Exhibit 10.4

 

EMPLOYMENT AGREEMENT

WAYNE LINGAFELTER

 

This Employment Agreement (this “Agreement”), is made and entered into as of the
31st day of December, 2008, by and between Corporate Development Services, LLC,
a Maryland limited liability company (the “Employer”), and Corporate Office
Properties Trust, a Maryland business trust (“COPT”), and Wayne Lingafelter (the
“Executive”).

 

RECITALS

 

A.                                   The Employer wishes 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.

 

B.                                     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.

 

C.                                     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.

 

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.                                       EFFECTIVE DATE.  Notwithstanding the
date of execution hereof, this Agreement shall become effective as of January 2,
2009 (the “Effective Date”).

 

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

 

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to time by the Board of Trustees of COPT (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 Three
Hundred Twenty-Five Thousand Dollars ($325,000) 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,” which shall be determined by the
Board based upon the recommendation of the Compensation Committee.  Any amount
due and payable to the Executive under this paragraph (b) of Section 3 for any
calendar year shall be paid to the Executive no later than two and one-half
months following the close of such calendar year.

 

(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 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)                                     one thousand one hundred dollars
($1,100) per month automobile allowance;

 

(ii)                                  five thousand dollars ($5,000) per year
for personal financial planning and personal income tax preparation; and

 

(iii)                               twenty-two (22) unaccrued vacation days per
year, subject to the Employer’s annual carryover limitation.

 

Any amounts due and payable to the Executive under this paragraph (d) of
Section 3 during any calendar year shall be paid to the Executive no later than
two and one-half months following the close of such calendar year.

 

(e)                                  DEFERRED COMPENSATION PLAN. Executive shall
be entitled to participate in the Supplemental Nonqualified Deferred
Compensation Plan (or any successor plan) in accordance with the terms and
subject to the limitations of such plan.

 

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(f)                                    EXECUTIVE WELLNESS PROGRAM. Executive
shall be entitled to participate in the Johns Hopkins Executive Wellness Program
(or any successor plan) in accordance with the terms and subject to the
limitations of such plan.

 

(g)                                 WITHHOLDING.  The Employer shall be entitled
to withhold, from amounts payable to the Executive hereunder, any federal, state
or local withholding or other 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.  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 either party shall have served written notice on
the other at least six (6) months, but not more than one (1) year, prior to the
expiration of the Basic Term, that this Agreement shall terminate at 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.  Notwithstanding the foregoing and other
applicable terms of this Agreement, this Agreement 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)                                 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 term hereof or any renewal term, termination upon
disability in accordance with the provisions of paragraph (f) of this Section 4,
or a “for-cause” termination in accordance with the provisions of paragraph
(d) 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 “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 paragraph (b) 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 perquisites, plans and benefits
provided under the Employer’s Perquisite Policy and Benefit

 

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Plans as of and after the date of termination, [all items in (z) being
collectively referred to as “Post-Termination Perquisites and Benefits”], for
twelve (12) 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 paragraph
(b) 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)                               The cash payments under this paragraph
(b) of Section 4 will be made monthly over twelve (12) months, unless otherwise
mutually agreed by the parties to minimize the Executive’s tax burden in any
year.

 

(c)                                  CONSTRUCTIVE TERMINATION. If at any time
during the term of this Agreement, except in connection with a “for-cause”
termination pursuant to paragraph (d) 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 of Base Salary and Performance Bonus compensation as well as
all of the Post-Termination Perquisites and Benefits, as if such termination of
his employment had been effectuated pursuant to paragraph (b) 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 employment location, 6711 Columbia Gateway Drive, Suite 300, Columbia,
Maryland 21046, as of the Effective Date of this Agreement; or

 

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

 

(d)                                 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 violation by the Executive of any applicable law
or regulation respecting the business of the Employer; (ii) the Executive’s
conviction of a felony or any crime involving moral turpitude; (iii) any act of
dishonesty or fraud, or the Executive’s commission of an act which in the
opinion of the Board disqualifies the Executive from serving as an officer or
director of the Employer; (iv) the willful or negligent failure of the Executive
to perform his duties hereunder, which failure continues for a period of thirty
(30) days after written notice thereof is given to the Executive; or (v) a
violation of any provision of the Code of Business Conduct and Ethics.  In the
event the Employer terminates the Executive’s employment “for cause” under this
paragraph (d) of Section 4, the Executive shall be entitled only to the Base
Salary through the date of the termination of the Executive’s employment and any
other additional benefit in accordance with applicable plans, programs or
agreements with the Employer; and all such amounts shall be payable no later
than two and one-half months following the close of the calendar year in which
such termination occurs.  The Executive’s right to exercise options and the
right to further vesting of restricted stock granted under any Stock Plan or
similar program shall terminate immediately upon the Executive’s termination
“for-cause.”

