Document:

EX-10.2

 Exhibit 10.2 

ADVISORY AGREEMENT 
 BY
AND AMONG 
 STRATEGIC STORAGE TRUST IV, INC., 

STRATEGIC STORAGE OPERATING PARTNERSHIP IV, L.P. 

AND 
 STRATEGIC STORAGE
ADVISOR IV, LLC 

 TABLE OF CONTENTS 

 

							
	 	  	 	  	PAGE	 
			
	 ARTICLE I
	  	DEFINITIONS	  	 	3	  
			
	 ARTICLE II
	  	APPOINTMENT	  	 	9	  
			
	 ARTICLE III
	  	AUTHORITY OF THE ADVISOR	  	 	10	  
	     Section 3.1
	  	General	  	 	10	  
	     Section 3.2
	  	Powers of the Advisor	  	 	10	  
	     Section 3.3
	  	Approval by Directors	  	 	10	  
	     Section 3.4
	  	Modification or Revocation of Authority of Advisor	  	 	10	  
			
	 ARTICLE IV
	  	DUTIES OF THE ADVISOR	  	 	10	  
	     Section 4.1
	  	Organizational and Offering Services	  	 	10	  
	     Section 4.2
	  	Acquisition Services	  	 	11	  
	     Section 4.3
	  	Asset Management Services and Administrative Services	  	 	11	  
			
	 ARTICLE V
	  	BANK ACCOUNTS	  	 	13	  
			
	 ARTICLE VI
	  	RECORDS; ACCESS	  	 	13	  
			
	 ARTICLE VII
	  	OTHER ACTIVITIES OF THE ADVISOR	  	 	14	  
	     Section 7.1
	  	General	  	 	14	  
	     Section 7.2
	  	Policy with Respect to Allocation of Investment Opportunities	  	 	14	  
			
	 ARTICLE VIII
	  	LIMITATIONS ON ACTIVITIES	  	 	15	  
			
	 ARTICLE IX
	  	FEES	  	 	15	  
	     Section 9.1
	  	Acquisition Fees	  	 	15	  
	     Section 9.2
	  	Asset Management Fee	  	 	15	  
	     Section 9.4
	  	Development Fee	  	 	15	  
	     Section 9.5
	  	Disposition Fees	  	 	16	  
			
	 ARTICLE X
	  	EXPENSES	  	 	16	  
	     Section 10.1
	  	Reimbursable Expenses	  	 	16	  
	     Section 10.2
	  	Other Services	  	 	18	  
	     Section 10.3
	  	Timing of and Limitations on Reimbursements	  	 	18	  
	     Section 10.4
	  	Advisor Support of Other Organization and Offering Expenses	  	 	18	  
			
	 ARTICLE XI
	  	NO PARTNERSHIP OR JOINT VENTURE	  	 	19	  
			
	 ARTICLE XII
	  	RELATIONSHIP WITH DIRECTORS	  	 	19	  
			
	 ARTICLE XIII
	  	REPRESENTATIONS AND WARRANTIES	  	 	19	  
	     Section 13.1
	  	The Company	  	 	19	  
	     Section 13.2
	  	The Operating Partnership	  	 	20	  
	     Section 13.3
	  	The Advisor	  	 	20	  

  
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	 ARTICLE XIV
	  	TERM; TERMINATION OF AGREEMENT	  	 	21	  
	     Section 14.1
	  	Term	  	 	21	  
	     Section 14.2
	  	Termination by Any Party	  	 	21	  
	     Section 14.3
	  	Termination by the Advisor	  	 	21	  
	     Section 14.4
	  	Termination by the Company	  	 	21	  
	     Section 14.5
	  	Survival	  	 	21	  
			
	 ARTICLE XV
	  	PAYMENTS TO AND DUTIES OF PARTIES UPON TERMINATION	  	 	21	  
	     Section 15.1
	  	Reimbursable Expenses and Earned Fees	  	 	21	  
	     Section 15.2
	  	Advisor’s Duties Upon Termination	  	 	21	  
	     Section 15.3
	  	Non-Solicitation	  	 	22	  
			
	 ARTICLE XVI
	  	ASSIGNMENT TO AN AFFILIATE	  	 	22	  
			
	 ARTICLE XVII
	  	INCORPORATION OF THE CHARTER AND THE OPERATING PARTNERSHIP AGREEMENT	  	 	22	  
			
	 ARTICLE XVIII
	  	INDEMNIFICATION BY THE COMPANY AND THE OPERATING PARTNERSHIP	  	 	23	  
			
	 ARTICLE XIX
	  	INDEMNIFICATION BY ADVISOR	  	 	23	  
			
	 ARTICLE XX
	  	LIMITATION OF LIABILITY	  	 	24	  
			
	 ARTICLE XXI
	  	NOTICES	  	 	24	  
			
	 ARTICLE XXII
	  	MODIFICATION	  	 	24	  
			
	 ARTICLE XXIII
	  	SEVERABILITY	  	 	25	  
			
	 ARTICLE XXIV
	  	CONSTRUCTION/GOVERNING LAW	  	 	25	  
			
	 ARTICLE XXV
	  	ENTIRE AGREEMENT	  	 	25	  
			
	 ARTICLE XXVI
	  	INDULGENCES, NOT WAIVERS	  	 	25	  
			
	 ARTICLE XXVII
	  	GENDER	  	 	25	  
			
	 ARTICLE XXVIII
	  	TITLES NOT TO AFFECT INTERPRETATION	  	 	25	  
			
	 ARTICLE XXIX
	  	EXECUTION IN COUNTERPARTS	  	 	26	  
			
	 ARTICLE XXX
	  	INITIAL INVESTMENT	  	 	26	  

  
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 ADVISORY AGREEMENT 

This ADVISORY AGREEMENT, dated as of [            ], 2017, is entered into
among STRATEGIC STORAGE TRUST IV, INC., a Maryland corporation (the “Company”), STRATEGIC STORAGE OPERATING PARTNERSHIP IV, L.P., a Delaware limited partnership (the “Operating Partnership”), and STRATEGIC STORAGE ADVISOR IV,
LLC, a Delaware limited liability company (the “Advisor”). 
 W I T N E S S E T H 

