Exhibit 10.2

 

EMPLOYMENT AGREEMENT

(JEFFREY H. BERSON)

 

THIS EMPLOYMENT AGREEMENT (“Agreement”) is entered into on April 11, 2017 and
effective as of April 3, 2017 (the “Effective Date”), by and among QTS Realty
Trust, Inc., a Maryland corporation (together with any successor general partner
of the Operating Partnership, (the “Company”), QualityTech, LP, a Delaware
limited partnership (the “Operating Partnership”), Quality Technology Services,
LLC, a Delaware limited liability company and an affiliate of the Company (the
“Employer”), and Jeffrey H. Berson an individual (“Executive”), with respect to
the following facts and circumstances:

 

RECITALS

 

WHEREAS, Executive has been employed by Employer as an executive of the Company,
the Operating Partnership and the Employer since 2013 pursuant to an employment
agreement, dated August 1, 2013, as amended August 14, 2013 (“Prior Agreement”);

 

WHEREAS, the Employer and Executive desire to continue their employment
relationship, with the Employer employing Executive to serve as the Company’s,
the Operating Partnership’s and the Employer’s Chief Financial Officer (“CFO”)
and Executive accepting such employment and appointments, on the terms set forth
below; and

 

WHEREAS, the parties desire that this Agreement supersede and replace Prior
Agreement in its entirety.

 

NOW, THEREFORE, in consideration of the mutual promises, covenants and
agreements set forth herein, the parties hereto agree as follows:

 

ARTICLE 1
EMPLOYMENT, TERM AND DUTIES

 

1.1          Employment.  During the Term (defined below), the Employer shall
employ Executive to serve as, and the Company shall appoint or cause to be
appointed the Executive to the position of, the CFO of the Company, upon the
terms and conditions set forth in this Agreement, and Executive shall report
directly to the Chief Executive Officer of the Company (the “CEO”), unless
otherwise determined by the Board of Directors of the Company (the “Board”).  In
addition, during the Term, Executive shall serve as the CFO of the Operating
Partnership and the Employer and shall report to the CEO, unless determined
otherwise by the Board.  For the avoidance of doubt, Executive shall be an
employee of the Employer.

 

1.2          Term.  The Employer shall employ Executive, and Executive shall
serve as the CFO of the Company, commencing upon the Effective Date and
continuing thereafter for a two (2)-year term (the “Term”), unless earlier
terminated under Article 4; provided that the Term shall automatically renew for
additional two (2)-year periods unless the Employer or Executive gives notice of
non-renewal at least thirty (30) days prior to expiration of the Term (as it may
have been extended by any renewal period).

 

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1.3          Duties.  Executive shall perform all the duties and obligations
reasonably associated with the position of CFO and consistent with the Bylaws or
other governing documents of the Company or the Operating Partnership as in
effect from time to time, subject to the supervision of the CEO, and shall
perform such other duties of an executive, managerial or administrative nature
as shall be specified and designated from time to time by the CEO (including the
performance of services for any subsidiary or affiliate of the Company (each,
including the Company, a “QTS Company”) without any additional compensation). 
Executive shall perform the duties contemplated herein faithfully and
diligently.  Executive shall devote substantially all of  his business time and
effort to the performance of Executive’s duties hereunder and to the business
affairs of the QTS Companies; provided that in no event shall this provision
prohibit Executive from (i) performing social, civic, charitable and religious
activities, (ii) managing personal investments and affairs, (iii) participating
in educational or professional associations, or (iv) any other activities
approved by the CEO, so long as the activities set forth in clauses (i) through
(iv) above do not materially and adversely interfere with Executive’s duties and
obligations hereunder or to the business affairs of the Company.

 

ARTICLE 2
COMPENSATION

 

2.1          Salary and Bonus.  In consideration for Executive’s services
hereunder, the Employer shall pay Executive as follows:

 

(a)           Employer shall pay Executive an annual salary at the rate of
$350,000 (“Base Pay”), payable in accordance with the Employer’s regular payroll
schedule from time to time (less any deductions required for Social Security,
state, federal and local withholding taxes, and any other authorized or mandated
similar withholdings).  The Base Pay shall be reviewed by the Compensation
Committee of the Board (the “Compensation Committee”), no less frequently than
annually.

 

(b)           Executive will have the opportunity to earn a bonus to be paid in
accordance with the Employer’s regular bonus payment schedule beginning in 2017
(to be paid in 2018).  Executive is eligible for a target bonus (a “Target
Bonus”) equal to 100% of his Base Pay for threshold performance and additional
amounts paid for exceptional performance as determined by the Compensation
Committee.  Executive’s Target Bonus will be earned based upon Executive’s
performance and the performance of the Company or such other factors and
criteria that may be established from time to time for the calculation of bonus
awards by the Compensation Committee, or, if there is none, the Board.  The
Employer may award discretionary bonuses in addition to performance bonuses.

 

2.2          Equity Awards.  Equity awards may be made pursuant to the QTS
Realty Trust, Inc. 2013 Equity Incentive Plan, or any successor equity incentive
plan adopted by the Company or the other QTS Companies, in accordance with the
Company’s policies and as deemed appropriate by the Compensation Committee (the
“Equity Awards”).  The Equity Awards will be comprised of a target grant valued
at 200% of Executive’s Base Pay beginning as

 

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of the Effective Date (to be awarded in 2018), to be awarded based upon
Executive’s performance and the performance of the Company or such other factors
and criteria that may be established from time to time by the Compensation
Committee, or, if there is none, the Board.  These Equity Awards typically will
be subject to a three (3)-year vesting schedule (33% one-year vesting following
grant and 8.375% vesting per quarter following the first year), however, a
performance-based component may be included with a different vesting schedule. 
Additional equity awards may be made in accordance with the Company’s policies
and as deemed appropriate by the Compensation Committee.

