|
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.
2
(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
3
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
4
(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,
5
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
| 