WHEREAS, the Company has filed with the Securities and Exchange Commission (“SEC”) a Registration Statement on Form S-11 (No. [            ]) (the “Registration Statement”) covering the issuance of Common Stock, and the Company may subsequently
issue additional shares of Common Stock; 
 WHEREAS, the Company intends to qualify as a REIT, and to invest its funds in investments
permitted by the terms of the Company’s charter and Sections 856 through 860 of the Code; 
 WHEREAS, the Company is the general
partner of the Operating Partnership; 
 WHEREAS, the Company and the Operating Partnership desire to avail themselves of the experience,
sources of information, advice, assistance, and certain facilities available to the Advisor and its Affiliates and to have the Advisor undertake the duties and responsibilities hereinafter set forth, on behalf of, and subject to the supervision of
the Board of Directors of the Company, all as provided herein; and 
 WHEREAS, the Advisor is willing to undertake to render such services,
subject to the supervision of the Board of Directors, on the terms and conditions hereinafter set forth. 
 NOW, THEREFORE, in consideration
of the foregoing and of the mutual covenants and agreements contained herein, the parties hereto agree as follows: 
 ARTICLE I

 DEFINITIONS 
 As
used in this Advisory Agreement, the following terms have the definitions hereinafter indicated: 
 “Acquisition Expenses” means
expenses incurred by the Company, the Operating Partnership, the Advisor, or any of their affiliates in connection with the sourcing, selection, evaluation and acquisition of, and investment in, Properties, whether or not acquired or made, including
but not limited to legal fees and expenses, travel and communications expenses, costs of financial analysis, appraisals and surveys, nonrefundable option payments on Property not acquired, accounting fees and expenses, computer use-related expenses,
architectural and engineering reports, environmental reports, title insurance and escrow fees, and personnel and other direct expenses related to the selection and acquisition of Properties. 

“Acquisition Fee” means any and all fees and commissions, exclusive of Acquisition Expenses, paid by any Person to any other Person
(including any fees or commissions paid by or to any Affiliate of the Company or the Advisor) in connection with the making or investing in mortgage loans or the purchase, development, or construction of a Property, including, without limitation,
real estate commissions, acquisition fees, finder’s fees, selection fees, Development Fees and Construction Fees 

  
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(except as provided in the following sentence), nonrecurring management fees, consulting fees, loan fees, points, or any other fees or commissions of a similar nature. Excluded shall be any
commissions or fees incurred in connection with the leasing of any Property, and Development Fees or Construction Fees paid to any Person or entity not affiliated with the Advisor in connection with the actual development and construction of any
Property. This fee is paid to the Advisor in the amount established pursuant to Section 9.1 for the services provided to the Company and the Operating Partnership described in Section 4.2. 

“Advisor” means the Person responsible for directing or performing the day-to-day business affairs of the Company and the Operating
Partnership, including a Person to which an Advisor subcontracts substantially all such functions. The Advisor is Strategic Storage Advisor IV, LLC or any Person which succeeds it in such capacity. 

“Advisory Agreement” means this advisory agreement among the Company, the Operating Partnership, and the Advisor pursuant to which
the Advisor will direct or perform the day-to-day business affairs of the Company and the Operating Partnership, as it may be further amended or restated from time to time. 

“Affiliate” or “Affiliated” means, as to any individual, corporation, partnership, trust, limited liability company, or
other legal entity (other than the Company): (a) any Person or entity, directly or indirectly owning, controlling, or holding with power to vote ten percent (10%) or more of the outstanding voting securities of another Person or entity;
(b) any Person ten percent (10%) or more of whose outstanding voting securities are directly or indirectly owned, controlled, or held, with power to vote, by such other Person; (c) any Person or entity directly or indirectly through
one or more intermediaries controlling, controlled by, or under common control with another Person or entity; (d) any officer, director, general partner, or trustee of such Person or entity; and (e) if such other Person or entity is an
officer, director, general partner, or trustee of a Person or entity, the Person or entity for which such Person or entity acts in any such capacity. 

“Appraised Value” means value according to an appraisal made by an Independent Appraiser. 

“Assets” means any and all GAAP assets including but not limited to all real estate investments (real, personal or otherwise),
tangible or intangible, owned or held by, or for the account of, the Company or the Operating Partnership, whether directly or indirectly through another entity or entities, including Properties. 

“Average Invested Assets” means, for a specified period, the average of the aggregate GAAP basis book carrying values of the Assets
invested, directly or indirectly, in equity interests in and loans secured, directly or indirectly, by real estate before reserves for depreciation or bad debts or other similar non-cash reserves, computed by taking the average of such values at the
end of each month during such period. 
 “Asset Management Fee” means the monthly fee paid to the Advisor in the amount
established pursuant to Section 9.2 for the services provided to the Company and the Operating Partnership described in Section 4.3. 

“Board of Directors” or “Board” means the individuals holding such office, as of any particular time, under the Charter of
the Company, whether they are the Directors named therein or additional or successor Directors. 

  
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 “Bylaws” means the bylaws of the Company, as the same may be amended from time to time.

 “Capped O&O Expenses” means all Organizational and Offering Expenses (excluding Sales Commissions and the dealer manager
fee) in excess of 3.5% of the Gross Proceeds raised in a completed Offering other than Gross Proceeds from Stock sold pursuant to the Distribution Reinvestment Plan. 

“Charter” means the charter of the Company, including the articles of incorporation and all articles of amendment, articles of
amendment and restatement, articles supplementary, and other modifications thereto as filed with the State Department of Assessments and Taxation of the State of Maryland. 

“Class W Shares” means Class W shares of the Company’s Common Stock. 

“Code” means the Internal Revenue Code of 1986, as amended from time to time, or any successor statute thereto. Reference to any
provision of the Code shall mean such provision as in effect from time to time, as the same may be amended, and any successor provision thereto, as interpreted by any applicable regulations as in effect from time to time. 

“Common Stock” means shares of the Company’s common stock, $0.001 par value per share, the terms and conditions of which are
set forth in the Charter. 
 “Common Stockholders” means holders of shares of Common Stock. 

“Company” means Strategic Storage Trust IV, Inc., a corporation organized under the laws of the State of Maryland. 