 

ARTICLE 3
EXECUTIVE BENEFITS

 

3.1          Vacation.  Executive shall be entitled to four (4) weeks paid
vacation each calendar year in accordance with the general policies of the
Company and the Employer applicable generally to other senior executives of the
Company.

 

3.2          Employee Benefits.  Executive shall receive all group insurance and
retirement plan benefits and any other benefits on the same basis as are
available to other senior executives of the Company under the personnel policies
in effect from time-to-time.  Executive shall receive all other such fringe
benefits as the Company and the Employer may offer to other senior executives
under personnel policies in effect from time-to-time, such as health and
disability insurance coverage, paid sick leave and financial planning/tax
services.

 

3.3          Reimbursement for Expenses.  Executive shall be reimbursed for all
documented reasonable expenses incurred by Executive in the performance of his
duties or otherwise in furtherance of the business of the Company, the Operating
Partnership or the Employer in accordance with the reimbursement policies in
effect from time-to-time. Any reimbursement under this Section 3.3 that is
taxable to Executive shall be made by December 31 of the calendar year following
the calendar year in which Executive incurred the expense.

 

ARTICLE 4

TERMINATION

 

4.1          Grounds for Termination.

 

4.1.1       Death or Disability.  Executive’s employment shall terminate
immediately in the event of Executive’s death or Disability.  “Disability” means
any: (i) physical disability or impairment, (ii) mental disability or
impairment, (iii) illness, or (iv) injury, that, in the good-faith judgment of
the Board, substantially prevents or would prevent Executive from performing his
duties and obligations under this Agreement or participating effectively and
actively in the management of the Company for more than three consecutive months
or for more than 90 days in any 180-day period.

 

4.1.2       Cause.  The Employer shall have the right to terminate Executive’s
employment by giving written notice of such termination to Executive upon the
occurrence of any one or more of the following events (which, for purposes of
this Agreement, shall

 

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constitute “Cause”):

 

(a)                                 Executive’s conviction of, or pleading
guilty or nolo contendere to, a crime that constitutes a felony or any lesser
criminal offense involving dishonesty or moral turpitude;

 

(b)                                 any commission by Executive of an act of
dishonesty, theft, fraud, or embezzlement; or

 

(c)                                  any willful act by Executive that has a
significant adverse effect on the reputation of the Company or any of the QTS
Companies.

 

4.1.3       Good Reason.  Executive may terminate his employment under this
Agreement by giving written notice to the Employer upon the occurrence of any
one or more of the following events (which, for purposes of this Agreement,
shall constitute “Good Reason”):

 

(a)                                 a material diminution in Executive’s
authority, duties or responsibilities (including reporting responsibilities), or
any significant adverse change in Executive’s title as Chief Financial Officer
of the Company;

 

(b)                                 a material diminution in Executive’s Base
Pay, as in effect from time to time;

 

(c)                                  the Executive’s place of employment is
moved more than fifty (50) miles from his/her assigned location; or

 

(d)                                 the failure of a successor to the assets or
business of the Company and the Operating Partnership to assume the obligations
of the Company and the Operating Partnership under this Agreement.

 

It shall be a condition precedent to Executive’s right to terminate his
employment for Good Reason that (a) he shall have first given the Employer
written notice stating with reasonable specificity the act(s) on which such
termination is premised within forty-five (45) days after Executive becomes
aware of such act(s), (b) if such act(s) is susceptible of cure or remedy, it
has not been cured or remedied within thirty (30) days after receipt of such
notice, and (c) Executive has terminated his employment within twelve (12)
months after so notifying the Employer.

 

4.1.4       Any Other Reason.  Notwithstanding anything to the contrary herein,
the Employer shall have the right to terminate Executive’s employment under this
Agreement at any time without Cause by giving written notice of such termination
to Executive, and Executive shall have the right to terminate Executive’s
employment under this Agreement at any time without Good Reason by giving
written notice of such termination to the Employer.  Any notice by Executive
hereunder shall be given at least sixty (60) days in advance of such
termination.

 

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4.2          Termination Date.  Any termination under Section 4.1 shall be
effective (i) in the case of a termination pursuant to 4.1.1, immediately upon
death or such Disability, and (ii) in the case of any other termination, upon
receipt of notice by Executive or the Employer, as the case may be, of such
termination or upon such other later date as may be provided herein or specified
by the Employer or Executive in the notice (the “Termination Date”).

 

4.3          Effect of Termination.

 

4.3.1       Termination with Cause or without Good Reason.  In the event that
Executive’s employment is terminated by the Employer with Cause or by Executive
without Good Reason, the Employer shall pay all Accrued Obligations to Executive
in a lump sum in cash within twenty (20) days after the Termination Date or on
such earlier date required by applicable law. “Accrued Obligations” means the
sum of (a) Executive’s Base Pay hereunder through the Termination Date to the
extent not theretofore paid, (b) the amount of any accrued but unused vacation
pay, (c) any business expense reimbursements incurred by Executive as of the
Termination Date and submitted for reimbursement, and (d) any performance bonus
or discretionary bonus under Section 2.1 that has been earned or declared for a
bonus period ending before the Termination Date but not paid before the
Termination Date, in each case, consistent with the policy for such
reimbursements, within ten (10) days following the Termination Date.

