Exhibit 10.1







 





EMPLOYMENT AGREEMENT


(William H. Schafer)


 


THIS EMPLOYMENT AGREEMENT
(“Agreement”) is dated February 16, 2017 and is 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 William H. Schafer, 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 Employer since 2010 pursuant to an
employment agreement, dated February 16, 2010 and amended and restated on August 13, 2013 (“Prior Agreement”);


 


WHEREAS, Employer and
Executive desire to continue their employment relationship, with Employer employing Executive to serve as the Company’s,
the Operating Partnership’s and Employer’s Executive Vice President – Finance and Accounting (“EVP –
Finance and Accounting”), and Executive transitioning to such position and accepting such employment and appointments,
on the terms set forth below; and


 


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


 


ARTICLE 1


EMPLOYMENT, TERM AND DUTIES


 


1.1       Employment
and Positions; Prior Agreement Superseded. During the Term (defined below), Employer shall employ Executive to serve as, and
the Company shall appoint or cause to be appointed the Executive to the position of, the EVP – Finance and Accounting of
the Company, upon the terms and conditions set forth in this Agreement, and Executive shall report directly to the Chief Financial
Officer of the Company (the “CFO”), unless otherwise determined by the Board of Directors of the Company (the
“Board”). In addition, during the Term, Executive shall serve as the EVP – Finance and Accounting of both
the Operating Partnership and Employer and shall report to the CFO, unless determined otherwise by the Board. For the avoidance
of doubt, Executive shall be an employee of Employer. This Agreement shall supersede and replace the Prior Agreement, which shall
be of no further force or effect as of the Effective Date; provided that any provisions of the Prior Agreement relating to the
termination by Executive of his employment for “Good Reason” (as defined in the Prior Agreement) shall be of no further
force or effect as of the date hereof and are hereby waived by Executive as of the date hereof, including with respect to the execution
of this Agreement and any related events occurring on or prior to the Effective Date.


 






    





     


    

 


1.2       Term.
The period of employment of the Executive by Employer shall commence upon the Effective Date and, subject to earlier termination
as provided in this Agreement, continue thereafter for a one (1)-year term (the “Term”); provided, that
the Term shall automatically renew for additional one (1)-year periods thereafter unless either Employer or Executive gives notice
of non-renewal at least ninety (90) days prior to expiration of the Term (as it may have been extended by any renewal period).


 


1.3       Duties.
During the Term, Executive shall (a) perform all duties and obligations reasonably associated with the position of EVP –
Finance and Accounting of the Company and the Operating Partnership, consistent with the Bylaws or other governing documents of
the Company and the Operating Partnership, as applicable, as in effect from time to time, and (b) perform such other duties reasonably
associated with a senior executive officer of the business of the Company, the Operating Partnership, Employer and their subsidiaries
and affiliates (each, including the Company, a “QTS Company,” and collectively, the “QTS Companies”),
including duties of an executive, managerial or administrative nature as shall be specified and designated from time to time by
the CFO (including the performance of services for any member of the QTS Companies without any additional compensation), subject,
in all cases described in clauses (a) and (b), to the supervision and direction of the CFO, as applicable, and the Board. Executive
shall devote substantially all of his business time and effort to the performance of Executive’s duties hereunder and to
the 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 Board, 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 QTS Companies.


 


ARTICLE 2


COMPENSATION


 


2.1       Salary.
In consideration for Executive’s services hereunder, Employer shall pay Executive an annual salary at the rate of not less
than $350,000 per year (“Base Pay”) during each of the years of the Term, payable in accordance with 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”), or, if there is none, the Board, no less frequently than annually.
Executive’s salary may be adjusted upward upon annual review, but shall not be decreased.


 


2.2       Bonus.
In addition to an annual base salary, if the Executive achieves certain corporate and individual objectives as established by the
Compensation Committee, or if there is none, the Board, then Employer shall pay to the Executive bonus compensation, not later
than 75 days following the end of the fiscal year. Employer’s award of bonus compensation to the Executive shall be determined
by the factors and criteria, including the financial performance of the Company and the performance by the Executive of his duties
hereunder, 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, which shall be established and communicated to Executive in writing no later than sixty (60) days following
the beginning of the applicable fiscal year. Annual bonuses will be targeted at 100% of Base Pay with 100% of Base Pay paid for
threshold performance and additional amounts paid for exceptional performance as determined by the Compensation Committee, if there
is one, and approved by the Board. The Board may award discretionary bonuses in addition to performance bonuses.


