General Counsel Employment Agreement

Exhibit 10.7


EMPLOYMENT AGREEMENT

BETWEEN

JOSEPH M. MACCHIONE

AND

GMH COMMUNITIES TRUST


This Employment Agreement (the " Agreement" ), effective as of July 1, 2006 (" Effective Date" ), between GMH Communities Trust (the " Company" ), and Joseph Macchione (the " Executive" ):

WHEREAS, the Company wishes to employ the Executive in the capacities and on the terms and conditions set out below, and the Executive has agreed to such employment, in the capacities and on the terms and conditions set forth below.

NOW, THEREFORE, the Company and the Executive, in consideration of the respective covenants set out below, hereby agree as follows:

1. EMPLOYMENT. (a) POSITIONS. The Executive shall be employed by the Company as an Executive Vice President and General Counsel. The Executive may also serve as an officer of GMH Communities, L.P. (the " Partnership" ), its subsidiaries and its general partner.

(b) DUTIES. The Executive' s principal employment duties and responsibilities shall be those duties and responsibilities customary for the position of Executive Vice President and General Counsel of the Company and such other executive duties and responsibilities as the Company' s Board of Trustees (the " Board" ) shall from time to time reasonably assign to the Executive. The Executive shall report directly to the Company' s President, Chairman and Chief Executive Officer.

(c) EXTENT OF SERVICES. Except for illnesses and vacation periods, the Executive shall devote a substantial majority of his business time and attention and his best efforts to the performance of his duties and responsibilities under this Agreement. Notwithstanding the foregoing, the Executive (i) subject to the Executive' s obligations set forth in Section 11, may make any investment with respect to which he is not obligated or required to, and does not in fact, devote efforts that would cause him to be unable to devote a substantial majority of his business time and attention and his best efforts to the performance of his duties and responsibilities under this Agreement, (ii) may participate in charitable, academic or community activities, and in trade or professional organizations, or (iii) may hold directorships in other companies consistent with the Company' s conflict of interest policies and corporate governance guidelines as in effect from time to time.

2. TERM. This Agreement shall be effective as of the Effective Date and shall continue in full force and effect thereafter for a period of three (3) years (the " Initial Term" ), and shall be automatically extended for as many as two additional one (1) year periods (each, a


" Successor Term" ) at the close of the Initial Term and each Successor Term, unless either party provides a written notice not less than 60 days prior to the end of the Initial Term or relevant Successor Term of such party' s intent not to renew, or the Agreement is sooner terminated pursuant to Section 7. For purposes of this Agreement, " Term" shall mean the actual duration of the Executive' s employment hereunder, taking into account any extensions pursuant to this Section 2 or early termination of employment pursuant to Section 7.


3. BASE SALARY. The Company shall pay the Executive a base salary annually (the " Base Salary" ), which shall be payable in periodic installments according to the Company' s normal payroll practices. The initial Base Salary effective as of January 1, 2006 shall be $250,000. The Board Committee charged with responsibility for officer employment and compensation matters of the Company (the " Compensation Committee" ) shall review the Base Salary at least once a year to determine whether the Base Salary should be increased effective January 1 of any year during the Term; provided, however, that on each January 1 during the Term, the Base Salary shall be increased by a minimum positive amount equal to the Base Salary in effect on January 1 of the prior year multiplied by the percentage increase in the Consumer Price Index applicable to such year. The amount of the increase shall be determined before March 31 of each year and shall be retroactive to January 1. The Base Salary, including any increases, shall not be decreased during the Term without the written agreement of the Executive. For purposes of this Agreement, the term " Base Salary" shall mean the amount established and adjusted from time to time pursuant to this Section 3. 4. INCENTIVE AWARDS. The Executive shall be entitled to receive an annual cash incentive bonus for each calendar year during the Term of this Agreement consistent with a bonus policy adopted by the Board or the Compensation Committee for each calendar year (which bonus policy shall be adopted during the first 120 days of the 2006 calendar year and during the first 90 days of each calendar year thereafter) containing individual performance goals for participants and corporate performance goals set at Threshold, Target and Superior levels, and allocating each participant' s annual cash incentive bonus on a percentage basis between individual and corporate performance goals (the " Bonus Policy" ). The Board or the Compensation Committee shall meet during the first 90 days of each calendar year (during the first 120 days for the 2006 calendar year) to determine the relevant goals for the current calendar year and to reach determination regarding bonus entitlement for the prior calendar year. For each calendar year, the annual incentive bonus shall be determined under the Bonus Policy in effect for such calendar year with reference to the Executive' s attainment of his individual performance goals and the Company' s attainment of the overall corporate goals, as follows: total annual incentive bonus = individual performance bonus + corporate performance bonus