“Competitive Real Estate Commission” means a real estate or brokerage commission paid (or, if no commission is paid, the amount that
customarily would be paid) for the purchase or sale of a Property that is reasonable, customary and competitive in light of the size, type, and location of the Property. 

“Construction Fee” means a fee or other remuneration for acting as general contractor and/or construction manager to construct,
supervise, or coordinate leasehold or other improvements or projects, or to provide major repairs or rehabilitation for a Property. 

“Contract Purchase Price” means the amount actually paid or allocated in respect of the purchase, development, construction, or
improvement of a Property, exclusive of Acquisition Fees and Acquisition Expenses. 
 “Contract Sales Price” means the total
consideration provided for in the sales contract for the sale of a Property. 
 “Dealer Manager” means Select Capital Corporation,
an Affiliate of the Advisor, or such other Person or entity selected by the Board of Directors to act as the dealer manager for the offering of the Stock. Select Capital Corporation is a member of the Financial Industry Regulatory Authority. 

“Development Fee” means a fee for the packaging of a Property, including negotiating and approving plans, and undertaking to assist
in obtaining zoning and necessary variances and financing for the specific Property, either initially or at a later date. 

  
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 “Director” means an individual who is a member of the Board of Directors. 

“Disposition Fee” means the fee paid to the Advisor in connection with the sale of a property as described in Section 9.4 of
this Advisory Agreement. 
 “Distribution Reinvestment Plan” means the distribution reinvestment plan of the Company approved by
the Board and as set forth in the Prospectus. 
 “Distributions” means any dividends or other distributions of money or other
property paid by the Company to the holders of Common Stock or preferred stock, including dividends that may constitute a return of capital for federal income tax purposes. 

“Excess Amount” has the meaning set forth in Section 10.3(b) hereof. 

“Excess Expense Guidelines” has the meaning set forth in Section 10.3(b) hereof. 

“Expense Year” has the meaning set forth in Section 10.3(b) hereof. 

“GAAP” means generally accepted accounting principles consistently applied as used in the United States. 

“Gross Proceeds” means the aggregate purchase price of all Stock sold for the account of the Company, including Stock sold pursuant
to the Distribution Reinvestment Plan, without deduction for Sales Commissions, volume discounts, fees paid to the Dealer Manager, or other Organization and Offering Expenses. Gross Proceeds does not include Stock issued in exchange for OP Units.

 “Independent Appraiser” means a person or entity, who is not an Affiliate of the Advisor or the Directors, who is engaged to a
substantial extent in the business of rendering opinions regarding the value of assets of the type held by the Company, and who is a qualified appraiser of real estate as determined by the Board. Membership in a nationally recognized appraisal
society such as the American Institute of Real Estate Appraisers or the Society of Real Estate Appraisers shall be conclusive evidence of such qualification. 

“Independent Director” means a Director who is not, and within the last two (2) years has not been, directly or indirectly
associated with the Advisor or the Sponsor by virtue of (a) ownership of an interest in the Advisor, the Sponsor or their Affiliates, (b) employment by the Advisor, the Sponsor or their Affiliates, (c) service as an officer or
director of the Advisor, the Sponsor or their Affiliates, (d) performance of services, other than as a Director, for the Company, (e) service as a director or trustee of more than three (3) real estate investment trusts organized by
the Advisor or the Sponsor or advised by the Advisor, or (f) maintenance of a material business or professional relationship with the Advisor, the Sponsor or any of their Affiliates. A business or professional relationship is considered
material if the gross revenue derived by the Director from the Advisor, the Sponsor and Affiliates exceeds five percent (5%) of either the Director’s annual gross revenue during either of the last two (2) years or the Director’s
net worth on a fair market value basis. An indirect relationship shall include circumstances in which a Director’s spouse, parents, children, siblings, mothers- or fathers-in-law, sons- or daughters-in-law or brothers- or sisters-in-law are or
have been associated with the Advisor, the Sponsor, any of their Affiliates or the Company or the Operating Partnership. 
 “Initial
Public Offering” means the offering and sale of Common Stock of the Company pursuant to the Company’s first effective registration statement covering such Common Stock filed under the Securities Act. 

  
 4 

 “Joint Venture” or “Joint Ventures” means those joint venture or general
partnership arrangements in which the Company or the Operating Partnership is a co-venturer or general partner which are established to acquire Properties. 

“NASAA” means the North American Securities Administrators Association, Inc. 

“NASAA Net Income” means for any period, the total revenues applicable to such period, less the total expenses applicable to such
period excluding additions to reserves for depreciation, bad debts or other similar non-cash reserves; provided, however, NASAA Net Income for purposes of calculating total allowable Operating Expenses shall exclude the gain from the sale of the
Company’s or the Operating Partnership’s Assets. 
 “NASAA REIT Guidelines” means the Statement of Policy Regarding Real
Estate Investment Trusts published by the NASAA, as revised and adopted by the NASAA membership on May 7, 2007, as may be amended from time to time. 

“Offering” means an offering of Stock that is registered with the SEC, excluding Stock offered under any employee benefit plan. 

“Operating Expenses” means all direct and indirect costs and expenses incurred by the Company, as determined under GAAP, which in
any way are related to the operation of the Company or to Company business, including advisory fees, but excluding (a) the expenses of raising capital such as Organizational and Offering Expenses, legal, audit, accounting, underwriting,
brokerage, listing, registration, and other fees, printing and other such expenses and taxes incurred in connection with the issuance, distribution, transfer, registration and listing of the Stock on a national securities exchange, (b) interest
payments, (c) taxes, (d) non-cash expenditures such as depreciation, amortization and bad debt reserves, (e) Acquisition Fees and Acquisition Expenses, (f) real estate commissions on the Sale of Property, and other expenses
connected with the acquisition and ownership of real estate interests, mortgage loans, or other property (such as the costs of foreclosure, insurance premiums, legal services, maintenance, repair, and improvement of property) and (g) any
incentive fees which may be paid in compliance with the NASAA REIT Guidelines. The definition of “Operating Expenses” set forth above is intended to encompass only those expenses which are required to be treated as Operating Expenses under
the NASAA REIT Guidelines. As a result, and notwithstanding the definition set forth above, any expense of the Company which is not an Operating Expense under the NASAA REIT Guidelines shall not be treated as an Operating Expense for purposes
hereof. 
 “Operating Partnership” means Strategic Storage Operating Partnership IV, L.P., a Delaware limited partnership. 

