Exhibit 10.7


 


FIFTH AMENDMENT


TO


EMPLOYMENT AGREEMENT


 


This
Fifth Amendment to Employment Agreement (“Amendment”) is made and entered into
as of September 16, 2010, by and between CORPORATE OFFICE PROPERTIES, L.P.
(the “Employer”), CORPORATE OFFICE PROPERTIES TRUST (“COPT”) and ROGER A.
WAESCHE, JR. (the “Executive”).


 


WHEREAS,
the Employer, COPT and the Executive are parties to an Employment Agreement,
dated as of September 12, 2002, as amended (the “Agreement”); and


 


WHEREAS,
the parties hereto desire to amend the Agreement pursuant to Section 11(b) of
the Agreement; and


 


WHEREAS,
capitalized terms used herein and not otherwise defined herein shall have the
meanings ascribed to them in the Agreement.


 


NOW,
THEREFORE, in consideration of the mutual covenants contained herein, the
parties agree as follows:


 


1.             Section 4(c)(ii) of
the Agreement is hereby amended by (a) adding the following immediately
prior to the period at the end thereof “to the extent such options or
restricted shares are subject to a time-based vesting schedule” and (b) adding
the following sentence to the end thereof:


 


“Any
accelerated vesting of the Executive’s options and restricted stock under any
Stock Plan or similar program that is subject to performance-based vesting
shall occur in accordance with the terms of the applicable award agreement.”


 


As
amended and restated, such section shall read as follows:


 


“            (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 to the extent such options or restricted shares are subject to
a time-based vesting schedule.  Any
accelerated vesting of the Executive’s options and restricted stock under any
Stock Plan or similar program that is subject to performance-based vesting
shall occur in accordance with the terms of the applicable award agreement.”


 


2.             Section 4(c)(iii) of
the Agreement is hereby amended by deleting such subsection in its entirety and
substituting therefor the following:


 

















 


“(iii) 
Any cash payment to the Executive under this Section 4(c) will be
made monthly over twelve (12) months. 
Solely for purposes of Section 409A of the Internal Revenue Code of
1986, as amended (the ‘Code’), each installment payment is considered a
separate payment.”


 


3.             Section 4(f) of
the Agreement is hereby amended by (a) adding the following immediately
prior to the period at the end of the last sentence thereof “to the extent such
options or restricted shares are subject to a time-based vesting schedule” and (b) adding
the following sentence to the end thereof:


 


“Any accelerated vesting of the Executive’s options
and restricted stock under any Stock Plan or similar program that is subject to
performance-based vesting shall occur in accordance with the terms of the
applicable award agreement.”


 


As
amended and restated, such section shall read as follows:


 


“(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
options and restricted shares granted to the Executive under any Stock Plan or
similar program shall be fully vested to the extent such options or restricted
shares are subject to a time-based vesting schedule.  Any accelerated vesting of the Executive’s
options and restricted stock under any Stock Plan or similar program that is
subject to performance-based vesting shall occur in accordance with the terms
of the applicable award agreement.”


 


4.             Section 4(g) of
the Agreement is hereby amended by (a) adding the following immediately
prior to the period at the end of the last sentence thereof “to the extent such
options or restricted shares are subject to a time-based vesting schedule” and (b) adding
the following sentence to the end thereof:


 


“Any accelerated vesting of the Executive’s options
and restricted stock under any Stock Plan or similar program that is subject to
performance-based vesting shall occur in accordance with the terms of the
applicable award agreement.”


 


2

















 


As
amended and restated, such section shall read as follows:


 


“(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 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 to the extent such options or restricted shares are
subject to a time-based vesting schedule. 
Any accelerated vesting of the Executive’s options and restricted stock
under any Stock Plan or similar program that is subject to performance-based
vesting shall occur in accordance with the terms of the applicable award
agreement.”


 


5.             Section 4(h)(i) of
the Agreement is hereby amended by inserting the following as the second
sentence of such Section:


 


“Such
Termination Payment shall be payable in accordance with Section 4(c)(iii) of
the Agreement.”


 


6.             Section 4(h)(i) of
the Agreement is hereby further amended by inserting the following within the
proviso within the second sentence thereof after the phrase “under any Stock
Plan or similar program” and immediately before the phrase “and shall be
allowed”:


 


“to
the extent such options or restricted shares are subject to a time-based
vesting schedule (any accelerated vesting of Executive’s options and restricted
stock under any Stock Plan or similar program that is subject to
performance-based vesting shall 


 


3

















 


occur
in accordance with the terms of the applicable Stock Plan, program or award
agreement),”


 


As
amended and restated, such Section 4(h)(i) shall read as follows:


 


“            (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.  Such Termination Payment shall be payable in
accordance with Section 4(c)(iii) of the Agreement.  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 to the extent such options or restricted shares are
subject to a time-based vesting schedule (any accelerated vesting of Executive’s
options and restricted stock under any Stock Plan or similar program that is
subject to performance-based vesting shall occur in accordance with the terms
of the applicable Stock Plan, program or award agreement), 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:”


 


7.             Section 4(h)(ii)2
of the Agreement is hereby amended by (a) replacing the phrase “Approval
by the stockholders of COPT or the Employer of” with “The consummation of”, and
(b) deleting the phrase “a complete or substantial liquidation or
dissolution, or an agreement for” within part (2) thereof.  As amended and restated, such section shall
read as follows:


 


“            2.           The consummation 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 


 


4

















 


consolidation;
or (2) the sale or other disposition of all or substantially all of the
assets of COPT or the Employer.


