Exhibit 10.2


 


EMPLOYMENT
AGREEMENT

BETWEEN

GARY M. HOLLOWAY, SR.

AND

GMH COMMUNITIES TRUST


 


This
Employment Agreement (the “Agreement”), dated as of November 2, 2004 (“Effective
Date”), between GMH Communities Trust (the “Company”), and Gary M. Holloway, Sr.
(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 its President, Chairman and Chief
Executive Officer. The Executive may also serve as an officer of GMH
Communities, L.P. (the “Partnership”) and its general partner.


 


(b)           DUTIES.    The Executive’s
principal employment duties and responsibilities shall be those duties and
responsibilities customary for the positions of President, Chairman and Chief
Executive Officer 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 be
responsible for and have authority over the day-to-day operational management
of the Company and such responsibilities with respect to the Partnership as may
be agreed to by the parties from time to time. The Executive shall report directly
to the Board. All other officers of the Company shall report to the Executive
or such person(s) as the Executive may designate from time to time.


 


(i)    The
Executive shall have the right to nominate a certain number of non-independent
members of the Company’s Board of Trustees based upon his ownership percentage
of the Company’s Common Shares on a fully diluted basis assuming the conversion
of all outstanding Partnership units into Company Common Shares. If the
Executive owns at least 20% of the outstanding Company Common Shares, he shall
have the right to nominate three (3) Trustees, including himself. If the
Executive owns at least 10% but less than 20% of the outstanding Company Common
Shares, he shall have the right to nominate two (2) Trustees, including
himself. If the Executive owns less than 10% of the outstanding Company Common
Shares, he shall have the right to nominate himself as a Trustee. As provided
in Article III, Section 2 of the Company’s Bylaws, all nominations to
the Board of Trustees, including the nomination of the Executive and the
Executive’s nominees, must be submitted through and approved by the Nominating
and Corporate Governance Committee and follow the nominating process
established by the committee for the nomination of Trustees and must satisfy
the standards for membership on the Board of Trustees approved by that
committee from time to time.


 


(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) shall be permitted to continue to own a position in, manage,
operate and devote time and attention to those properties and businesses he
owned, operated or controlled prior to the formation of the Company that were
not transferred to or purchased by the Company, all of which are listed on
Schedule A attached hereto, or any properties and businesses that were
transferred to the Company and that, subject to the approval of a majority of
the independent


 





















 


members of the Board, the
Executive subsequently acquires (the “Excluded Businesses”), (ii) 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,
(iii) may participate in charitable, academic or community activities, and
in trade or professional organizations, or (iv) 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 shall be $350,000. The Board
or 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 (or, for the first year of the Initial Term, from the
Effective Date until December 31, 2004) 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. 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.    Provided that the Executive is employed by the
Company as of December 31, 2004, the Executive shall be entitled to a
fixed bonus with respect to the 2004 calendar year in the amount of $150,000,
subject to the review and concurrence of the Compensation Committee after the
end of the 2004 calendar year. Starting in 2005, 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 90 days of each calendar year)
containing individual performance goals for participants and corporate
performance goals set at Threshold, Target, Superior and Outperformance 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 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


 


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where:


 


individual performance bonus = individual performance level achieved
(Threshold, Target, Superior or Outperformance
percentage) × individual goals allocation percentage
(20%) × Base Salary


 


corporate performance bonus = corporate performance level achieved
(Threshold, Target, Superior or Outperformance
percentage) × corporate goals allocation percentage
(80%) × Base Salary


 


The
percentages established for the Executive for the performance bonus levels for
2005 shall be 40% for Threshold Level and 80% for Target Level, 120% for
Superior Level, and 200% for Outperformance 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. After 2005 the percentages shall not be less than the
2005 percentages for each performance bonus level without the written
agreement of the Executive. For 2005 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 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 six (6) weeks
of paid vacation per full calendar year, which shall accrue during the
Executive’s employment with the Company.


 


(b)           SICK AND PERSONAL
DAYS.    The Executive shall be entitled to sick and
personal days on an as needed basis.


 


(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


 


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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 by his then employer.


 


(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 $1,500 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 $10,000
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.


 


(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:


 


(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


 


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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.