 

4.3.2       Termination without Cause, with Good Reason or Due to Company
Non-Renewal.  In the event that Executive’s employment is terminated by the
Employer without Cause, by Executive for Good Reason or due to the Employer’s
non-renewal  of any Term:

 

(a)         the Employer shall pay all Accrued Obligations to Executive in a
lump sum in cash within twenty (20) days after the Termination Date or on such
earlier date required by law;

 

(b)         the Employer shall pay to Executive, in a lump sum in cash on the
first payroll date following sixty (60) days after the Termination Date, an
amount equal to one (1) year of Executive’s Base Pay plus the Target Bonus as in
effect on the Termination Date;

 

(c)          Employer shall pay to Executive, in a lump sum in cash on the first
payroll date following sixty (60) days after the Termination Date all bonus
amounts earned but not yet paid for the year prior to the year in which the
Termination Date occurs;

 

(d)         If not previously vested in full, the Equity Awards and any other
equity awards granted to Executive that otherwise would vest during the
then-current term of this Agreement (whether the initial term or any renewal
term) shall fully vest as of the Termination Date;

 

(e)          If Executive elects COBRA coverage, the Employer shall reimburse
Executive for his premiums for such coverage for a period of eighteen (18)
months following the Termination Date; and

 

(f)           the Employer shall provide to Executive, at the Employer’s
expense, outplacement services and support, the scope and provider of which will
be selected by Executive, for a period of

 

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one (1) year follow the Termination Date.

 

The Employer’s delivery of any notice under Section 1.2 of this Agreement that
the Agreement will not be renewed and any subsequent termination of Executive’s
employment at the expiration of such Term of the Agreement shall be considered a
termination without Cause, and Executive shall be entitled to any payments and
benefits under this Section 4.3.2 under such circumstance.

 

4.3.3       Termination due to Death or Disability.   In the event that
Executive’s employment is terminated due to Executive’s death or Disability the
Employer shall pay all Accrued Obligations to Executive or Executive’s estate in
a lump sum in cash within thirty (30) business days after the Termination Date. 
If not previously vested in full, all equity awards granted to Executive shall
fully vest as of the Termination Date.

 

4.3.4       Termination upon Change in Control.  In the event that Executive’s
employment is terminated following a Change in Control, the following provisions
shall apply:

 

(a)         Upon the occurrence of a Triggering Event:

 

(1)                                 the Employer shall pay all Accrued
Obligations to Executive in a lump sum in cash within twenty (20) days after the
Termination Date or on such earlier date required by law;

 

(2)                                 the Employer shall pay to Executive a lump
sum severance benefit in cash on the first payroll date following sixty (60)
days after the Termination Date, which will be in addition to any other
compensation or remuneration to which Executive is or becomes entitled to
receive from the Employer, in an amount equal to the sum of (i) two (2) times
Executive’s Annual Bonus (as defined below) plus (ii) two (2) times Executive’s
Base Pay as in effect on the date of the Triggering Event or on the date on
which the Change of Control occurs, whichever is higher;

 

(3)                                 the Employer shall pay or reimburse the cost
of health, disability and accidental death, and dismemberment insurance in an
amount not less than that provided at the time of the Triggering Event or, if
greater, on the date on which the Change in Control occurred, until the earlier
of (x) in the event that Executive shall become employed by another employer
after a Triggering Event, the date on which Executive shall be eligible to
receive benefits from such employer which are substantially equivalent to or
greater than the benefits Executive and Executive’s family received from Company
or (y) the second anniversary of the date of the Triggering Event.  Any
reimbursement under this Section 4.3.4(a)(3) that is taxable to Executive or any
of his

 

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Family Members shall be made (subject to the provisions of such health care
plans that may require earlier payment) by December 31 of the calendar year
following the calendar year in which Executive or such Family Member incurred
the expense; and

 

(4)                                 the Employer shall provide Executive, at
Employer’s expense, with outplacement services and support, the scope and
provider of which will be selected by Executive, for a period of one (1) year
following the date of the Triggering Event.

 

(b)         “Change in Control” means:

 

(1)                                 any transaction (including without
limitation a merger or reorganization in which the Company is the surviving
entity) that results in any “person” (as such term is used in Section 13(d) and
14(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”))
(other than persons who are stockholders of the Company or their affiliates
immediately prior to the transaction), becoming the “beneficial owner” (as
defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of
securities of the Company representing 25% or more of the then- combined voting
power of the Company’s then outstanding voting securities;

 

(2)                                 during any period of twelve (12) consecutive
months, individuals who at the beginning of such period constitute the Board and
any new director (other than a director designated by a person who has entered
into an agreement with the Company to effect a transaction described in clause
(a), (b) or (c) hereof) whose election by the Board or nomination for election
by the Company’s stockholders was approved by a vote of at least a majority of
the directors then still in office who either were directors at the beginning of
the period or whose election or nomination for election was previously so
approved, but excluding, for this purpose, any such individual whose initial
assumption of office occurs as a result of an actual or threatened election
contest with respect to the election or removal of directors or actual
threatened solicitation of proxies or consents by or on behalf of a person other
than the Board, cease for any reason to constitute at least a majority of the
Board;

 

(3)                                 the merger or consolidation of the Company
with one or more other entities, other than (A) a merger or consolidation which
would result in the voting securities of the Company outstanding immediately
prior thereto continuing to represent (either by remaining outstanding or by
being converted into voting securities of the surviving or parent entity) more
than 75% of the combined voting power of the voting securities of the Company or
such surviving or parent entity outstanding

 

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immediately after such merger or consolidation or (B) a merger or consolidation
effected to implement a recapitalization of the Company (or similar transaction)
in which no “person” (as defined above) is or becomes the beneficial owner,
directly or indirectly, of securities of the Company representing 25% or more of
the then combined voting power of the Company’s then outstanding voting
securities; or

 

(4)                                 the consummation of the sale or disposition
by the Company or the Operating Partnership of all or substantially all of its
respective assets (or any transaction or series of transactions within a period
of twelve months ending on the date of the last sale or disposition having a
similar effect).