“Operating Partnership Agreement” means the First Amended and Restated Limited Partnership Agreement of the Operating Partnership,
as amended and restated from time to time. 
 “OP Unit” means a unit of limited partnership interest in the Operating Partnership.

 “Organizational and Offering Expenses” means any and all costs and expenses incurred by the Company, the Advisor, or any
Affiliate of either in connection with and in preparing the Company for registration of and subsequently offering and distributing its Stock to the public, which may include but are not limited to total underwriting and brokerage discounts and
commissions (including fees of the underwriters’ attorneys), legal, accounting and escrow fees, expenses for printing, engraving, amending, supplementing and mailing, distribution costs, compensation to employees while engaged in registering,
marketing and wholesaling the Stock, telegraph and telephone costs, all advertising and marketing 

  
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expenses (including the costs related to investor and broker-dealer sales meetings), charges of transfer agents, registrars, trustees, escrow holders, depositories, experts, and fees, expenses
and taxes related to the filing, registration and qualification of the sale of the Securities under Federal and State laws, including accountants’ and attorneys’ fees and other accountable offering expenses. Organization and Offering
Expenses may include, but are not limited to: (a) amounts to reimburse the Advisor for all marketing related costs and expenses such as compensation to and direct expenses of the Advisor’s employees or employees of the Advisor’s
Affiliates in connection with registering and marketing the Stock; (b) travel and entertainment expenses related to the offering and marketing of the Stock; (c) facilities and technology costs and other costs and expenses associated with
the offering and to facilitate the marketing of the Stock including web site design and management; (d) costs and expenses of conducting training and educational conferences and seminars; (e) costs and expenses of attending broker-dealer
sponsored retail seminars or conferences; and (f) payment or reimbursement of bona fide due diligence expenses. 
 “Other
Organization and Offering Expenses” means Organization and Offering Expenses with respect to an Offering, other than Sales Commissions, dealer manager fees, stockholder servicing fees, and dealer manager servicing fees relating to the Initial
Public Offering. 
 “Person” shall mean any natural person, partnership, corporation, association, trust, limited liability
company, or other legal entity. 
 “Property” or “Properties” means the real properties or real estate investments which
are acquired by the Company either directly or through the Operating Partnership, Joint Ventures, partnerships, or other entities. 

“Property Manager” means any entity that has been retained to perform and carry out at one or more of the Properties property
management services. 
 “Prospectus” means any document, notice, or other communication satisfying the standards set forth in
Section 10 of the Securities Act of 1933, and contained in a currently effective registration statement filed by the Company with, and declared effective by, the SEC, or if no registration statement is currently effective, then the Prospectus
contained in the most recently effective registration statement. 
 “Public Offering” means the Initial Public Offering or any
subsequent offering of Stock that is registered with the SEC, excluding Stock offered under any employee benefit plan. 
 “Registration
Statement” means a registration statement filed by the Company with the Securities and Exchange Commission on Form S-11, as amended from time to time, in connection with a Public Offering. 

“REIT” means a corporation, trust or association which is engaged in investing in equity interests in real estate (including fee
ownership and leasehold interests and interests in partnerships and Joint Ventures holding real estate) or in loans secured by mortgages on real estate or both and that qualifies as a real estate investment trust under the REIT Provisions of the
Code. 
 “REIT Provisions of the Code” means Sections 856 through 860 of the Code and any successor or other provisions of the
Code relating to real estate investment trusts (including provisions as to the attribution of ownership of beneficial interests therein) and the regulations promulgated thereunder. 

  
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 “REIT Shares Amount” has the meaning set forth in the Operating Partnership Agreement.

 “Sale” or “Sales” means any transaction or series of transactions whereby: (a) the Operating Partnership sells,
grants, transfers, conveys, or relinquishes its ownership of any Property or portion thereof, including the lease of any Property consisting of the building only, and including any event with respect to any Property which gives rise to a significant
amount of insurance proceeds or condemnation awards; (b) the Operating Partnership sells, grants, transfers, conveys, or relinquishes its ownership of all or substantially all of the interest of the Operating Partnership in any Joint Venture in
which it is a co-venturer or partner; (c) any Joint Venture in which the Operating Partnership is a co-venturer or partner sells, grants, transfers, conveys, or relinquishes its ownership of any Property or portion thereof, including any event
with respect to any Property which gives rise to insurance claims or condemnation awards; (d) the Operating Partnership sells, grants, conveys, or relinquishes its interest in any asset, or portion thereof, including any event with respect to
any asset which gives rise to a significant amount of insurance proceeds or similar awards; or (e) the Operating Partnership sells or otherwise disposes of or distributes all of its assets in liquidation of the Operating Partnership. 

“Sales Commissions” means any and all commissions payable to underwriters, dealer managers, or other broker-dealers in connection
with the sale of Stock, including, without limitation, commissions payable to the Dealer Manager. 
 “Securities” means any class
or series of units or shares of the Company or the Operating Partnership, including common shares or preferred units or shares and any other evidences of equity or beneficial or other interests, voting trust certificates, bonds, debentures, notes or
other evidences of indebtedness, secured or unsecured, convertible, subordinated or otherwise, or in general any instruments commonly known as “Securities” or any certificates of interest, shares or participations in, temporary or interim
certificates for, receipts for, guarantees of, or warrants, options or rights to subscribe to, purchase or acquire, any of the foregoing. 

“Securities Act” means the Securities Act of 1933, as amended. 

“Sponsor” means SmartStop Asset Management, LLC, a Delaware limited liability company. 

“Stock” means shares of stock of the Company of any class or series, including Common Stock, preferred stock or shares-in-trust.

 “Stockholders” means the registered holders of the Company’s Stock. 

“Termination Date” means the date of termination of this Advisory Agreement. 