 


(d)           FOR GOOD REASON.    At
the election of the Executive, for Good Reason. For purposes of this Agreement,
“Good Reason” shall mean any of the following actions or omissions occurring
without the Executive’s written consent, provided the Executive notifies the
Company of his determination that Good Reason exists, with such notification to
occur within 60 days of the time at which the Executive knows or should
know of the action or omission on which such determination is based:


 


(i)    removal
from the Board (other than for Cause), or the failure to be nominated or
elected to the Board (other than for Cause),


 


(ii)   failure
by the Company to renew this Agreement on at least comparable terms at the
conclusion of the Initial Term or either Successor Term,


 


(iii)  a
material reduction of the Executive’s duties, responsibilities or reporting
requirements, or the assignment to the Executive of any duties,
responsibilities, or reporting requirements that are inconsistent with his
positions as President, Chief Executive Officer, and Chairman of the Board, as
the case may be,


 


(iv)  a
reduction by the Company in the Executive’s annual Base Salary,


 


(v)   a
material reduction or loss of employee benefits or material fringe benefits,
both in terms of the amount of the benefit and the level of the Executive’s
participation therein, enjoyed by the Executive under the employee benefit and
welfare plans of the Company, including without limitation such benefits as
group health, dental, 401(k), accident, disability insurance, or group life
insurance, that is caused by the Company except as is required by applicable
law,


 


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(vi)  absent
the Executive’s prior written consent, the requirement by the Company that the
principal place of business at which the Executive performs his duties be
changed to a location that is outside of a 35 mile radius of Newtown Square,
Pennsylvania.


 


(vii) a
material breach by the Company of any provision of this Agreement that
continues for a period of thirty (30) days after Executive provides
written notice to the Company of such breach.


 


8.             EFFECTS OF TERMINATION.


 


(a)           BY THE COMPANY WITHOUT CAUSE; BY THE
EXECUTIVE FOR GOOD REASON.    In the event of a termination
of the Executive’s employment by the Company without Cause (including for these
purposes non-renewal of this Agreement pursuant to Section 2 as
termination without Cause) or by the Executive for Good Reason, then the
Company shall pay the Executive as follows:


 


(i)   an
amount equal to three (3) times the Executive’s Base Salary and Annual
Incentive Bonus (determined at the Superior level for both corporation and
individual performance for the year in which the termination of employment
occurs) (the “Applicable Amount”), provided, however, that in the event of a
resignation by the Executive for Good Reason pursuant to
Section 7(d)(ii) after notice of non-renewal of this Agreement by the
Company with respect to the second Successor Term, the multiplier shall be
limited to one (1) times the Applicable Amount, and


 


(ii)   the
prorated amount of the Annual Incentive Bonus at the Superior Level for both
corporate and individual performance for the year in which the termination of
employment occurs, pro rated for the portion of such year during which the
Executive was employed prior to the effective date of his termination, and


 


(iii)  an
amount equal to accrued but unpaid Base Salary through the date of termination
plus any other compensation then due and owing from the Company.


 


(iv)  The
sum of the amounts payable under subsections (i), (ii) and
(iii) hereof is referred to herein as his “Severance Payment.”


 


(v)   The
Severance Payment shall be made in a single, lump sum cash payment no later
than ten (10) days after the effective date of the Executive’s termination
of employment.


 


(vi)  The
Company shall allow the Executive to continue to participate during the
three-year period commencing on the date of termination (the “Severance Period”)
in any healthcare, dental, vision and prescription drug plans in which the
Executive was entitled to participate immediately prior to his termination, to
the same extent and upon the same terms as the Executive participated in such
plans prior to his termination, provided that the Executive’s continued participation
is permissible or otherwise practicable under the general terms and provisions
of such benefit plans and programs. During the Severance Period, the Company
shall pay for the Executive’s continued participation in said healthcare,
dental, vision and prescription drug plans, including but not limited to
premiums for such programs. To the extent that continued participation is
neither permissible nor practicable, the Company shall take such actions as may
be necessary to provide the Executive with substantially comparable benefits
(without additional cost to the Executive) outside the scope of such plans,
including, without limitation, reimbursing the Executive for his costs in
obtaining such coverage, such as COBRA premiums paid by the Executive and/or
his eligible dependents. If the Executive engages in regular employment after
his termination of employment (whether as an executive or as a self-employed
person), any employee benefit and welfare benefits received by the Executive in
consideration of such employment which are similar in nature to the healthcare,


 


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dental, vision and
prescription drug plans provided by the Company will relieve the Company of its
obligation under this Section 8(a)(vi) to provide comparable benefits
to the extent of the benefits so received.