 






    





     


    

 


2.3       Equity
Award. 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 QTS Companies, in accordance with the Company’s policies and as deemed appropriate
by the Investment Committee or the Compensation Committee, as appropriate (the “Equity Awards”). The Equity
Awards will be targeted at an award value of 200% of Base Pay, to be awarded depending on factors and criteria established from
time to time by the Compensation Committee, which may include the financial performance of the Company and the performance by the
Executive of his duties hereunder. 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 of the Term in accordance with the general policies
of the Company, the Operating Partnership and Employer applicable to other senior executives of the Company, the Operating Partnership
and Employer. Unused vacation shall carry over, if at all, in accordance with the general policies of the Company, the Operating
Partnership and Employer as the same shall be in effect from time to time.


 


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, the Operating Partnership and Employer under the personnel policies
in effect from time to time, and Executive shall be provided individual life and disability insurance benefits on substantially
the same terms as apply to the Company’s and the Operating Partnership’s top executives. Executive shall receive all
other such fringe benefits as the Company, the Operating Partnership and Employer may offer to other senior executives generally
under personnel policies in effect from time to time, such as health and disability insurance coverage and paid sick leave.


 


3.3       Reimbursement
for Expenses. Executive shall be reimbursed for all documented reasonable expenses incurred by Executive in the performance
of his duties set forth in Section 1.3 in furtherance of the business of the QTS Companies 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.


 


 



    





     


    

 





3.4       Corporate
Membership. Executive will have access to a corporate country club membership and Employer will pay for all dues and assessments
associated with such membership.


 


3.5       Supplemental
Disability. Employer will reimburse Executive for existing annual supplemental disability premiums which currently approximate
$10,000.00.


 


ARTICLE 4.

TERMINATION


 


4.1       Grounds
for Termination.


 


4.1.1       Death
or Disability. Executive’s employment with Employer pursuant to this Agreement 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, prevents or would
prevent Executive from performing his duties and obligations under this Agreement or participating effectively and actively in
the management of the business of the QTS Companies for more than three consecutive months or for more than 90 days in any 180-day
period.


 


4.1.2       Cause.
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 constitute “Cause”):


 


		(a)	any willful act or omission by Executive, other than as a result of Executive’s Disability,
that causes material harm and represents (i) a material breach of any of the terms of this Agreement or (ii) any breach of Article
5 of this Agreement;



 


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



 


		(c)	Executive’s willful and material violation of the written rules, regulations, procedures,
or policies relating to the conduct of employees, directors or officers of any member of the QTS Companies that cause material
harm;



 


		(d)	any commission by Executive of an act of dishonesty, theft, fraud, embezzlement or material misappropriation
of property of any of the QTS Companies; or



 






    





     


    

 


		(e)	any act by Executive that will or is reasonably expected to have, a significant adverse effect
on the business or reputation of any member of the QTS Companies unless such act was taken with the good faith belief that it was
in the best interest of any member of the QTS Companies.



 


Except as provided in Section
4.1.1 of this Agreement, any termination of Executive by Employer for any reason, including without limitation, a termination
for alleged failures of performance or a termination in connection with a nonrenewal of this Agreement, shall be deemed a termination
without Cause, unless it is established that the reason for the termination was the occurrence of an event constituting Cause.


 


It shall be a condition precedent
to Employer’s right to terminate Executive’s employment for Cause that Cause be established as follows: (i) Employer
shall have first given Executive written notice stating with reasonable specificity the act(s) on which such termination is premised
within twenty (20) days after the party providing such notice becomes aware or reasonably should have become aware of such act,
and (ii) at least two-thirds of the members of the Board find that the act alleged to be Cause constitutes Cause and has not been
cured or remedied within thirty (30) days after receipt of such notice, and provided, such act is of such a nature that it cannot
with due diligence be cured within the time required, Executive shall not have commenced, or shall not thereafter diligently prosecute
to completion, all steps necessary to cure such act alleged to be Cause within a reasonable period of time.


