive in connection
with the investigation, defense, settlement, or appeal of any threatened,
pending or completed action, suit or proceeding, subject to receipt by the
Employer of a written undertaking from the Executive covenanting: (i) to
reimburse the Employer for all Expenses actually paid by the Employer to or on
behalf of the Executive in the event it shall be ultimately determined that the
Executive is not entitled to indemnification by the Employer for such Expenses;
and (ii) to assign to the Employer all rights of the Executive to insurance
proceeds, under any policy of directors’ and officers’ liability insurance or
otherwise, to the extent of the amount of Expenses actually paid by the Employer
to or on behalf of the Executive.

 

10.                                 ASSUMPTION BY COPT.  By its execution of
this Agreement, COPT agrees to be secondarily liable to the Executive, and shall
assume the liabilities, obligations and duties of the Employer as contained in
this Agreement in the event the Employer cannot or refuses to honor such
obligations.

 

11.                                 GENERAL PROVISIONS.

 

(a)                                  SUCCESSORS; ASSIGNMENT. This Agreement
shall be binding upon and inure to the benefit of the Executive, the Employer
and his and its respective personal

 

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representatives, successors and assigns, and any successor or assign of the
Employer shall be deemed the “Employer” hereunder. The Employer shall require
any successor to all or substantially all of the business and/or assets of the
Employer, whether directly or indirectly, by purchase, merger, consolidation,
acquisition of stock, or otherwise, by an agreement in form and substance
satisfactory to the Executive, expressly to assume and agree to perform this
Agreement in the same manner and to the same extent as the Employer would be
required to perform if no such succession had taken place.  No rights or
obligations of the Executive under this Agreement may be assigned or transferred
by the Executive other than his rights to compensation and benefits, which may
be transferred only by will or by operation of law.

 

(b)                                 ENTIRE AGREEMENT; MODIFICATIONS. This
Agreement constitutes the entire agreement between the parties respecting the
subject matter hereof, and supersedes all prior negotiations, undertakings,
agreements and arrangements with respect thereto, whether written or oral.
Except as otherwise explicitly provided herein, this Agreement may not be
amended or modified except by written agreement signed by the Executive and the
Employer.

 

(c)                                  ENFORCEMENT AND GOVERNING LAW. The
provisions of this Agreement shall be regarded as divisible and separate; if any
of said provisions should be declared invalid or unenforceable by a court of
competent jurisdiction, the validity and enforceability of the remaining
provisions shall not be affected thereby. This Agreement shall be construed and
the legal relations of the parties hereto shall be determined in accordance with
the laws of the State of Maryland as it constitutes the situs of the corporation
and the employment hereunder, without reference to the law regarding conflicts
of law.

 

(d)                                 ARBITRATION. Except as provided in paragraph
(b) of Section 6, any dispute or controversy arising under or in connection with
this Agreement or the Executive’s employment by the Employer shall be settled
exclusively by arbitration, conducted by a single arbitrator sitting in
Baltimore, MD in accordance with the rules of the American Arbitration
Association (the “AAA”) then in effect. The arbitrator shall be selected by the
parties from a list of eleven (11) arbitrators provided by the AAA, provided
that no arbitrator shall be related to or affiliated with either of the parties.
No later than ten (10) days after the list of proposed arbitrators is received
by the parties, the parties, or their respective representatives, shall meet at
a mutually convenient location in Baltimore, Maryland, or telephonically. At
that meeting, the party who sought arbitration shall eliminate one (1) proposed
arbitrator and then the other party shall eliminate one (1) proposed arbitrator.
The parties shall continue to alternatively eliminate names from the list of
proposed arbitrators in this manner until each party has eliminated five (5)
proposed arbitrators. The remaining arbitrator shall arbitrate the dispute. Each
party shall submit, in writing, the specific requested action or decision it
wishes to take, or make, with respect to the matter in dispute, and the
arbitrator shall be obligated to choose one (1) party’s specific requested
action or decision, without being permitted to effectuate any compromise or
“new” position; provided, however, that the arbitrator is authorized to award
amounts not in dispute during the pendency of any dispute or controversy arising
under or in connection with this Agreement. The Employer shall bear the cost of
all counsel, experts or other representatives that are retained by both parties,
together with all costs of the arbitration proceeding, including, without
limitation, the fees, costs and expenses imposed or incurred by the arbitrator.
Judgment may be entered on the arbitrator’s award in any court having
jurisdiction; including, if applicable, entry of a permanent injunction under
paragraph (b) of Section 6.

 

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(e)                                  PRESS RELEASES AND PUBLIC DISCLOSURE. Any
press release or other public communication by either the Executive or the
Employer with any other person concerning the terms, conditions or circumstances
of Executive’s employment, or the termination of such employment, shall be
subject to prior written approval of both the Executive and the Employer,
subject to the proviso that the Employer shall be entitled to make requisite and
appropriate public disclosure of the terms of this Agreement, without the
Executive’s consent or approval, as required under applicable statutes, and the
rules and regulations of the Securities and Exchange Commission and the Stock
Exchange on which the shares of Employer may from time to time be listed.

 

(f)                                    WAIVER. No waiver by either party at any
time of any breach by the other party of, or compliance with, any condition or
provision of this Agreement to be performed by the other party, shall be deemed
a waiver of any similar or dissimilar provisions or conditions at the same time
or any prior or subsequent time.

 

(g)                                 NOTICES. Notices given pursuant to this
Agreement shall be in writing, and shall be deemed given when received, and, if
mailed, shall be mailed by United States registered or certified mail, return
receipt requested, postage prepaid. Notices to the Employer shall be addressed
to the principal headquarters of the Employer, Attention: Chairman. Notices to
the Executive shall be sent to the address set forth below the Executive’s
signature on this Agreement, or to such other address as the party to be
notified shall have given to the other.

 

IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.

 

 

“Employer”

“Executive”

Corporate Office Properties L.P., a
Maryland limited liability corporation

 

By:

/s/ Clay W. Hamlin, III

 

/s/ Roger A. Waesche, Jr.

 

Clay W. Hamlin, III, CEO

 

Roger A. Waesche, Jr.

 

8815 Centre Park Drive, Suite 400

 

Columbia, MD 21045

 

Corporate Office Properties Trust, a Maryland
business trust

 

By:

/s/ Clay W. Hamlin, III

 

 

Clay W. Hamlin, III, CEO

 

 

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