 


(vii) The
Executive’s stock options, if any, awarded under the Equity Incentive Plan (or
any other or successor plan) shall immediately become 100% vested and he shall
have at least a two-year period following the effective date of his termination
of employment in which to exercise his vested stock options, including those
stock options that vested upon his termination of employment.


 


(viii) The
Executive’s restricted Common Shares awarded under the Equity Incentive Plan
(or any other or successor plan) shall immediately become 100% vested and all
restrictions shall lapse.


 


(b)           TERMINATION ON DEATH OR PERMANENT
DISABILITY.    Upon a termination of employment due to the
Executive’s death or his becoming subject to Permanent Disability, the Company
shall pay the Executive (or his estate or beneficiary) an amount equal to one
(1) time the sum of the Executive’s Base Salary and Annual Incentive Bonus
(determined at the Superior level for both corporation and individual
performance for the year in which the termination of employment occurs),
payable within ten (10) business days of the occurrence of the relevant
event. The Executive shall become 100% vested in his stock options and restricted
Common Shares awarded under the Equity Incentive Plan. The Executive (or his
estate or beneficiary) shall have a one-year period following the occurrence of
the relevant event in which to exercise his vested stock options, including
those stock options that vested on such event. The Company shall pay to the
Executive (or to his estate or beneficiary) any Base Salary, Incentive Bonus,
expense reimbursements and all other compensation related payments that are
payable as of the date of occurrence of the relevant event and that are related
to his period of employment preceding such date. The Company shall pay to the
Executive (or to his estate or beneficiary) the prorated amount of Incentive
Bonus at the Target Level for both corporate and individual performance for the
year in which such event occurs, prorated for the portion of the year during
which the Executive was employed prior to the occurrence of the relevant event.


 


(c)           BY THE COMPANY FOR CAUSE OR BY THE EXECUTIVE
WITHOUT GOOD REASON.    In the event that the Executive’s
employment is terminated by the Company for Cause or by the Executive without
Good Reason, the Company shall pay the Executive his accrued Base Salary and,
with respect to a termination by the Executive without Good Reason, any amount
of Annual Incentive Bonus fully earned and payable through the date of
termination and payable under the applicable Incentive Bonus policy, expense
reimbursements and all other compensation related payments that are payable as
of his termination of employment date and that are related to his period of
employment preceding his termination date. The Executive shall be entitled to
exercise his vested stock options, determined as of his termination date,
pursuant to the terms of the option grant. Unless the Company and the Executive
agree otherwise, the Executive shall forfeit all unvested options and any
unvested Restricted Share Grants not acquired by the Executive for
consideration, subject to Section 9(b) below, and the Company has the
right to repurchase any unvested Restricted Share Grants that the Executive
acquired for consideration in accordance with the terms of the Equity Incentive
Plan (with the result that if the Executive acquired such unvested Restricted
Share Grants for any consideration, the Executive shall at most be entitled to
a return of such consideration). The Executive shall also be entitled to all
benefits accrued and vested under any employee benefit plan of the Company.


 


(d)           TERMINATION OF
AUTHORITY.    Immediately upon the Executive terminating or
being terminated from his employment with the Company for any reason,
notwithstanding anything else appearing in this Agreement or otherwise, the
Executive will stop serving the functions of his


 


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terminated or expired
positions, and shall be without any of the authority or responsibility for such
positions. On request of the Board, at any time following his termination of
employment for any reason, the Executive shall resign from the Board if then a
member. Notwithstanding any contrary provision in this Agreement, the Company
shall continue to indemnify the Executive and hold the Executive harmless to
the extent specified under the by-laws or other corporate documents of the
Company or the Partnership (as applicable) and permitted by applicable law.


 


9.             CHANGE OF CONTROL.


 


(a)           CHANGE OF CONTROL.    For
purposes of this Agreement, a “Change of Control” will be deemed to have taken
place upon the occurrence of any of the following events:


 


(i)    the
acquisition by any person, entity or affiliated group, excluding the Company or
any employee benefit plan of the Company or any entity controlled directly or
indirectly by the Company, of more than 50% of the then outstanding voting
shares of the Company,


 


(ii)   the
consummation of any merger or consolidation of the Company into another
company, such that the holders of the voting shares of the Company immediately
prior to such merger or consolidation hold less than 50% of the voting power of
the securities of the surviving company or the parent of such surviving
company,


 


(iii)  the
complete liquidation of the Company or the sale or disposition of all or
substantially all of the Company’s assets, such that after the transaction, the
holders of the voting shares of the Company immediately prior to the
transaction hold less than 50% of the voting securities of the acquiror or the
parent of the acquiror, or


 


(iv)  trustees
of the Company are elected such that a majority of the members of the Board
shall have been members of the Board for less than two years, unless the
election or nomination for election of each new trustee who was not a trustee
at the beginning of such two-year period was approved by a vote of at least
two-thirds of the trustees then still in office who were trustees at the
beginning of such period, or


 


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(v)   a
majority of the Board of the Company votes in favor of a decision that a Change
of Control has occurred.


