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
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
11
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.
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“Employer”
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“Executive”
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Corporate Development
Services, LLC,
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a Maryland limited
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liability company
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By:
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/s/ Randall M. Griffin
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/s/ Wayne Lingafelter
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Randall M. Griffin
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Wayne Lingafelter
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Chief Executive Officer
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6711 Columbia Gateway
Drive, Suite 300
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Columbia, MD 21046
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Corporate Office
Properties Trust,
a Maryland real
estate investment trust
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By:
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/s/ Randall M. Griffin
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Randall M. Griffin
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President &
Chief Executive Officer
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