 


4.1.3       Good
Reason. Executive may terminate his employment under this Agreement by giving written notice to 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, or any significant
adverse change in Executive’s title as EVP – Finance and Accounting of the Company, the Operating Partnership and Employer;



 


		(b)	Executive’s place of employment is moved more than fifty (50) miles from the Company’s
current location in Overland Park, Kansas;



 


		(c)	a material diminution in Executive’s base compensation, as in effect from time to time; or



 


		(d)	a material breach by Employer or the Company of any term of 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 Board written notice
stating with reasonable specificity the act(s) on which such termination is premised within ninety (90) 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 Executive has terminated his employment within twelve (12) months after the occurrence of
the event giving rise to Good Reason.


 






    





     


    

 


4.1.4       Any
Other Reason. Notwithstanding anything to the contrary herein, 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 Employer. Any notice by Executive hereunder shall be given at least sixty (60) days in advance of
such termination. Any notice by Employer shall be given at least ninety (90) days in advance of such termination.


 


4.2       Termination
Date. Except as provided in Section 4.1.1 with respect to Executive’s death or Disability, any termination under
Section 4.1 shall be effective on the termination of the applicable notice period following receipt of notice by Executive
or Employer, as the case may be, of such termination or upon such other later date as may be provided herein or specified by Employer
or Executive in the notice (in each case under Section 4.1, 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 Employer with Cause or by
Executive without Good Reason, 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 salary 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, in each case, consistent with the policy for such reimbursements, within ten (10) days following
the Termination Date; and (d) any performance bonus or discretionary bonus under Section 2.2 that has been earned or declared
for a bonus period ending before the Termination Date but not paid before the Termination Date.


 


4.3.2       Termination
without Cause, with Good Reason or at Death or Disability. In the event that Executive’s employment is terminated by
Employer without Cause, by Executive for Good Reason, or on death or disability:


 


		(a)	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)	Solely in the case of a termination for death or disability, if not previously vested in full,
the Equity Awards and any other equity awards granted to Executive shall fully vest as of the Termination Date;



 






    





     


    

 


		(c)	Solely in the case of a termination by Employer without Cause or by Executive for Good Reason,
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;



 


		(d)	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) times Executive’s annual salary as in effect on the Termination
Date;



 


		(e)	Employer shall pay to Executive, in a lump sum in cash on the first payroll date following sixty
(60) days after the Termination Date, a prorated bonus for the year in which the termination occurs determined by multiplying the
target bonus for such year by the quotient of the number of calendar days of employment during the year of termination divided
by 365;



 


		(f)	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) times Executive’s Annual Bonus (as defined below) for the
year in which the termination occurs; and



 


		(g)	Employer shall provide Executive with continuing
coverage under its health benefit plans for the one (1) year period following the Termination Date. If Executive elects COBRA coverage,
at the end of such year, Employer shall reimburse Executive for his premiums for such coverage.
If Employer is not able to provide continuing coverage of Executive under its health benefit
plans, other than via COBRA coverage, then in addition to paying the premiums during the COBRA period, Employer shall pay Executive
an additional amount equal to the cost of substantially similar coverage for himself and his family for one (1) year of coverage.
Any reimbursement under this Section 4.3.2(f) that is taxable to Executive or any of his 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. For purposes of this Agreement, “Family Members”
shall include Executive’s immediate family and any parent, brother or sister.



 


4.3.3       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)       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)       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 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 annual salary as in effect on the date of the Triggering Event or on the date on which the Change in
Control occurs, whichever is higher;


 


(3)       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 4.3.3(a)(4) that is taxable to Executive or any of his 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)       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 30% 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 70% of the combined voting
power of the voting securities of the Company or such surviving or parent entity outstanding 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 30% 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 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)	“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.



 






    





     


    

 


		(d)	Executive’s Annual Bonus” means, for purposes of Section 4.3.2 and this
Section 4.3.3, Executive’s annual bonus (i) at the time of the Termination Date for purposes of Section 4.3.2,
calculated on the basis of the target bonus available to Executive and the assumption that all performance goals are satisfied
at the target achievement level by Employer and Executive in the year in which such Termination without Cause or for Good Reason
occurred, and (ii) with regard to a Triggering Event, the annual bonus in effect on the Termination Date 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 Employer and Executive in the year in which
such Triggering Event or such Change in Control, as the case may be, occurred.



 


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 4.3.3, 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.