ARTICLE II 

APPOINTMENT 
 The Company,
through the powers vested in the Board of Directors including a majority of all Independent Directors, and the Operating Partnership, hereby appoints the Advisor to serve as its advisor and asset manager on the terms and conditions set forth in this
Advisory Agreement, and the Advisor hereby accepts such appointment. The Advisor undertakes to use its commercially reasonable best efforts to present to the Company and the Operating Partnership potential investment opportunities and to provide a
continuing and suitable investment program consistent with the investment objectives and policies of the Company as determined and adopted from time to time by the Board. 

  
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 ARTICLE III 

AUTHORITY OF THE ADVISOR 

Section 3.1 General. All rights and powers to manage and control the day-to-day business and affairs of the Company and the
Operating Partnership shall be vested in the Advisor. The Advisor shall have the power to delegate all or any part of its rights and powers to manage and control the business and affairs of the Company and the Operating Partnership to such officers,
employees, Affiliates, agents, and representatives of the Advisor, the Company, or the Operating Partnership as it may from time to time deem appropriate. Any authority delegated by the Advisor to any other Person shall be subject to the limitations
on the rights and powers of the Advisor specifically set forth in this Advisory Agreement, the Charter, the Bylaws, and the Operating Partnership Agreement. 

Section 3.2 Powers of the Advisor. Subject to the express limitations set forth in this Advisory Agreement and
subject to the supervision of the Board, the power to direct the management, operation and policies of the Company and the Operating Partnership shall be vested in the Advisor, which shall have the power by itself and shall be authorized and
empowered on behalf and in the name of the Company and the Operating Partnership, as applicable, to carry out any and all of the objectives and purposes of the Company and the Operating Partnership and to perform all acts and enter into and perform
all contracts and other undertakings that it may in its sole discretion deem necessary, advisable or incidental thereto to perform its obligations under this Advisory Agreement. 

Section 3.3 Approval by Directors. Notwithstanding the foregoing, any investment in Properties, including any
acquisition of a Property by the Company or the Operating Partnership or any investment by the Company or the Operating Partnership in a joint venture, limited partnership, or similar entity owning real properties, will require the prior approval of
the Board of Directors or a committee of the Board constituting a majority of the Board. The Advisor will deliver to the Board of Directors all documents required by it to properly evaluate the proposed investment. 

Section 3.4 Modification or Revocation of Authority of Advisor. The Board may, at any time upon the giving of notice to the
Advisor, modify or revoke the authority or approvals set forth in Articles III and IV, provided however, that such modification or revocation shall be effective upon receipt by the Advisor and shall not be applicable to investment transactions to
which the Advisor has committed the Company or the Operating Partnership prior to the date of receipt by the Advisor of such notification. 

ARTICLE IV 
 DUTIES
OF THE ADVISOR 
 The Advisor undertakes to use its commercially reasonable best efforts to present to the Company and the Operating
Partnership potential investment opportunities and to provide a continuing and suitable investment program consistent with the investment objectives and policies of the Company as determined and adopted from time to time by the Board. In connection
therewith, the Advisor agrees to perform the following services on behalf of the Company and the Operating Partnership. 

Section 4.1 Organizational and Offering Services. The Advisor shall manage and supervise: 

(a) the structure and development of any Offering, including the determination of the specific terms of the Securities to be offered by the
Company; 
 (b) the preparation of all organizational and offering related documents, and obtaining of all required regulatory approvals of
such documents; 

  
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 (c) along with the Dealer Manager, approval of the participating broker dealers and negotiation
of the related selling agreements; 
 (d) coordination of the due diligence process relating to participating broker dealers and their
review of the Prospectus and other Offering and Company documents; 
 (e) preparation and approval of all marketing materials contemplated
to be used by the Dealer Manager or others in an Offering; 
 (f) along with the Dealer Manager, negotiation and coordination with the
transfer agent for the receipt, collection, processing and acceptance of subscription agreements, commissions, and other administrative support functions; 

(g) creation and implementation of various technology and electronic communications related to an Offering; and 

(h) all other services related to organization of the Company or the Offering, whether performed and incurred by the Advisor or its
Affiliates. 
 Section 4.2 Acquisition Services. The Advisor shall: 

(a) serve as the Company’s and the Operating Partnership’s investment and financial advisor and provide relevant market research and
economic and statistical data in connection with the Company’s assets and investment objectives and policies; 
 (b) subject to Article
III hereof and the investment objectives and policies of the Company: (i) locate, analyze and select potential investments; (ii) structure and negotiate the terms and conditions of transactions pursuant to which investments in Assets will
be made; (iii) acquire Assets on behalf of the Company and the Operating Partnership; and (iv) arrange for financing related to acquisitions of Assets; 

(c) perform due diligence on prospective investments and create due diligence reports summarizing the results of such work; 

(d) prepare reports regarding prospective investments which include recommendations and supporting documentation necessary for the Board to
evaluate the proposed investments; 
 (e) obtain reports (which may be prepared by the Advisor or its Affiliates), where appropriate,
concerning the value of contemplated investments of the Company and the Operating Partnership; and 
 (f) negotiate and execute investments
and other transactions approved by the Board. 
 Section 4.3 Asset Management Services and Administrative Services.
 
 (a) Asset Management and Property Related Services. The Advisor shall: 

(i) negotiate and service the Company’s and the Operating Partnership’s debt facilities and other financings; 

(ii) monitor applicable markets and obtain reports (which may be prepared by the Advisor or its Affiliates) where appropriate, concerning the
value of investments of the Company and the Operating Partnership; 

  
 9 

 (iii) monitor and evaluate the performance of investments of the Company and the Operating
Partnership; provide daily management services to the Company and perform and supervise the various management and operational functions related to the Company’s and the Operating Partnership’s investments; 

(iv) coordinate with the Property Manager on its duties under any property management agreement and assist in obtaining all necessary
approvals of major property transactions as governed by the applicable property management agreement; 
 (v) coordinate and manage
relationships between the Company and the Operating Partnership with any joint venture partners; 
 (vi) consult with the officers and
Directors of the Company and provide assistance with the evaluation and approval of potential property dispositions, sales or refinancings; and 

(vii) provide the officers and Directors of the Company periodic reports regarding prospective investments in Properties. 