 


(b)           CERTAIN BENEFITS UPON A CHANGE OF
CONTROL.    In the event of a termination of the Executive’s
employment by the Executive or by the Company (or its successor) for any reason
other than Cause following a Change of Control, the Executive shall become 100%
vested in all unvested stock options and restricted Common Shares awarded under
the Equity Incentive Plan (or any other or successor plan) and the Executive
shall have a two (2) year period following the termination of his
employment in which to exercise his vested stock options, including those stock
options that vested upon the Change of Control.


 


(c)           EXCISE TAX.


 


(i)    In
the event that any payment or benefit received or to be received by the
Executive in connection with a change in control or a termination of the
Executive’s employment (whether pursuant to the terms of this Agreement or any
other plan, arrangement or agreement with the Company, any person whose actions
result in a change in control or any person affiliated with the Company or such
person) (all such payments and benefits being hereinafter called “Total
Payments”), is in an amount such that the Executive will be subject (in whole
or in part) to the excise tax imposed under Section 4999 of the Internal
Revenue Code of 1986, as amended (“Excise Tax”) on such payments and benefits,
then the Company shall pay to the Executive an additional amount (the “Gross-Up
Payment”) such that the net amount retained by the Executive, after deduction
of the Excise Tax and any federal, state and local tax on the Gross-Up Payment,
will be equal to the Total Payments. For purposes of determining the amount of
the Gross-Up Payment, the Executive shall be deemed to pay federal income taxes
at the highest marginal rate of federal income taxation in the calendar year in
which the Gross-Up Payment is to be made and state and local income taxes at
the highest marginal rate of taxation in the state and locality of the
Executive’s residence on such date, net of the maximum deduction in federal
income taxes which could be obtained from deduction of such state and local
taxes.


 


(ii)   The
Executive or the Company may request, prior to the time any payments under this
Agreement are made, a determination of whether any or all of the Total Payments
will be subject to the Excise Tax and, if so, the amount of such Excise Tax and
the federal, state and local tax imposed on the Gross-Up Payment. If such a
determination is requested, it shall be made promptly, at the Company’s
expense, by tax counsel selected by the Executive and approved by the Company
(with such approval not being unreasonably withheld), and such determination
shall be conclusive and binding on both parties. The Company agrees to provide
any information reasonably requested by such tax counsel. Tax counsel may
engage accountants or other experts, at the Company’s expense, to the extent
deemed necessary or advisable for them to reach a determination. For these
purposes, the term “tax counsel” shall mean a law firm with expertise in
federal income tax matters.


 


(iii)  In
the event that the Excise Tax is subsequently determined to be less than the
amount taken into account hereunder, the Executive will repay to the Company,
at the time that the amount of such reduction in Excise Tax is finally
determined, the portion of the Gross-Up Payment attributable to such reduction
plus that portion of the Gross-Up Payment attributable to the Excise Tax and
federal, state and local income tax imposed on the Gross-Up Payment, without
any interest thereon. In the event that the Excise Tax is determined to exceed
the amount taken into account hereunder, the Company will make an additional
Gross-Up Payment in respect of such excess and in respect of any portion of the
Excise Tax with respect to which the Company had not previously made a Gross-Up
Payment (plus any interest, penalties or additions to tax payable


 


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by the Executive with
respect to such excess and such portion) at the time that the amount of such
excess or such portion is finally determined, without any interest thereon.