 

(c)          “Code” means the Internal Revenue Code of 1986, as amended.

 

(d)         “Triggering Event” will be deemed to have occurred if: (i) within
two (2) years from the date on which the Change in Control occurred, Employer
terminates the employment of Executive, other than in the case of a Termination
for Cause or (ii) within two (2) years from the date on which the Change in
Control occurred, the Executive terminates his employment for Good Reason.

 

(e)          “Executive’s Annual Bonus” means Executive’s Target Bonus at the
time of a Triggering Event or on the date on which the Change in Control
occurred, whichever is higher, calculated on the basis of the maximum bonus
available to Executive and the assumption that all performance goals are
satisfied at a 100% achievement level by Company and Executive in the year in
which such Triggering Event or such Change in Control, as the case may be,
occurred.

 

(f)           “Executive’s Annual Salary” means Executive’s annual Base Pay at
the time of a Triggering Event or on the date on which the Change in Control
occurred, whichever is higher.

 

For the avoidance of doubt, in the event of a change of Control and a Triggering
Event under circumstances entitling Executive to payments and benefits under
this Section 4.3.4, such payments and benefits shall be in lieu of payments and
benefits under Section 4.3.2, and Executive shall not be entitled to any
compensation or benefits under Section 4.3.2.

 

4.3.5       Waiver and Release Agreement.  In consideration of the severance
payments and other benefits described in Section 4.3.2 and Section 4.3.4, to
which severance payments and benefits Executive would not otherwise be entitled,
and as a precondition to Executive becoming entitled to such severance payments
and other benefits under this Agreement, Executive agrees to execute and deliver
to the Employer on or before the sixtieth (60th) day after the applicable
Termination Date a waiver and general release of claims in favor of the Company
and each of the QTS Companies, their respective predecessors and successors, and
all of the respective current or former directors, officers, employees,
shareholders, partners, members, agents or representatives

 

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of any of the foregoing, in a form reasonably satisfactory to the Employer, that
has become effective in accordance with its terms, and for which any revocation
periods applicable to such release shall have expired on or prior to the
sixtieth (60th) day following Executive’s Termination Date.  If Executive fails
to execute and deliver such release agreement on or before the sixtieth (60th)
day following the applicable Termination Date, if any revocation period
applicable to such release has not expired on or before the sixtieth (60th) day
following Executive’s Termination Date or if Executive revokes such release as
provided therein, the Employer shall have no obligation to provide any of the
severance payments and other benefits described in Section 4.3.2 or
Section 4.3.4 other than any Accrued Obligations.

 

4.5          Required Delay For Certain Deferred Compensation and Section 409A. 
In the event that any compensation with respect to Executive’s termination is
“deferred compensation” within the meaning of Section 409A of the Code and the
regulations promulgated thereunder (“Section 409A”), and Executive is determined
to be a “specified employee,” as defined in Section 409A (a)(2)(B)(i) of the
Code, payment of such compensation shall be delayed as required by
Section 409A.  Such delay shall last six (6) months from the date of Executive’s
termination, except in the event of Executive’s death.  Within twenty (20)
business days following the end of such six (6)-month period, or, if earlier,
Executive’s death, the Employer shall make a catch-up payment to Executive equal
to the total amount of such payments that would have been made during the six
(6)-month period but for this Section 4.4.  Such catch-up payment shall bear
simple interest at the prime rate of interest as published by the Wall Street
Journal’s bank survey as of the first day of the six (6)-month period, which
such interest shall be paid with the catch-up payment.  Wherever payments under
this Agreement are to be made in installments, each such installment shall be
deemed to be a separate payment for purposes of Section 409A.  The Executive
will be deemed to have a Termination Date for purposes of determining the timing
of any payments or benefits hereunder that are classified as deferred
compensation only upon a “separation from service” within the meaning of
Section 409A.  Any amount that the Executive is entitled to be reimbursed under
this Agreement will be reimbursed to the Executive as promptly as practical and
in any event not later than the last day of the calendar year after the calendar
year in which the expenses are incurred and any right to reimbursement or
in-kind benefits will not be subject to liquidation or exchange for another
benefit.  Whenever a payment under this Agreement specifies a payment period
with reference to a number of days (e.g., “payment shall be made within thirty
(30) days following the date of termination”), the actual date of payment within
the specified period shall be within the sole discretion of the Employer.

 

4.6          Non-Exclusivity of Rights.  Nothing in this Agreement shall prevent
or limit Executive’s continuing or future participation in any plan, program,
policy or practice provided by the Employer, the Company or any of the QTS
Companies and for which Executive may qualify, nor shall anything herein limit
or otherwise affect such rights as Executive may have under any other contract
or agreement with the Employer, the Company any of the QTS Companies at or
subsequent to the Termination Date, which shall be payable in accordance with
such plan, policy, practice or program or contract or agreement, except as
explicitly modified by this Agreement.