(b) Accounting, Regulatory and Other Administrative Services. The Advisor shall: 

(i) maintain accounting systems, records and data and any other information requested concerning the activities of the Company and the
Operating Partnership as shall be required to prepare and to file all periodic financial reports and returns required to be filed with the Securities and Exchange Commission and any other regulatory agency, including annual financial statements;

 (ii) provide tax and compliance services and coordinate with appropriate third parties, including independent accountants and other
consultants, on related tax matters; 
 (iii) maintain all appropriate books and records of the Company and the Operating Partnership; 

(iv) provide the officers of the Company and the Board with timely updates related to the overall regulatory environment affecting the
Company, as well as managing compliance with such matters, including but not limited to compliance with the Sarbanes-Oxley Act of 2002; 

(v) consult with the officers of the Company and the Board relating to the corporate governance structure and appropriate policies and
procedures related thereto; 
 (vi) perform all reporting, record keeping, internal controls and similar matters in a manner to allow the
Company to comply with applicable law including the Sarbanes-Oxley Act of 2002; 
 (vii) investigate, select, and, on behalf of the Company
and the Operating Partnership, engage and conduct business with such Persons as the Advisor deems necessary to the proper performance of its obligations hereunder, including but not limited to consultants, accountants, lenders, technical advisors,
attorneys, brokers, underwriters, corporate fiduciaries, escrow agents, depositaries, custodians, agents for collection, insurers, insurance agents, banks, builders, developers, property owners, mortgagers, construction companies and any and all
Persons acting in any other capacity deemed by the Advisor necessary or desirable for the performance of any of the foregoing services; 

(viii) supervise the performance of such ministerial and administrative functions as may be necessary in connection with the daily operations
of the Assets; 

  
 10 

 (ix) provide the Company and the Operating Partnership with all necessary cash management
services; 
 (x) consult with the officers of the Company and the Board and assist the Board in evaluating and obtaining adequate insurance
coverage based upon risk management determinations; 
 (xi) manage and perform the various administrative functions necessary for the
management of the day-to-day operations of the Company and the Operating Partnership; 
 (xii) provide or arrange for administrative
services and items, legal and other services, office space, office furnishings, personnel and other overhead items necessary and incidental to the Company’s and the Operating Partnership’s business and operations; 

(xiii) provide financial and operational planning services and portfolio management functions; and 

(xiv) from time-to-time, or at any time reasonably requested by the Board, make reports to the Board on the Advisor’s performance of
services to the Company and the Operating Partnership under this Advisory Agreement. 
 (c) Stockholder Services. The Advisor shall:

 (i) have the authority, in its sole discretion, to retain a transfer agent on behalf of the Company to perform all necessary transfer
agent functions; 
 (ii) manage and coordinate with such transfer agent, if retained by the Advisor, the distribution process and payments
to Stockholders; 
 (iii) manage communications with Stockholders, including answering phone calls, preparing and sending written and
electronic reports and other communications; and 
 (iv) establish technology infrastructure to assist in providing Stockholder support and
service. 
 ARTICLE V 

BANK ACCOUNTS 
 The Advisor
may establish and maintain one or more bank accounts in its own name for the account of the Company or the Operating Partnership or in the name of the Company or the Operating Partnership and may collect and deposit into any such account or
accounts, and disburse from any such account or accounts, any money on behalf of the Company or the Operating Partnership, under such terms and conditions as the Board may approve, provided that no funds shall be commingled with the funds of the
Advisor; and the Advisor shall from time to time render appropriate accountings of such collections and payments to the Board and to the auditors of the Company. 

ARTICLE VI 

RECORDS; ACCESS 
 The
Advisor shall maintain appropriate records of all its activities hereunder and make such records available for inspection by the Board and by counsel, auditors, and authorized agents of the Company and the Operating Partnership, at any time or from
time to time during normal business hours. The Advisor, in the conduct of its responsibilities to the Company and the Operating Partnership, shall 

  
 11 

 
maintain adequate and separate books and records for the Company’s and the Operating Partnership’s operations in accordance with GAAP, which shall be supported by sufficient
documentation to ascertain that such books and records are properly and accurately recorded. Such books and records shall be the property of the Company. Such books and records shall include all information necessary to calculate and audit the fees
or reimbursements paid under this Advisory Agreement. The Advisor shall utilize procedures to attempt to ensure such control over accounting and financial transactions as is reasonably required to protect the Company’s and the Operating
Partnership’s assets from theft, error or fraudulent activity. All financial statements that the Advisor delivers to the Company shall be prepared on an accrual basis in accordance with GAAP, except for special financial reports which by their
nature require a deviation from GAAP. The Advisor shall maintain necessary liaison with the Company’s independent accountants and shall provide such accountants with such reports and other information as the Company shall request. The Advisor
shall at all reasonable times have access to the books and records of the Company and the Operating Partnership. 
 ARTICLE VII

 OTHER ACTIVITIES OF THE ADVISOR 

Section 7.1 General. Nothing herein contained shall prevent the Advisor from engaging in other activities,
including, without limitation, the rendering of advice to other Persons (including other REITs) and the management of other programs advised, sponsored or organized by the Advisor or its Affiliates; nor shall this Advisory Agreement limit or
restrict the right of any director, officer, employee, or stockholder of the Advisor or its Affiliates to engage in any other business or to render services of any kind to any other partnership, corporation, firm, individual, trust or association.
The Advisor may, with respect to any investment in which the Company is a participant, also render advice and service to each and every other participant therein. The Advisor shall report to the Board the existence of any condition or circumstance,
existing or anticipated, of which it has knowledge, which creates or could create a conflict of interest between the Advisor’s obligations to the Company and the Operating Partnership and its obligations to or its interest in any other
partnership, corporation, firm, individual, trust or association. 
 Section 7.2 Policy with Respect to Allocation of Investment
Opportunities. Before the Advisor presents an investment opportunity that would in its judgment be suitable for the Company to another Advisor-sponsored program, the Advisor shall determine in its sole discretion that the investment
opportunity is more suitable for such other program than for the Company based on factors such as the following: the investment objectives and criteria of each program; the cash requirements and anticipated cash flow of each entity; the size of the
investment opportunity; the effect of the acquisition on diversification of each entity’s investments; the income tax consequences of the purchase on each entity; the policies of each program relating to leverage; the amount of funds available
to each program and the length of time such funds have been available for investment. In the event that an investment opportunity becomes available that is, in the sole discretion of the Advisor, equally suitable for both the Company and another
Advisor-sponsored program, then the Advisor may offer the other program the investment opportunity if it has had the longest period of time elapse since it was offered an investment opportunity. The Advisor will use its reasonable efforts to fairly
allocate investment opportunities in accordance with such allocation method and will promptly disclose any material deviation from such policy or the establishment of a new policy, which shall be allowed provided (a) the Board is provided with
notice of such policy at least 60 days prior to such policy becoming effective and (b) such policy provides for the reasonable allocation of investment opportunities among such programs. The Advisor shall provide the Independent Directors with
any information reasonably requested so that the Independent Directors can ensure that the allocation of investment opportunities is applied fairly. Nothing herein shall be deemed to prevent the Advisor or an Affiliate from pursuing an investment
opportunity directly rather than offering it to the Company or another Advisor-sponsored program so long as the 