 


4.3.4       Waiver
and Release Agreement. In consideration of the severance payments and other benefits described in Section 4.3.2 and
Section 4.3.3, 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 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 other QTS Companies, their respective predecessors and successors, and
all of the respective current or former directors, officers, employees, shareholders, partners, members, agents or representatives
of any of the foregoing, in a form reasonably satisfactory to 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, Employer shall have no obligation to provide any of the severance payments and other benefits
described in Section 4.3.2 or Section 4.3.3 other than any Accrued Obligations.


 






    





     


    

 


4.4       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 Internal Revenue Code of 1986, as
amended (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, 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 Employer.


 


4.5       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 Employer, the Company or any of the other 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
Employer, the Company or any of the other 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.


 


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


 


4.7       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 4.7, 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.


 






    





     


    

 


4.7.1       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.


 


4.7.2       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.


 


4.7.3       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.


 


4.7.4       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 4.7, it is possible that amounts will have been paid or distributed to Executive that
should not have been paid or distributed under this Section 4.7 (“Overpayments”), or that additional
amounts should be paid or distributed to the Executive under this Section 4.7 (“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,
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 4.7,
the term “Accounting Firm” means the independent accounting firm engaged by the Company immediately before a
Change in Control. For purposes of this Section 4.7, 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 4.7, 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 Employer and position
with the Company and the Operating Partnership, Executive will have access to confidential matters relating to the business, assets
and operations (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 person, partnership,
corporation, limited liability company, or any other entity (each, a “Person”) (except as Executive’s
duties as a manager, director, officer or employee of the Company, the Operating Partnership or Employer require) without the prior
written authorization of the Board. Notwithstanding the foregoing, information which (i) at the time of receipt is, or thereafter
becomes, publicly known through no wrongful act of Executive, (ii) is received from a third party not under an obligation
to keep such information confidential and without breach of this Agreement, or (iii) was developed by Executive independently
of and without reference to information obtained from the Company shall not be considered “Confidential Information.”
Notwithstanding the foregoing, Executive shall not be restricted from disclosing Confidential Information to the extent required
by law, court order, subpoena or other legal proceeding or 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 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 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 5.1.2, “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 QTS 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 Employer and assist the Company, the Operating
Partnership, Employer or any other QTS Company, 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       Nondisparagement.


 


(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, Employer or any of their respective affiliates, 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, Employer or any of their respective affiliates,
owners or their past or present employees, directors, officers or other representatives.


 


(b)       The
Company, the Operating Partnership, and 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 Employer are defined to mean the Company’s executive team and the Board.


 


 



    





     


    




 


5.4       Non-Compete.
The Executive acknowledges the QTS Companies’ reliance and expectation of the Executive’s
continued commitment to performance of the Executive’s duties and responsibilities during the term of this Agreement. In
light of such reliance and expectation on the part of the QTS Companies, during the term of this Agreement and for a period of
one (1) year thereafter (and, as to subparagraph (b), at any time during and after the term of this Agreement), the Executive shall
not, directly or indirectly do or suffer either of the following:


 


(a)       Own,
manage, control or participate in the ownership, management or

control of, or be employed or engaged by or otherwise affiliated or associated as a consultant, independent contractor or otherwise
with, any other company, corporation, partnership, proprietorship, firm, association or other business entity engaged in the business
of, or otherwise engage in the business of, acquiring, owning, developing or managing data centers or colocation facilities and/or
the provision of cloud or managed services; provided, however, that the ownership of not more than five percent (5%)
of any class of publicly traded securities of any entity shall not be deemed a violation of this covenant; or


 


(b)       disclose,
divulge, discuss, copy or otherwise use or suffer to be used in any manner, in competition with, or contrary to the interests of,
the QTS Companies, any confidential information relating to the QTS Companies’ operations, properties or otherwise to the
particular business or other trade secrets of the QTS Companies, it being acknowledged by the Executive that all such information
regarding the business of the QTS Companies compiled or obtained by, or furnished to, the Executive while the Executive shall have
been employed by the QTS Companies is confidential information and the QTS Companies’ exclusive property; provided,
however, that the foregoing restrictions shall not apply to the extent that such information (A) is clearly obtainable in
the public domain, (B) becomes obtainable in the public domain, except by reason of the breach by the Executive of the terms hereof,
(C) was not acquired by the Executive in connection with the Executive's employment or affiliation
with the QTS Companies, (D) was not acquired by the Executive from the QTS Companies
or their representatives or (E) is required to be disclosed by rule of law or by order of a court
or governmental body or agency.