 


(iv)  Each
party agrees to notify the other party, in writing, of any claim that, if
successful, would require the payment by the Company of a Gross-Up Payment or
might entitle the Company to a refund of all or part of any previous Gross-Up
Payment. Such notification shall be given as soon as practicable but no later
than ten (10) business days after the Executive or Company is informed in
writing of such claim or otherwise becomes aware of such claim. If notice of
the claim arose as a result of a claim made against the Executive by a taxing
authority, Executive shall not pay such claim prior to the expiration of the
thirty (30) day period following the date on which he gives notice to the
Company. If the Company notifies the Executive in writing prior to the
expiration of such period that it desires to contest such claim, the Executive
shall: (A) give the Company any information reasonably requested by the
Company relating to such claim, (B) take such action in connection with
contesting such claim as the Company shall reasonably request in writing from
time to time, including, without limitation, accepting legal representation
with respect to such claim by an attorney selected by the Executive and
approved by the Company (with such approval not being unreasonably withheld),
(C) cooperate with the Company in good faith in order to effectively
contest such claim, and (D) permit the Company to reasonably participate
in any proceedings relating to such claim. The Company shall bear and pay directly
all costs and expenses (including legal fees and additional interest and
penalties) incurred in connection with such contest and shall indemnify and
hold the Executive harmless, on an after-tax basis, for any Excise Tax
(including interest and penalties with respect thereto) imposed as a result of
such representation and payment of costs and expenses.


 


(v)   Notwithstanding
the foregoing, the Company shall control all audits and proceedings taken in
connection with any claim, audit or proceeding involving Excise Taxes or
Gross-Up Payments and, at its sole option, may pursue or forego any and all
administrative appeals, proceedings, hearings and conferences with the taxing
authority in respect of any such claim, audit or proceeding and may, at its sole
option, either direct the Executive to pay the tax claimed and sue for a refund
or contest the tax in any permissible manner, and the Executive agrees to
prosecute such contest to a determination before any administrative tribunal,
in a court of initial jurisdiction and in one or more appellate courts, as the
Company shall determine; provided, however,
that if the Company directs the Executive to pay such tax and sue for a refund,
the Company shall advance the amount of such payment to the Executive, (including
interest or penalties with respect thereto) and shall indemnify and hold the
Executive harmless, on an after-tax basis, for any Excise Tax or income tax
(including interest or penalties with respect thereto) imposed with respect to
such advance or with respect to any imputed income with respect to such
advance. The Company shall be required to consult with and keep the Executive
fully apprised of developments and actions being considered or taken with
respect to such claim, audit or proceeding. The Company’s control of the
contest shall be limited to issues with respect to which such a Gross-Up
Payment would be payable or refundable hereunder and the Executive shall be
entitled to settle or contest, as the case may be, any other issue. Each party
agrees to keep the other party fully apprised of developments concerning such
claim, audit or proceeding and to cooperate with the other in good faith in
order to effectively resolve such claim, audit or proceeding.


 


(vi)  For
purposes of this Subsection (c), a determination of whether a payment is
subject to Excise Tax, including but not limited to, a determination of change
in control, shall be made pursuant to Section 280G of the Internal Revenue
Code of 1986, as amended.


 


10.           CONFIDENTIAL
INFORMATION.    The Executive recognizes and acknowledges
that certain assets of the Company constitute Confidential Information. The
term “Confidential


 


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Information”
as used in this Agreement shall mean all information which is known only to the
Executive or the Company, other employees of the Company, or others in a
confidential relationship with the Company, and relating to the Company’s
business including, without limitation, information regarding clients,
customers, pricing policies, methods of operation, proprietary Company
programs, sales products, profits, costs, markets, key personnel, formulae,
product applications, technical processes, and trade secrets, as such
information may exist from time to time, which the Executive acquired or
obtained by virtue of work performed for the Company, or which the Executive
may acquire or may have acquired knowledge of during the performance of said
work. The Executive shall not, during the Term or for a two (2) year period
after the Term, disclose all or any part of the Confidential Information to any
person, firm, corporation, association, or any other entity for any reason or
purpose whatsoever, directly or indirectly, except as may be required by law or
pursuant to his employment hereunder, unless and until such Confidential
Information becomes publicly available other than as a consequence of the
breach by the Executive of his confidentiality obligations hereunder by law or
in any judicial or administrative proceeding (in which case, the Executive
shall provide the Company with notice). In the event of the termination of his
employment, whether voluntary or involuntary and whether by the Company or the
Executive, the Executive shall deliver to the Company all documents and data
pertaining to the Confidential Information and shall not take with him any
documents or data of any kind or any reproductions (in whole or in part) or
extracts of any items relating to the Confidential Information. The Company
acknowledges that prior to his employment with the Company, the Executive has
lawfully acquired extensive knowledge of the industries and businesses in which
the Company engages in business, and that the provisions of this
Section 10 are not intended to restrict the Executive’s use of such
previously acquired knowledge.