 

4.7          No Set-Off or Mitigation.  The Employer’s obligation to make the
payments

 

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provided for in this Agreement and otherwise to perform its obligations
hereunder shall not be affected by any setoff, counterclaim, recoupment,
defense, or other claim, right or action that  the Employer may have against
Executive or others, except to the extent of the mitigation and setoff
provisions provided for in this Agreement.  In no event shall Executive be
obligated to seek other employment or take any other action by way of mitigation
of the amounts payable to Executive under any of the provisions of this
Agreement, and such amounts shall not be reduced whether or not Executive
obtains other employment.

 

4.8          Excise Tax-Related Provisions.  The payments and benefits that
Executive may be entitled to receive under this Agreement and other payments and
benefits that Executive is or may be entitled to receive under other plans,
agreements and arrangements (which, together with the benefits provided under
this Agreement, are referred to as “Payments”), may constitute Parachute
Payments (as defined below) that are subject to Sections 280G and 4999 of the
Code.  As provided in this Section 4.8, the Parachute Payments will be reduced
if, and only to the extent that, a reduction will allow Executive to receive a
greater Net After Tax Amount (as defined below) than Executive would receive
absent a reduction.

 

4.8.1       The Accounting Firm (as defined below) will first determine the
amount of any Parachute Payments that are payable to the Executive.  The
Accounting Firm also will determine the Net After Tax Amount attributable to the
Executive’s total Parachute Payments.

 

4.8.2       The Accounting Firm will next determine the largest amount of
Payments that may be made to the Executive without subjecting Executive to tax
under Section 4999 of the Code (the “Capped Payments”).  Thereafter, the
Accounting Firm will determine the Net After Tax Amount attributable to the
Capped Payments.

 

4.8.3       Executive will receive the total Parachute Payments or the Capped
Payments, whichever provides Executive with the higher Net After Tax Amount.  If
Executive will receive the Capped Payments, the total Parachute Payments will be
adjusted by first reducing the amount of any cash benefits under this Agreement
or any other plan, agreement or arrangement (with the source of the reduction to
be directed by the Company) and then by reducing the amount of any noncash
benefits under this Agreement or any other plan, agreement or arrangement (with
the source of the reduction to be directed by the Company).  The Accounting Firm
will notify Executive and the Company if it determines that the Parachute
Payments must be reduced to the Capped Payments and will send Executive and the
Company a copy of its detailed calculations supporting that determination.

 

4.8.4       As a result of the uncertainty in the application of Sections 280G
and 4999 of the Code at the time that the Accounting Firm makes its
determinations under this Section 4.8, it is possible that amounts will have
been paid or distributed to Executive that should not have been paid or
distributed under this Section 4.8 (“Overpayments”), or that additional amounts
should be paid or distributed to the Executive under this Section 4.8
(“Underpayments”).  If the Accounting Firm determines, based on either the
assertion of a deficiency by the Internal Revenue Service against the Company or
the Executive,

 

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which assertion the Accounting Firm believes has a high probability of success
or controlling precedent or substantial authority, that an Overpayment has been
made, the Executive must repay to the Company, without interest, the amount of
the Overpayment; provided, however, that no amount will be payable by the
Executive to the Company unless, and then only to the extent that, the payment
would either reduce the amount on which the Executive is subject to tax under
Section 4999 of the Code or generate a refund of tax imposed under Section 4999
of the Code.  If the Accounting Firm determines, based upon controlling
precedent or substantial authority, that an Underpayment has occurred, the
Accounting Firm will notify the Executive and the Company of that determination
and the amount of that Underpayment will be paid to the Executive promptly by
the Company.

 

For purposes of this Section 4.8, the term “Accounting Firm” means the
independent accounting firm engaged by the Company immediately before a Change
in Control.  For purposes of this Section 4.8, the term “Net After Tax Amount”
means the amount of any Parachute Payments or Capped Payments, as applicable,
net of taxes imposed under Sections 1, 3101(b) and 4999 of the Code and any
State or local income taxes applicable to Executive on the date of payment.  The
determination of the Net After Tax Amount shall be made using the highest
combined effective rate imposed by the foregoing taxes on income of the same
character as the Parachute Payments or Capped Payments, as applicable, in effect
on the date of payment.  For purposes of this Section 4.8, the term “Parachute
Payment” means a payment that is described in Section 280G(b)(2) of the Code,
determined in accordance with Section 280G of the Code and the regulations
promulgated or proposed thereunder.

 

ARTICLE 5
RESTRICTIVE COVENANTS

 

5.1          Confidential Information.

 

5.1.1       Obligation to Maintain Confidentiality.  Executive acknowledges
that, by reason of Executive’s employment by the Employer, the Executive will
have access to confidential information (collectively, “Confidential
Information”) of the Company and the other QTS Companies.  Executive
acknowledges that such Confidential Information is a valuable and unique asset
of the QTS Companies and covenants that, both during and after the Term,
Executive shall not disclose any Confidential Information to any individual,
firm, corporation, partnership, company, limited liability company, trust, joint
venture, association or other entity (“Person”) (except as Executive’s duties as
a manager, officer or employee of the Company, the Operating Partnership, the
Employer or any related entity require) without the prior written authorization
of the CEO of the Company.  The obligation of confidentiality imposed by this
Section 5.1 shall not apply to Confidential Information that otherwise becomes
known to the public through no act of Executive in breach of this Agreement or
which is required to be disclosed by court order, applicable law or regulatory
requirements, nor shall it apply to Executive’s disclosure of Confidential
Information to his attorneys and advisors in connection with a dispute between
Executive and a QTS Company.