 


5.5       Non-Solicitation.
The Executive will not directly or indirectly during the term of this Agreement and for a period
of one (1) year after the expiration of this Agreement or the termination of Executive’s employment for any reason, (a) solicit
or induce or attempt to solicit or induce any employee(s) of the Company and/or any subsidiary,
affiliated or related companies to terminate their employment with the Company and/or any subsidiary, affiliated or related companies,
(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 QTS Companies (or any predecessor
thereof) within one (1) year of the termination of such employee’s or independent contractor’s employment or other
service with the QTS Companies or (c) solicit any of tenants of the QTS Companies to lease, purchase or otherwise occupy data center
space in the United States of America or encourage any of the tenants of any of the QTS Companies to reduce its patronage of any
of the QTS Companies.


 






    





     


    

 


5.6       Cooperation.
At all times during Executive’s employment and after the date of Executive’s termination of employment, Executive agrees
to reasonably cooperate (i) with the Company, the Operating Partnership, and 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 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 Employer. The Company, the Operating Partnership or Employer, as applicable,
will reimburse Executive for reasonable travel and out of pocket expenses incurred by Executive in providing such cooperation.


 


5.7       Reasonableness
of Restrictions; Blue-Penciling. Executive has carefully read and considered the provisions
of Article 5 of this Agreement, and, having done so, agrees that the restrictions set forth in such paragraphs are fair
and reasonable and reasonably required for the protection of the interests of the business of the QTS Companies. If any of the
provisions of Article 5 shall be held to be invalid or unenforceable, the remaining provisions thereof shall nevertheless
continue to be valid and enforceable as though the invalid or unenforceable parts had not been included therein. If any provision
of Article 5 relating to time periods or areas of restriction shall be declared by a court of competent jurisdiction to
exceed the maximum time period or areas such court deems reasonable and enforceable, said time periods and/or areas of restriction
shall be deemed to become and thereafter be the maximum time period and/or areas which such court deems reasonable and enforceable.


 


5.8       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 QTS Companies, and that the Company, the Operating Partnership,
Employer and each other QTS Company 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, 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, Employer and any other QTS Company 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 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.


 


ARTICLE 6


GOVERNING LAW, DISPUTE RESOLUTION


 


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.


 


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 or more counterparts, each of which shall be deemed an 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, Employer or any QTS Company or Executive
to exercise any right or remedy, power or privilege hereunder shall not operate as a waiver thereof, except as explicitly set forth
herein. 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 Employer may assign this Agreement or their respective obligations under this Agreement to any affiliate
or successor. The Company, the Operating Partnership and 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 Employer to assume expressly and agree, and the Company shall cause any successor general partner of the Operating Partnership
to assume expressly and agree, to perform this Agreement in the same manner and to the same extent that the Company, the Operating
Partnership or Employer, as applicable, 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:





 


	To Executive:	Bill Schafer

                                                                           Address on file with the Company

	 	 
	
        To the Company,

        the Operating Partnership

        or Employer:
	c/o QualityTech GP, LLC 

12851 Foster Street, Suite 205 

Overland Park, Kansas 66213 

Attention: General Counsel 

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 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 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 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 Partnership and/or 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 officers and directors under any additional D&O insurance or similar policy, any indemnification agreement,
Company policies or the articles of organization or bylaws of the Company or the Operating Partnership as in effect as of the date
hereof, provided, however, that in the event that the benefits provided to any of the Company’s officers and
directors 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 7.15; 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 7.15, 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]


 




    





     


    

 


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:	Vice President, General Counsel & Secretary
	 	 	 
	 	 	 
	 	OPERATING PARTNERSHIP
	 	 	 
	 	QUALITYTECH, LP
	 	 	 
	 	By:	QTS REALTY TRUST, INC., its general partner
	 	 	 
	 	By:	/s/ Shirley E. Goza	 
	 	Name:	Shirley E. Goza
	 	Title:	Vice President, General Counsel & Secretary
	 	 	 
	 	 	 
	 	EMPLOYER
	 	 	 
	 	QUALITY TECHNOLOGY SERVICES, LLC
	 	 	 
	 	 	 
	 	By:	/s/ Shirley E. Goza	 
	 	Name:	Shirley E. Goza
	 	Title:	Vice President, General Counsel & Secretary
	 	 	 
	 	 	 
	 	EXECUTIVE
	 	 	 
	 	/s / William H. Schafer	 
	 	WILLIAM H. SCHAFER