 


In
the event that the Executive receives a request or is required (by deposition,
interrogatory, request for documents, subpoena, civil investigative demand or
similar process) to disclose all or any part of the Confidential Information,
the Executive agrees to (a) promptly notify the Company in writing of the
existence, terms and circumstances surrounding such request or requirement,
(b) consult with the Company on the advisability of taking legally available
steps to resist or narrow such request or requirement, and (c) assist the
Company in seeking a protective order or other appropriate remedy. In the event
that such protective order or other remedy is not obtained or that the Company
waives compliance with the provisions hereof, the Executive shall not be liable
for such disclosure unless disclosure to any such tribunal was caused by or
resulted from a previous disclosure by the Executive not permitted by this
Agreement.


 


11.           NON-COMPETITION AND
NONSOLICITATION.    During the Term and for a period of 18
calendar months after the termination of the Executive’s employment (the “Noncompete
Period”), the Executive shall not, directly or indirectly, either as a
principal, agent, employee, employer, stockholder, partner, member, director,
trustee or in any other capacity whatsoever: (a) engage or assist others
engaged, in whole or in part, in any business which is engaged in a business or
enterprise that is substantially similar to any primary segment of the business
of the Company that the Company was engaged in during the period of the
Executive’s employment with the Company, or (b) without the prior consent
of the Board, employ or solicit the employment of, or assist others in
employing or soliciting the employment of, any individual employed by the
Company (other than the Executive’s personal assistant or Executive’s
secretary) at any time during the six (6) month period prior to any
termination of the Executive’s employment with the Company; provided, however, that the provisions of
this Section 11 shall not apply in the event the Company materially
breaches this Agreement.


 


Nothing
in this Section 11 shall impede, restrict or otherwise interfere with the
Executive’s management and operation of the Excluded Businesses. Further,
nothing in this Section 11 shall prohibit (a) Executive from making
any investment in a public company, or where he is the owner of five percent
(5%) or less of the issued and outstanding voting securities of any entity,
provided such


 


11





















 


ownership
does not result in his being obligated or required to devote any substantial
amount of managerial efforts; or (b) Executive from being engaged in
activities permitted under Section 1(c).


 


The
Executive agrees that the restraints imposed upon him pursuant to this
Section 11 are necessary for the reasonable and proper protection of the
Company and its subsidiaries and affiliates, and that each and every one of the
restraints is reasonable in respect to subject matter, length of time and
geographic area. The parties further agree that, in the event that any
provision of this Section 11 shall be determined by any court of competent
jurisdiction to be unenforceable by reason of its being extended over too great
a time, too large a geographic area or too great a range of activities, such
provision shall be deemed to be modified to permit its enforcement to the
maximum extent permitted by law.


 


12.           INTELLECTUAL
PROPERTY.    During the Term, the Executive shall promptly
disclose to the Company or any successor or assign, and grant to the Company
and its successors and assigns without any separate remuneration or
compensation other than that received by him in the course of his employment,
his entire right, title and interest in and to any and all inventions,
developments, discoveries, models, or any other intellectual property of any
type or nature whatsoever (“Intellectual Property”), whether developed by him
during or after business hours, or alone or in connection with others, that is
in any way related to the business of the Company, its successors or assigns.
This provision shall not apply to (a) any Intellectual Property developed
by the Executive prior to the Term; and (b) books or articles authored by the
Executive during non-work hours, consistent with his obligations under this
Agreement, so long as such books or articles (i) are not funded in whole
or in part by the Company, and (ii) do not contain any Confidential
Information or Intellectual Property of the Company. The Executive agrees, at
the Company’s expense, to take all steps necessary or proper to vest title to
all such Intellectual Property in the Company, and cooperate fully and assist
the Company in any litigation or other proceedings involving any such
Intellectual Property.


 


13.           DISPUTES.


 


(a)           EQUITABLE RELIEF.    The
Executive acknowledges and agrees that upon any breach by the Executive of his
obligations under Sections 10, 11, or 12 hereof, the Company will have no
adequate remedy at law, and accordingly will be entitled to specific
performance and other appropriate injunctive and equitable relief.