 

5.1.2       Company Property.  All records, designs, business plans, financial
statements, customer lists, manuals, memoranda, lists, research and development
plans, Intellectual Property and other property delivered to or compiled by
Executive by or on behalf of any QTS

 

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Company or its providers, clients or customers that pertain to the business of
any QTS Company shall be and remain the property of such QTS Company and be
subject at all times to its discretion and control.  Likewise, all
correspondence, reports, records, charts, advertising materials and other
similar data pertaining to the business, activities, research and
development, Intellectual Property or future plans of a QTS Company that is
collected by the Executive shall be delivered promptly to such QTS Company
without request by it upon termination of Executive’s employment for any
reason.  For purposes of this Section “Intellectual Property” shall mean
patents, copyrights, trademarks, trade dress, trade secrets, other such rights,
and any applications therefor.

 

5.2          Inventions.  Executive is hereby retained in a capacity such that
Executive’s responsibilities may include the making of technical and managerial
contributions of value to the QTS Companies.  Executive hereby assigns to the
applicable QTS Company all rights, title and interest in such contributions and
inventions made or conceived by Executive alone or jointly with others during
the Term that relate to the business of such company. This assignment shall
include (a) the right to file and prosecute patent applications on such
inventions in any and all countries, (b) the patent applications filed and
patents issuing thereon, and (c) the right to obtain copyright, trademark or
trade name protection for any such work product.  Executive shall promptly and
fully disclose all such contributions and inventions to the Company, the
Operating Partnership and the Employer and assist the Company, the Operating
Partnership and the Employer or any other related entity, as the case may be, in
obtaining and protecting the rights therein (including patents thereon), in any
and all countries; provided, however, that said contributions and inventions
shall be the property of the applicable QTS Company, whether or not patented or
registered for copyright, trademark or trade name protection, as the case may
be.  Notwithstanding the foregoing, no QTS Company shall have any right, title
or interest in any work product or copyrightable work developed outside of work
hours and without the use of any QTS Company’s resources that does not relate to
the business of any QTS Company and does not result from any work performed by
Executive for any QTS Company.

 

5.3          Non-Disparagement.

 

(a)           Executive agrees that he will not talk about or otherwise
communicate to any third parties in a malicious, disparaging, or defamatory
manner regarding the Company, the Operating Partnership, the Employer or any
related entity, their respective owners or their past or present employees,
directors, officers or other representatives and will not make or authorize to
be made any written or oral statement that may disparage or damage the
reputation of the Company, the Operating Partnership, the Employer or any
related entity, their respective owners or their past or present employees,
directors, officers or other representatives or their past or present employees,
officers or other representatives.

 

(b)           The Company, the Operating Partnership and the Employer agree that
they will not talk about or otherwise communicate to any third parties in a
malicious, disparaging, or defamatory manner regarding Executive and will not
make or authorize to be made any written or oral statement that may disparage or
damage the reputation of Executive.  For purposes of this non-disparagement
provision, the Company, the Operating Partnership and the Employer are defined
to mean the Company’s executive team and the Board.

 

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5.4          Non-Compete.   The Executive agrees that for the period during
which the Executive is employed by, or serving as an officer or manager or
director of, the Company, the Operating Partnership, the Employer or any related
entity and for one (1) year thereafter (the “Restricted Period”), the Executive
will not, (a) directly or indirectly, engage in any business involving the
development, construction, acquisition, ownership or operation of data center
properties, colocation facilities and/or the provision of managed or cloud
services, whether such business is conducted by the Executive individually or as
a principal, partner, member, stockholder, joint venturer, director, trustee,
officer, employee, consultant, advisor or independent contractor of any Person
or (b) own any interests in any data center facilities, colocation facilities or
managed or cloud service providers, in each case in the United States of America
as of the Termination Date; provided, however, that this Section 5.4 shall not
be deemed to prohibit the direct or indirect ownership by the Executive of up to
five (5) percent of the outstanding equity interests of any public company.

 

5.5          Non-Solicitation.  The Executive agrees that during the Term or
otherwise for the period during which the Executive is employed by, or serving
as an officer or manager or director of, the Company, the Operating Partnership,
the Employer or any related entity and for one (1) year thereafter, such
Executive will not directly or indirectly (a) solicit, induce or encourage any
employee (other than clerical employees) or independent contractor to terminate
their employment or engagement with the Company, the Operating Partnership, the
Employer or any other QTS Company or to cease rendering services to the Company,
the Operating Partnership, the Employer or any other QTS Company, and the
Executive shall not initiate discussions with any such Person for any such
purpose or authorize or knowingly cooperate with the taking of any such actions
by any other Person, or (b) solicit, recruit, induce for employment or hire (on
behalf of the Executive or any other person or entity) any employee (other than
clerical employees) or independent contractor who has left the employment or
other service of the Company, the Operating Partnership, the Employer  or any
QTS Company within one (1) year of the termination of such employee’s or
independent contractor’s employment or other service with the Company, the
Operating Partnership, the Employer or any other QTS Company, or (c) solicit any
tenants of the Company, the Operating Partnership, the Employer or any other QTS
Company to lease, purchase or otherwise occupy data center space in the United
States of America or encourage any of the tenants of the Company, the Operating
Partnership, the Employer or any other QTS Company to reduce its patronage of
the Company, the Operating Partnership, the Employer or any other QTS Company.

 

5.6          Reasonable and Necessary Restrictions.  Executive acknowledges that
the restrictions, prohibitions and other provisions hereof, including, without
limitation, the Restricted Period set forth in Section 5.4, are reasonable, fair
and equitable in terms of duration, scope and geographic area, as are necessary
to protect the legitimate business interests of the Company, the Operating
Partnership and the Employer, and are a material inducement to the Company, the
Operating Partnership and the Employer to enter into this Agreement.