  
 12 

 
Advisor is fulfilling its obligation to present a continuing and suitable investment program to the Company which is consistent with the investment policies and objectives of the Company. If a
subsequent development, such as a delay in the closing of a property or a delay in the construction of a property, causes any such investment, in the opinion of the Board of Directors and the Advisor, to be more appropriate for an entity other than
the entity which committed to make the investment, however, the Advisor has the right to agree that the other entity affiliated with the Advisors or its Affiliates may make the investment. 

ARTICLE VIII 

LIMITATIONS ON ACTIVITIES 

Anything else in this Advisory Agreement to the contrary notwithstanding, the Advisor shall refrain from taking any action which, in its sole
judgment made in good faith, would (a) adversely affect the status of the Company as a REIT, (b) subject the Company to regulation under the Investment Company Act of 1940, as amended, (c) violate any law, rule, regulation or
statement of policy of any governmental body or agency having jurisdiction over the Company, its Stock or its other Securities, or the Operating Partnership, or (d) violate the Charter, the Bylaws or the Operating Partnership Agreement, except
if such action shall be ordered by the Board, in which case the Advisor shall notify promptly the Board of the Advisor’s judgment of the potential impact of such action and shall refrain from taking such action until it receives further
clarification or instructions from the Board. In such event the Advisor shall have no liability for acting in accordance with the specific instructions of the Board so given. Notwithstanding the foregoing, the Advisor, its directors, officers,
employees and stockholders, and stockholders, directors and officers of the Advisor’s Affiliates shall not be liable to the Company or the Operating Partnership or to the Board or Stockholders for any act or omission by the Advisor, its
directors, officers or employees, or stockholders, directors or officers of the Advisor’s Affiliates except as provided in this Advisory Agreement. 

ARTICLE IX 
 FEES

 Section 9.1 Acquisition Fees. The Company will pay the Advisor, as compensation for the services described
in Section 4.2, Acquisition Fees in an amount equal to 2.0% of (a) the Contract Purchase Price of each Property acquired by the Company, including any debt attributable to the Property, plus amounts incurred for the development,
construction or other capital improvements thereon, or (b) the funds advanced in respect of a loan or other investment. The purchase price allocable for a Property held through a Joint Venture shall equal the product of (i) the Contract
Purchase Price of the Property and (ii) the direct or indirect ownership percentage in the Joint Venture held directly or indirectly by the Company or the Operating Partnership. For purposes of this Section 9.1, “ownership
percentage” shall be the percentage of capital stock, membership interests, partnership interests or other equity interests held by the Company or the Operating Partnership, without regard to classification of such interests. The total of all
Acquisition Fees and Acquisition Expenses shall be limited in accordance with the Charter. 
 Section 9.2 Asset Management
Fee. Commencing on the date hereof, for the asset management services included in the services described in Section 4.3(a), the Company shall pay the Advisor a monthly Asset Management Fee in an amount equal to one-twelfth of
0.75% of the Average Invested Assets. The Advisor may elect to receive the Asset Management Fee, in whole or in part, in OP Units of the Operating Partnership or shares of the Company. 

Section 9.3 Development Fee. The Advisor or its Affiliates shall receive a market-based Development Fee equal to the
amount that would be payable to an unaffiliated third-party for development of a similar property in the same geographic region, which Development Fee may be reallowed to a third party developer. 

  
 13 

 Section 9.4 Disposition Fees. If the Advisor or an Affiliate provides a
substantial amount of the services (as determined by a majority of the Directors, including a majority of the Independent Directors) in connection with the Sale of one or more Properties, the Advisor or such Affiliate shall receive at closing a
Disposition Fee in an amount equal to the lesser of: (a) 1% of the Contract Sales Price or (b) 50% of the Competitive Real Estate Commission. Any Disposition Fee payable under this section may be paid in addition to real estate commissions
paid to non-Affiliates, provided that the total real estate commissions (including such Disposition Fee) paid to all Persons by the Company or the Operating Partnership for each Property shall not exceed an amount equal to the lesser of (i) 6%
of the aggregate Contract Sales Price of each Property or (ii) the Competitive Real Estate Commission for each Property. The Company or the Operating Partnership will pay the Disposition Fee for a property at the time the property is sold. 

ARTICLE X 
 EXPENSES

 Section 10.1 Reimbursable Expenses. In addition to the compensation paid to the Advisor pursuant to Article
IX hereof, the Company or the Operating Partnership shall pay directly or reimburse the Advisor for all of the expenses paid or incurred by the Advisor (to the extent not reimbursable by another party, such as the Dealer Manager) in connection with
the services it provides to the Company and the Operating Partnership pursuant to this Advisory Agreement, including, but not limited to: 

(a) subject to Section 10.4, reimbursements for Organizational and Offering Expenses in connection with this offering, provided, however,
that within 60 days after the end of the month in which an Offering terminates, the Advisor shall reimburse the Company to the extent (i) there are Capped O&O Expenses borne by the Company or (ii) Organization and Offering Expenses
borne by the Company (including selling commissions, dealer manager fees and non-accountable due diligence expense allowance but not including Acquisition Fees or Acquisition Expenses) exceed 15% of the Gross Proceeds raised in a completed Offering;

 (b) subject to the limitation set forth below, Acquisition Expenses incurred by the Advisor or its Affiliates; 