where:

individual performance bonus = individual performance level achieved (Threshold, Target, Superior or Outperformance percentage) x individual goals allocation percentage (40%) x Base Salary

corporate performance bonus = corporate performance level achieved (Threshold, Target, Superior or Outperformance percentage) x corporate goals allocation percentage (60%) x Base Salary


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The percentages established for the Executive for the performance bonus levels for 2006 shall be 40% for Threshold Level and 80% for Target Level and 120% for Superior Level. Except to the extent otherwise provided in Section 8, no bonus shall be payable unless the Executive was employed by the Company or a subsidiary as of the last day of the relevant calendar year. For 2006 and thereafter, to the extent the Executive' s annual incentive bonus exceeds either a performance bonus level of 100% or his then-current Base Salary, such excess bonus amount may, at the sole discretion of the Company, be paid to the Executive one-half in cash and one-half in Company Common Shares that shall vest ratably over a period of three (3) years from the date of payment and shall be subject to dividend payments, if any, by the Company. If the Executive or the Company, as the case may be, fails to satisfy the performance criteria contained in such Bonus Policy for a calendar year, the Executive may be eligible to receive an incentive bonus for such calendar year, in such amount as is recommended by the Compensation Committee and subject to approval by the full Board (if such approval is required). The annual incentive bonus shall be paid to the Executive no later than thirty (30) days after the date on which final approval of the annual incentive bonus payable to the Executive for such calendar year is obtained. For purposes of this Agreement, the term " Annual Incentive Bonus" shall mean the amount established pursuant to this Section 4.

5. STOCK BASED AWARDS. (a) OPTION GRANTS. The Company may establish an equity incentive plan (" Equity Incentive Plan" ). The Executive' s eligibility for grants under the Equity Incentive Plan and the terms and conditions of such grants shall be determined by the Compensation Committee. (b) RESTRICTED SHARE AWARDS. The Executive shall be eligible to receive restricted Common Shares of the Company (" Restricted Share Grants" ) as approved by the Compensation Committee, but only to the extent that restricted shares are available for issuance under the Equity Incentive Plan. The terms and conditions of Restricted Share Grants shall be determined by the Compensation Committee. Any Common Shares issued as Restricted Share Grants will have voting and dividend rights, and, following the restriction period, shall be registered and fully transferable by the Executive. 6. BENEFITS. (a) VACATION. The Executive shall be entitled to an amount of vacation time consistent with Company policy applicable to senior executives but at least five (5) weeks of paid vacation per full calendar year, which shall accrue during the Executive' s employment with the Company; provided, however, that the Executive can never accrue more than ten (10) weeks of paid and unused vacation time during the Term of this Agreement. (b) SICK AND PERSONAL DAYS. The Executive shall be entitled to sick and personal days on an as needed basis.