 

5.7          Breach of Restrictive Covenants.  The parties agree that a breach
or violation of any provision of this Article 5 will result in immediate and
irreparable injury and harm to the business of the Company, the Operating
Partnership, the Employer and each other related entity shall have, in addition
to any and all remedies of law and other consequences under this Agreement, the
right to seek an injunction, specific performance or other equitable relief to
prevent the violation of the obligations hereunder, including without
limitation, to address any threatened breach or violation,

 

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and to enjoin and restrain Executive and each and every person, firm, company or
corporation concerned therewith, from the violation or continuance of such
violation or breach.  In addition thereto, Executive shall be responsible for
all damages, including reasonable attorneys’ fees, sustained by the Company, the
Operating Partnership, the Employer and any other related entity by reason of
said violation.  In addition to any other remedy which may be available at law
or in equity, or pursuant to any other provision of this Agreement, the payments
by the Employer of any severance to which Executive may otherwise be entitled
under this Agreement will cease as of the date on which such violation first
occurs.

 

5.8          Cooperation.  At all times during Executive’s employment and after
the date of Executive’s termination of employment, Executive agrees to
reasonably cooperate (if occurring after termination of employment, to the
extent not interfering with Executive’s other full-time business endeavors)
(i) with the Company, the Operating Partnership and the Employer in the defense
of any legal matter involving any matter that arose during Executive’s
employment in the business of the Company, the Operating Partnership and the
Employer, and (ii) with all government authorities on matters pertaining to any
investigation, litigation or administrative proceeding pertaining to the
business of the Company, the Operating Partnership or the Employer.  The
Company, the Operating Partnership or the Employer, as applicable, will
reimburse Executive for reasonable travel and out-of-pocket expenses incurred by
Executive in providing such cooperation.

 

ARTICLE 6
GOVERNING LAW

 

6.1          Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF KANSAS APPLICABLE TO AGREEMENTS MADE
AND TO BE WHOLLY PERFORMED WITHIN THAT STATE, WITHOUT REGARD TO ITS CONFLICT OF
LAWS PROVISIONS OR THE CONFLICT OF LAWS PROVISIONS OF ANY OTHER JURISDICTION
WHICH WOULD CAUSE THE APPLICATION OF ANY LAW OTHER THAN THAT OF THE STATE OF
KANSAS.

 

6.2          Waiver of Jury Trial.  Each party hereby waives, to the fullest
extent permitted by applicable law, any right it may have to a trial by jury in
respect to any litigation, directly or indirectly, arising out of or relating to
this Agreement or any transaction contemplated hereby.  Each party (a) certifies
that no representative, agent or attorney of any other party has represented,
expressly or otherwise, that such other party would not, in the event of
litigation, seek to enforce the foregoing waiver and (b) acknowledges that it
and the other parties have been induced to enter into this Agreement by, among
other things, the mutual waivers and certifications in this Section 6.2.

 

ARTICLE 7
MISCELLANEOUS

 

7.1          Amendments.  The provisions of this Agreement may not be waived,
altered, amended or repealed in whole or in part except by the signed written
consent of the parties sought to be bound by such waiver, alteration, amendment
or repeal.

 

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7.2          Entire Agreement.  This Agreement constitutes the total and
complete agreement of the parties with respect to the subject matter hereof and
thereof and supersedes all prior and contemporaneous understandings and
agreements heretofore made, and there are no other representations,
understandings or agreements.

 

7.3          Counterparts.  This Agreement may be executed in one of more
counterparts, each of which shall be deemed and original, but all of which shall
together constitute one and the same instrument.

 

7.4          Severability.  Each term, covenant, condition or provision of this
Agreement shall be viewed as separate and distinct, and in the event that any
such term, covenant, condition or provision shall be deemed by an arbitrator or
a court of competent jurisdiction to be invalid or unenforceable, the court or
arbitrator finding such invalidity or unenforceability shall modify or reform
this Agreement to give as much effect as possible to the terms and provisions of
this Agreement. Any term or provision which cannot be so modified or reformed
shall be deleted and the remaining terms and provisions shall continue in full
force and effect.

 

7.5          Waiver or Delay.  The failure or delay on the part of the Company,
the Operating Partnership, the Employer or Executive to exercise any right or
remedy, power or privilege hereunder shall not operate as a waiver thereof.  A
waiver, to be effective, must be in writing and signed by the party making the
waiver. A written waiver of default shall not operate as a waiver of any other
default or of the same type of default on a future occasion.

 

7.6          Successors and Assigns.  This Agreement shall be binding on and
shall inure to the benefit of the parties to it and their respective heirs,
legal representatives, successors and assigns, except as otherwise provided
herein. Neither this Agreement nor any of the rights, benefits, obligations or
duties hereunder may be assigned or transferred by Executive except by operation
of law. The Company, the Operating Partnership and the Employer may assign this
Agreement to any affiliate or successor.  The Company, the Operating Partnership
and the Employer shall require any successor (whether direct or indirect by
purchase, merger, consolidation or otherwise) to all or substantially all of the
business and/or assets of the Company, the Operating Partnership or the Employer
to assume expressly and agree to perform this Agreement in the same manner and
to the same extent that the Company, the Operating Partnership and the Employer
would be required to perform if no such succession had taken place.

 

7.7          Necessary Acts.  Each party to this Agreement shall perform any
further acts and execute and deliver any additional agreements, assignments or
documents that may be reasonably necessary to carry out the provisions or to
effectuate the purpose of this Agreement.