 

(e)                                  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. Any cash payments shall be
made no later than two and one-half months following the close of the calendar
year in which the Executive’s death occurs.  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 (e) of
Section 4, all of options and restricted shares granted to the Executive under
any Stock Plan or similar program shall be fully vested.

 

(f)                                    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 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 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 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,

 

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the Executive shall be entitled to return to his position with the Employer as
set forth in this Agreement, in which event no disability of Executive, will be
deemed to have occurred.   Notwithstanding the vesting schedule otherwise
applicable, in the event of a termination governed by this subparagraph (f) 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.

 

(g)                                 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 (or, if less, the average of the annual performance Bonuses
that the Executive has theretofore 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 (b) 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 (but in no event beyond
the expiration of any option term or period of any option agreement with 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 twelve (12) 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

 

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percent (50%) or more of the combined voting power embodied in the then
outstanding voting securities of COPT or the Employer; or

 

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

 

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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.

 

(iv)                              Any cash payments to the Executive under this
paragraph (g) of Section 4 shall be paid to the Executive no later than two and
one-half months following the close of the calendar year in which the Executive
has a vested right to the payment.

 

(h)                                 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 (d) 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, COPT and their 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 or
COPT, 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 business of the Employer or COPT, which the Executive shall
prepare or use, shall be and remain the sole property of the Employer and COPT,
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
reasonable policies of the Employer and COPT, as in effect from time to time,
respecting confidentiality and the avoidance of interests conflicting with those
of the Employer or COPT.

 

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 of twenty-four (24) months after the termination of the Executive’s
employment with the Employer for any reason (including termination as a result
of the expiration of the term so this Agreement), (the “Restrictive Period”), he
will not directly or indirectly compete with the business of the

 

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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 1,000,000 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 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.

 

(c)                                  DEFINITION OF EMPLOYER.  For purposes of
this Section 6, the term “Employer” shall be deemed to include COPT and all of
its subsidiaries and affiliates.

 

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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 entity 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 continue to be 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 or COPT or any of their subsidiaries or affiliates, 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 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 him 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

 

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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, and in consideration of the services provided by the Executive
to the Employer hereunder, 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 its respective personal 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
Columbia, 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

 

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arbitrators is received by the parties, the parties, or their respective
representatives, shall meet at a mutually convenient location in Columbia,
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; provided, however, that if the
arbitrator determines that the claim or defenses of the Executive were without
reasonable basis, each party shall bear his or its own cost. 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.

 

(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 or
COPT, subject to the proviso that the Employer and COPT 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 securities of Employer or COPT
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: President and Chief
Executive Officer. 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.

 

(h)                                 COMPLIANCE WITH INTERNAL REVENUE CODE
SECTION 409A.  It is intended that this Agreement comply with Section 409A of
the Internal Revenue Code of 1986, and the regulations and guidance issued
thereunder, and shall be interpreted accordingly.  Any provision of the
Agreement not in compliance with that Section 409A shall be void as of the
Effective Date. 

 

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

 

 

“Employer”

 

“Executive”

Corporate Development Services, LLC,

 

 

a Maryland limited

 

 

liability company

 

 

 

 

By:

/s/ Randall M. Griffin

 

/s/ Wayne Lingafelter

 

Randall M. Griffin

 

Wayne Lingafelter

 

Chief Executive Officer

 

6711 Columbia Gateway Drive, Suite 300

 

 

 

Columbia, MD 21046

 

 

Corporate Office Properties Trust,

a Maryland real estate investment trust

 

 

By:

/s/ Randall M. Griffin

 

 

 

Randall M. Griffin

 

 

 

President & Chief Executive Officer

 

 

 

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