 


(b)           ARBITRATION.    Excluding
only requests for equitable relief by the Company under Section 13(a), in
the event that there is any claim or dispute arising out of or relating to this
Agreement or the breach hereof, and the parties hereto shall not have resolved
such claim or dispute within 60 days after written notice from one party
to the other setting forth the nature of such claim or dispute, then such claim
or dispute shall be settled exclusively by binding arbitration in Montgomery
County, Pennsylvania, in accordance with the Employment Dispute Resolution
Rules of the American Arbitration Association (“Rules”), by an arbitrator
mutually agreed upon by the parties hereto or, in the absence of such
agreement, by an arbitrator selected according to such Rules. Notwithstanding
the foregoing, if either the Company or the Executive shall request, such
arbitration shall be conducted by a panel of three (3) arbitrators, one
selected by the Company, one selected by the Executive and the third selected
by agreement of the first two arbitrators, or, in the absence of such
agreement, in accordance with such Rules. Judgment upon the award rendered by
such arbitrator(s) shall be entered in any Court having jurisdiction thereof
upon the application of either party. The parties agree to use their reasonable
best efforts to have such arbitration completed as soon as is reasonably
practicable. Notwithstanding anything herein to the contrary, except as
provided in (c) below, each party shall bear its own costs and expenses
incurred in connection with the arbitration.


 


(c)           LEGAL FEES.    The
Company shall pay or promptly reimburse the Executive for the reasonable legal
fees and expenses incurred by the Executive in successfully enforcing or
defending


 


12





















 


any right of the Executive
pursuant to this Agreement even if the Executive does not prevail on each
issue.


 


14.           INDEMNIFICATION.    The
Company shall indemnify the Executive, to the maximum extent permitted by
applicable law, against all costs, charges and expenses incurred or sustained
by the Executive, including the cost of legal counsel selected and retained by
the Executive in connection with any action, suit or proceeding to which the
Executive may be made a party by reason of the Executive being or having been
an officer, director, trustee, or employee of the Company or the Partnership.


 


15.           COOPERATION IN FUTURE MATTERS.    The
Executive hereby agrees that for a period of 18 months following his
termination of employment he shall cooperate with the Company’s reasonable
requests relating to matters that pertain to the Executive’s employment by the
Company, including, without limitation, providing information or limited
consultation as to such matters, participating in legal proceedings,
investigations or audits on behalf of the Company, or otherwise making himself
reasonably available to the Company for other related purposes. Any such
cooperation shall be performed at scheduled times taking into consideration the
Executive’s other commitments, and the Executive shall be compensated at a
reasonable hourly or per diem rate (based on the Executive’s Base Salary as of
his termination date). The Executive shall not be required to perform such
cooperation to the extent it conflicts with any requirements of exclusivity of
services for another employer or otherwise, nor in any manner that in the good
faith belief of the Executive would conflict with his rights under or ability
to enforce this Agreement.


 


16.           GENERAL.


 


(a)           NOTICES.    All notices
and other communications hereunder shall be in writing or by written
telecommunication, and shall be deemed to have been duly given if delivered
personally or if sent by overnight courier, to the relevant address set forth
below or to such other address as the recipient of such notice or communication
shall have specified in writing to the other party hereto, in accordance with
this Section 16(a). 


 


	
  If
  to the Company, to:

  	
   

  	
  GMH
  Communities Trust

  10 Campus Drive

  Newtown Square, PA 19073

  Attn: Board of Trustees

  
	
   

  	
   

  	
   

  
	
  With
  a Mandatory copy to:

  	
   

  	
  GMH
  Communities Trust

  10 Campus Drive

  Newtown Square, PA 19073

  Attn: General Counsel

  



 


If
to Executive, at his last residence shown on the records of the Company.


 


Any
such notice shall be effective (i) if delivered personally, when received,
and (ii) if sent by overnight courier, when receipted for, provided a copy
of such communication is sent, as described above.


 


(b)           SEVERABILITY.    If any
provision of this Agreement is or becomes invalid, illegal or unenforceable in
any respect under any law, the validity, legality and enforceability of the
remaining provisions hereof shall not in any way be affected or impaired.


 


(c)           WAIVERS.    No delay or
omission by either party hereto in exercising any right, power or privilege
hereunder shall impair such right, power or privilege, nor shall any single or
partial exercise of any such right, power or privilege preclude any further
exercise thereof or the exercise of any other right, power or privilege.


 


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(d)           COUNTERPARTS.    This
Agreement may be executed in multiple counterparts, each of which shall be
deemed an original, but all of which together shall constitute one and the same
instrument. In making proof of this Agreement, it shall not be necessary to
produce or account for more than one such counterpart.