 


8.             Section 4(h)(ii) of
the Agreement is hereby amended by adding the following as a new subsection 3
thereto:


 


“            3.           Approval by the stockholders
of COPT or the Employer of a complete or substantial liquidation or dissolution
of COPT or the Employer.”


 


9.             The Agreement
is hereby amended by inserting the following as a new Section 12 to the
Agreement:


 


“12.        SECTION 409A.


 


(a)           Anything in this Agreement to the contrary
notwithstanding, if at the time of the Executive’s separation from service
within the meaning of Section 409A of the Code, the Employer determines
that the Executive is a ‘specified employee’ within the meaning of Section 409A(a)(2)(B)(i) of
the Code, then to the extent any payment or benefit that the Executive becomes entitled
to under this Agreement on account of the Executive’s separation from service
would be considered deferred compensation subject to the 20 percent additional
tax imposed pursuant to Section 409A(a) of the Code as a result of
the application of Section 409A(a)(2)(B)(i) of the Code, such payment
shall not be payable and such benefit shall not be provided (as applicable)
until the date that is the earlier of (x) the Executive’s death or (y) the
later of (A) six months and one day after the Executive’s separation from
service, or (B) the 18th month anniversary of the date of this
Amendment.  If any such delayed cash
payment is otherwise payable on an installment basis, the first payment shall
include a catch-up payment covering amounts that would otherwise have been paid
during such period but for the application of this provision, and the balance
of the installments shall be payable in accordance with their original
schedule.


 


(b)           All in-kind benefits provided and expenses eligible
for reimbursement under this Agreement shall be provided by the Employer or
incurred by the Executive during the time periods set forth in this
Agreement.  All reimbursements shall be
paid as soon as administratively practicable, but in no event shall any
reimbursement be paid after the last day of the taxable year following the
taxable year in which the expense was incurred. 
The amount of in-kind benefits provided or reimbursable expenses
incurred in one taxable year shall not affect the in-kind benefits to be
provided or the expenses eligible for reimbursement in any


 


5

















 


other
taxable year.  Such right to
reimbursement or in-kind benefits is not subject to liquidation or exchange for
another benefit.


 


(c)           To the extent that any payment or benefit described
in this Agreement constitutes ‘non-qualified deferred compensation’ under Section 409A
of the Code, and to the extent that such payment or benefit is payable upon the
Executive’s termination of employment, then such payments or benefits shall be
payable only upon the Executive’s ‘separation from service.’  The determination of whether and when a
separation from service has occurred shall be made in accordance with the
presumptions set forth in Treasury Regulation Section 1.409A 1(h).


 


(d)           The parties intend that this Agreement will be
administered in accordance with Section 409A of the Code.  To the extent that any provision of this
Agreement is ambiguous as to its compliance with Section 409A of the Code,
the provision shall be read in such a manner so that all payments hereunder
comply with Section 409A of the Code. 
The parties agree that this Agreement may be amended, as reasonably
requested by either party, and as may be necessary to fully comply with Section 409A
of the Code and all related rules and regulations in order to preserve the
payments and benefits provided hereunder without additional cost to either
party.


 


(e)           The Employer and COPT make
no representation or warranty and shall have no liability to the Executive or any
other person if any provisions of this Agreement are determined to constitute
deferred compensation subject to Section 409A of the Code but do not
satisfy an exemption from, or the conditions of, such Section.”


 


10.          All other provisions of the Agreement shall remain
in full force and effect according to their respective terms, and nothing
contained herein shall be deemed a waiver of any right or abrogation of any
obligation otherwise existing under the Agreement except to the extent
specifically provided for herein.


 


11.          The validity, interpretation, construction and
performance of this Amendment shall be governed by the laws of the State of
Maryland.


 


12.          This Amendment may be executed in several
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.


 


6

















 


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


 


	
  “Employer”

  	
   

  	
  “Executive”

  
	
  Corporate
  Office Properties L.P., a

  	
   

  	
   

  
	
  Maryland
  limited liability corporation

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/
  Randall M. Griffin

  	
   

  	
  /s/
  Roger A. Waesche, Jr.

  
	
   

  	
  Randall
  M. Griffin

  	
   

  	
  Roger
  A. Waesche, Jr.

  
	
   

  	
  President
  and Chief Executive Officer

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Corporate Office Properties Trust, a Maryland
  business trust

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
  /s/
  Randall M. Griffin

  	
   

  	
   

  
	
   

  	
  Randall
  M. Griffin

  	
   

  	
   

  
	
   

  	
  President
  and Chief Executive Officer

  	
   

  	
   

  



 


7