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(c) EMPLOYEE BENEFITS. (i) PARTICIPATION IN EMPLOYEE BENEFIT PLANS. The Executive and his spouse and eligible dependents, if any, and their respective designated beneficiaries where applicable, will be eligible for and entitled to participate in all Company sponsored employee benefits plan, as such plans may be amended or modified from time to time, including but not limited to a 401(k) plan, group health, accident, disability insurance, group life insurance and supplemental life insurance, as such benefits may be offered from time to time, on a basis no less favorable than that applicable to any other executive. Such benefits coverage shall be in the aggregate, not materially less valuable to Executive than the benefits made available to the Executive immediately prior to the Effective Date. (ii) DEFERRED COMPENSATION PLAN. To the extent practicable under applicable law and deemed appropriate by the Compensation Committee, the Company shall provide to the Executive an opportunity to participate in a Company sponsored deferred compensation plan. (d) OTHER BENEFITS. (i) ANNUAL PHYSICAL. The Company shall provide, at its cost, a medical examination for the Executive on an annual basis by a licensed physician in the Philadelphia, Pennsylvania area selected by the Executive. The results of such examination are the sole property of such Executive and shall be treated in confidence. (ii) CAR ALLOWANCE. The Company shall pay Executive a monthly car allowance of $650 in advance of the month to which the payment relates. (iii) TAX PREPARATION AND FINANCIAL PLANNING. The Company shall pay or promptly reimburse the Executive for costs incurred by him in connection with tax preparation and financial planning assistance, to be furnished by such advisors as chosen by the Executive, up to a maximum aggregate of $5,000 annually. (iv) DIRECTORS AND OFFICERS INSURANCE. During the Term and the Severance Period, the Executive shall be entitled to director and officer insurance coverage for his acts and omissions while an officer and director of the Company to the extent applicable, on a basis no less favorable to him than the coverage provided to any other current officers and trustees. The provision of such insurance coverage will be at the sole cost of the Company or the Partnership and the amount of coverage provided shall be determined by the Company and/or the Board, in its or their sole discretion. (v) DISABILITY INSURANCE. The Company shall maintain, at its cost, supplemental renewable long-term disability insurance as agreed to by the Company and the Executive. 7. TERMINATION. The employment of the Executive by the Company pursuant to this Agreement shall terminate upon the occurrence of any of the following:

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(a) DEATH OR PERMANENT DISABILITY. Immediately upon death or Permanent Disability of the Executive. As used in this Agreement, " Permanent Disability" shall mean an inability due to a physical or mental impairment to perform the material services contemplated under this Agreement for a period of six (6) months, whether or not consecutive, during any 365-day period. A determination of Permanent Disability shall be made by a physician satisfactory to both the Executive and the Company, provided that if the Executive and the Company do not agree on a physician, the Executive and the Company shall each select a physician and these two together shall select a third physician, whose determination as to Permanent Disability shall be binding on all parties, with the Company to bear all cost of securing such determination. The appointment of one or more individuals to carry out the offices or duties of the Executive during a period of the Executive' s inability to perform such duties and pending a determination of Permanent Disability shall not be considered a breach of this Agreement by the Company. (b) FOR CAUSE. At the election of the Company and subject to the provisions of this Section 7(b), immediately upon written notice by the Company to the Executive of his termination for Cause. For purposes of this Agreement, " Cause" for termination shall be deemed to exist solely in the event of (i) the conviction of the Executive of, or the entry of a plea of guilty or nolo contendere by the Executive to, a felony (exclusive of any felony relating to negligent operation of a motor vehicle and not including a conviction, plea of guilty or nolo contendere arising solely under a statutory provision imposing criminal liability upon the Executive on a per se basis due to the Company offices held by the Executive, so long as any act or omission of the Executive with respect to such matter was not taken or omitted in contravention of any applicable policy or directive of the Board), (ii) a willful breach of his duty of loyalty which is materially detrimental to the Company, or (iii) a willful failure to perform or adhere to explicitly stated duties that are consistent with the terms of this Agreement, or the Company' s reasonable and customary guidelines of employment or reasonable and customary corporate governance guidelines or policies, including without limitation any business code of ethics adopted by the Board, or to follow the lawful directives of the Board (provided such directives are consistent with the terms of this Agreement), which, in any such case, continues for thirty (30) days after written notice from the Board to the Executive. For purposes of this Section 7(b), no act, or failure to act, on the Executive' s part will be deemed " willful" unless done, or omitted to be done, by the Executive not in good faith and without a reasonable belief that the Executive' s act, or failure to act, was in the best interest of the Company. The parties agree that in order to terminate the Executive pursuant to Subsections (ii) and (iii) hereof, the Company shall first be required to prove to the reasonable satisfaction of the Executive that he engaged in improper conduct under these Subsections, and if the Executive shall not agree with the Company' s assessment of his conduct, then the Executive shall not be terminated until an arbitrator, as provided for in Section 13(b), has determined that the Executive' s conduct constituted improper conduct under the applicable Subsection. (c) WITHOUT CAUSE; WITHOUT GOOD REASON. At the election of the Company, without Cause, and at the election of the Executive, without Good Reason, in either case upon thirty (30) days prior written notice to the Executive or the Company, as the case may be.

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(d) FOR GOOD REASO ...