 

7.8          Notices.  All notices, requests, demands and other communications
to be given under this Agreement shall be in writing and shall be deemed to have
been duly given on the date of service, if personally served on the party to
whom notice is to be given, or 48 hours after mailing, if mailed to the party to
whom notice is to be given by certified or registered mail, return receipt
requested, postage prepaid, and properly addressed to the party at his address
set forth as follows or any other address that any party may designate by
written notice to the other parties:

 

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To Executive:

Jeffery H. Berson
Address on File With the Company

 

 

To the Company,
the Employer or the
Operating Partnership:

Quality Technology Services, LLC
12851 Foster Street, Suite 205
Overland Park, Kansas 66213
Attention: CEO
Facsimile: (913) 814-7766

 

7.9          Headings and Captions.  The headings and captions used herein are
solely for the purpose of reference only and are not to be considered as
construing or interpreting the provisions of this Agreement.

 

7.10        Construction.  All terms and definitions contained herein shall be
construed in such a manner that shall give effect to the fullest extent possible
to the express or implied intent of the parties hereby.

 

7.11        Counsel.  Executive has been advised by the Company, the Operating
Partnership and the Employer that he should consider seeking the advice of
counsel in connection with the execution of this Agreement and the other
agreements contemplated hereby and Executive has had an opportunity to do so.
Executive has read and understands this Agreement, and has sought the advice of
counsel to the extent he has determined appropriate.

 

7.12        Withholding of Compensation.  Executive hereby agrees that the
Employer may deduct and withhold from the compensation or other amounts payable
to Executive hereunder or otherwise in connection with Executive’s employment
any amounts required to be deducted and withheld by the Employer under the
provisions of any applicable Federal, state and local statute, law, regulation,
ordinance or order.

 

7.13        Executive Representation.  Executive acknowledges that by entering
into or complying with any provision of this Agreement he is not breaching or
acting in contravention of any other agreement or commitment he has to any other
firm, corporation, partnership, organization, person or any other individual or
entity.

 

7.14        D & O Insurance.  The Company, the Operating Partner and/or the
Employer will maintain directors’ and officers’ liability insurance during the
Term and for a period of not less than six (6) years thereafter, covering acts
and omissions of Executive during the Term, on terms substantially no less
favorable than those in effect on the date of this Agreement.  During the Term
and for a period of not less than six (6) years thereafter, Executive shall
receive the same benefits provided to any of the Company’s or the Employer’s
officers and directors under any additional D&O insurance or similar policy, any
indemnification agreement, Company or Employer policies or the articles of
organization or bylaws of the Company, the Operating Partnership or the Employer
as in effect as of the date hereof, provided, however, that in the event that
the benefits provided to any of the Company’s or Employer’s officers and
directors

 

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under any of the foregoing documents or policies are enlarged after the date
hereof, Executive shall receive such enlarged benefits.

 

7.15        Arbitration.  Any dispute or controversy arising under or in
connection with this Agreement other than a dispute pursuant to Section 5.4 and
Section 5.5, shall be settled exclusively by arbitration in the State of Kansas
by three arbitrators in accordance with the Employment Arbitration Rules and
Mediation Procedures of the American Arbitration Association in effect at the
time of submission to arbitration.  Judgment may be entered on the arbitrators’
award in any court having jurisdiction.  For purposes of entering any judgment
upon an award rendered by the arbitrators, Employer and Executive each hereby
consent to the jurisdiction of any or all of the following courts: (i) the
United States District Court for the State of Kansas, (ii) any of the courts of
the State of Kansas, or (iii) any other court having jurisdiction. Employer and
Executive further agree that any service of process or notice requirements in
any such proceeding shall be satisfied if the rules of such court relating
thereto have been substantially satisfied.  Employer and Executive hereby waive,
to the fullest extent permitted by applicable law, any objection which it or he
may now or hereafter have to such jurisdiction and any defense of inconvenient
forum.  Employer and Executive hereby agree that a judgment upon an award
rendered by the arbitrators may be enforced in other jurisdictions by suit on
the judgment or in any other manner provided by law.  Each party shall bear its
or his costs and expenses arising in connection with any arbitration proceeding
pursuant to this Section 7.16; provided, however, that the party that
substantially prevails in an arbitration shall be reimbursed by the other party
for all reasonable costs, including reasonable attorneys’ fees and costs,
incurred by such prevailing party in connection with the arbitration. 
Notwithstanding any provision in this Section 7.16, Executive shall be paid all
compensation due and owing under this Agreement during the pendency of any
dispute or controversy arising under or in connection with this Agreement.

 

[SIGNATURES APPEAR ON FOLLOWING PAGE]

 

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

 

 

COMPANY

 

 

 

QTS REALTY TRUST, INC.

 

 

 

 

 

By:

 /s/ Shirley E. Goza

 

Name:

Shirley E. Goza

 

Title:

General Counsel & Secretary

 

 

 

 

 

OPERATING PARTNERSHIP

 

 

 

QUALITYTECH, LP

 

 

 

By:

QTS Realty Trust, Inc.,

 

 

General Partner

 

 

 

 

 

 

By:

 /s/ Shirley E. Goza

 

 

Name: Shirley E. Goza

 

 

Title:   General Counsel & Secretary

 

 

 

EMPLOYER

 

 

 

QUALITY TECHNOLOGY SERVICES, LLC

 

 

 

 

 

By:

/s/ Shirley E. Goza

 

Name:

Shirley E. Goza

 

Title:

General Counsel & Secretary

 

 

 

 

 

EXECUTIVE

 

 

 

/s/ Jeffrey H. Berson

 

Jeffrey H. Berson

 

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