 


(e)           ASSIGNS.    This
Agreement shall be binding upon and inure to the benefit of the Company’s
successors and the Executive’s personal or legal representatives, executors,
administrators, heirs, distributees, devisees and legatees. This Agreement
shall not be assignable by the Executive, it being understood and agreed that
this is a contract for the Executive’s personal services. This Agreement shall
not be assignable by the Company except that the Company shall assign it in
connection with a transaction involving the succession by a third party to all
or substantially all of the Company’s business and/or assets (whether direct or
indirect and whether by purchase, merger, consolidation, liquidation or
otherwise). When assigned to a successor, the assignee shall assume this
Agreement and expressly agree to perform this Agreement in the same manner and
to the same extent as the Company would be required to perform it in the
absence of such an assignment. For all purposes under this Agreement, the term “Company”
shall include any successor to the Company’s business and/or assets that
executes and delivers the assumption agreement described in the immediately
preceding sentence or that becomes bound by this Agreement by operation of law.


 


(f)            ENTIRE AGREEMENT.    This
Agreement contains the entire understanding of the parties, supersedes all
prior agreements and understandings, whether written or oral, relating to the
subject matter hereof and may not be amended except by a written instrument
hereafter signed by the Executive and a duly authorized representative of the
Board (other than the Executive).


 


(g)           GOVERNING LAW.    This
Agreement and the performance hereof shall be construed and governed in
accordance with the laws of the Commonwealth of Pennsylvania, without giving
effect to principles of conflicts of law.


 


(h)           CONSTRUCTION.    The
language used in this Agreement shall be deemed to be the language chosen by
the parties to express their mutual intent, and no rule of strict construction
shall be applied against any party. The headings of sections of this Agreement
are for convenience of reference only and shall not affect its meaning or
construction. Whenever any word is used herein in one gender, it shall be
construed to include the other gender, and any word used in the singular shall
be construed to include the plural in any case in which it would apply and vice
versa.


 


(i)            PAYMENTS AND EXERCISE OF RIGHTS AFTER
DEATH.    Any amounts payable hereunder after the Executive’s
death shall be paid to the Executive’s designated beneficiary or beneficiaries,
whether received as a designated beneficiary or by will or the laws of descent
and distribution. The Executive may designate a beneficiary or beneficiaries
for all purposes of this Agreement, and may change at any time such
designation, by notice to the Company making specific reference to this
Agreement. If no designated beneficiary survives the Executive or the Executive
fails to designate a beneficiary for purposes of this Agreement prior to his
death, all amounts thereafter due hereunder shall be paid, as and when payable,
to his spouse, if she survives the Executive, and otherwise to his estate.


 


(j)            CONSULTATION WITH
COUNSEL.    The Executive acknowledges that he has had a
full and complete opportunity to consult with counsel or other advisers of his
own choosing concerning the terms, enforceability and implications of this
Agreement, and that the Company has not made any representations or warranties
to the Executive concerning the terms, enforceability and implications of this
Agreement other than as are reflected in this Agreement. The Company will pay
the reasonable legal fees and expenses incurred in the drafting and negotiation
of this Agreement.


 


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(k)           WITHHOLDING.    Any
payments provided for in this Agreement shall be paid net of any applicable
income tax withholding required under federal, state or local law.


 


(l)            CONSUMER PRICE
INDEX.    For purposes of this Agreement, the term “CPI”
refers to the Consumer Price Index as published by the Bureau of Labor Statistics
of the United States Department of Labor, U.S. City Average, All Items for
Urban Wage Earners and Clerical Workers (1982-1984=100). If the CPI is
hereafter converted to a different standard reference base or otherwise
revised, the determination of the CPI adjustment shall be made with the use of
such conversion factor, formula or table for converting the CPI, as may be
published by the Bureau of Labor Statistics, or, if the bureau shall no longer
publish the same, then with the use of such conversion factor, formula or table
as may be published by an agency of the United States, or failing such
publication, by a nationally recognized publisher of similar statistical
information.


 


(m)          SURVIVAL.    The
provisions of Sections 8, 9, 10, 11, 12, 13, 14 and 15 shall survive the
termination of this Agreement.


 


IN
WITNESS WHEREOF, and intending to be legally bound hereby, the parties hereto
have caused this Agreement to be duly executed as of the date first above
written. 


 


	
  GMH
  COMMUNITIES TRUST

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Gary M. Holloway

  	
   

  	
  /s/ Gary M. Holloway, Sr.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
  Gary M. Holloway

  	
   

  	
  GARY
  M. HOLLOWAY, SR.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Its:

  	
  President and Chief Financial Officer

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Dated:
  November 2, 2004

  	
   

  	
  Dated:
  November 2, 2004

  



 


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