(c) subject to the limitation set forth below, Acquisition Fees and Acquisition Expenses payable to unaffiliated Persons incurred in
connection with the selection and acquisition of Properties; 
 (d) the actual out-of-pocket cost of goods and services used by the Company
and the Operating Partnership and obtained from entities not affiliated with the Advisor including brokerage and other fees paid in connection with the purchase, operation and sale of Assets; 

(e) interest and other costs for borrowed money, including discounts, points and other similar fees; 

(f) taxes and assessments on income or Property and taxes as an expense of doing business and any taxes otherwise imposed on the Company and
the Operating Partnership, its business or income; 

  
 14 

 (g) costs associated with insurance required in connection with the business of the Company, the
Operating Partnership or by the Board; 
 (h) expenses of managing and operating Properties owned by the Company or the Operating
Partnership, whether payable to an Affiliate of the Company or a non-affiliated Person; 
 (i) all expenses in connection with payments to
Directors and meetings of the Directors and Stockholders; 
 (j) expenses associated with the listing of the Common Stock on a national
securities exchange or with the issuance and distribution of Securities other than the Stock issued in a Public Offering, such as selling commissions and fees, advertising expenses, taxes, legal and accounting fees, listing and registration fees;

 (k) expenses connected with payments of Distributions in cash or otherwise made or caused to be made by the Company to the Stockholders;

 (l) expenses of organizing, converting, modifying, merging, liquidating or dissolving the Company, the Operating Partnership or of
amending the Charter, the Bylaws or the Operating Partnership Agreement; 
 (m) expenses of maintaining communications with Stockholders,
including the cost of preparation, printing, and mailing annual reports and other Stockholder reports, proxy statements and other reports required by governmental entities; 

(n) administrative service expenses, including all direct and indirect costs and expenses incurred by Advisor in fulfilling its duties
hereunder and including personnel costs; provided, however, that no reimbursement shall be made for costs of personnel to the extent that such personnel perform services in transactions for which the Advisor receives the Acquisition Fee or
Disposition Fee. Such direct and indirect costs and expenses may include reasonable wages and salaries and other employee-related expenses of all employees of Advisor who are directly engaged in the operation, management, administration, and
marketing of the Company, including taxes, insurance and benefits relating to such employees, and legal, travel and other out-of-pocket expenses which are directly related to their services provided by Advisor pursuant to this Advisory Agreement;

 (o) audit, accounting and legal fees, and other fees for professional services relating to the operations of the Company and the
Operating Partnership and all such fees incurred at the request, or on behalf of, the Independent Directors or any committee of the Board; and 

(p) out-of-pocket costs for the Company and the Operating Partnership to comply with all applicable laws, regulation and ordinances; and all
other out-of-pocket costs necessary for the operation of the Company, the Operating Partnership and the Assets incurred by the Advisor in performing its duties hereunder. 

Upon the Company satisfying the minimum offering requirements in the Initial Public Offering and commencing operations, the Company or the
Operating Partnership shall also reimburse the Advisor or Affiliates of the Advisor for all direct and indirect costs and expenses incurred on behalf of the Company or the Operating Partnership prior to the execution of this Advisory Agreement. 

The total of all Acquisition Fees and Acquisition Expenses paid by the Company in connection with the purchase of a Property by the Company
shall be reasonable, and shall in no event exceed an 

  
 15 

 
amount equal to 6% of the Contract Purchase Price, or in the case of a mortgage loan, 6% of the funds advanced; provided, however, that a majority of the Directors (including the majority of the
Independent Directors) not otherwise interested in the transaction may approve fees and expenses in excess of these limits if they determine the transaction to be commercially competitive, fair and reasonable to the Company. 

Section 10.2 Other Services. Should the Directors request that the Advisor or any member, manager, officer, or
employee thereof render services for the Company or the Operating Partnership other than set forth in Article IV, such services shall be separately compensated at such rates and in such amounts as are agreed by the Advisor and a majority of the
Independent Directors, subject to the limitations contained in the Charter, and shall not be deemed to be services pursuant to the terms of this Advisory Agreement. 

Section 10.3 Timing of and Limitations on Reimbursements. 

(a) Expenses incurred by the Advisor on behalf of the Company and the Operating Partnership and payable pursuant to this Article X shall be
reimbursed no less frequently than monthly to the Advisor. The Advisor shall prepare a statement documenting the expenses of the Company and the Operating Partnership during each quarter, and shall deliver such statement to the Company within 45
days after the end of each quarter. Subject to the Excess Expense Guidelines, the Company or the Operating Partnership may advance funds to the Advisor for expenses the Advisor anticipates will be incurred by the Advisor within the current month and
any such advances shall be deducted from the amounts reimbursed by the Company or the Operating Partnership to the Advisor. 
 (b) Upon four
fiscal quarters after the Company’s or the Operating Partnership’s acquisition of the first Property, the Company shall not reimburse the Advisor at the end of any fiscal quarter Operating Expenses that, in the four consecutive fiscal
quarters then ended (the “Expense Year”) exceed (the “Excess Amount”) the greater of 2% of Average Invested Assets or 25% of NASAA Net Income (the “Excess Expense Guidelines”) for such year unless a majority of the
Independent Directors determines that such excess was justified, based on unusual and nonrecurring factors which they deem sufficient. If a majority of the Independent Directors does not approve such excess as being so justified, any Excess Amount
paid to the Advisor during a fiscal quarter shall be repaid to the Company. If a majority of the Independent Directors determines such excess was justified, then within 60 days after the end of any fiscal quarter of the Company for which total
reimbursed Operating Expenses for the Expense Year exceed the Excess Expense Guidelines, the Advisor, at the direction of a majority of the Independent Directors, shall send to the Stockholders a written disclosure of such fact, together with an
explanation of the factors a majority of the Independent Directors considered in determining that such excess expenses were justified. The Company will ensure that such determination will be reflected in the minutes of the meetings of the Board of
Directors. All figures used in the foregoing computation shall be determined in accordance with GAAP. 
 Section 10.4 Advisor
Support of a Portion of Other Organization and Offering Expenses. Through the completion of the primary portion of the Company’s Initial Public Offering, the Advisor or its Affiliates shall fund on behalf of the Company, an
amount equal to 1.5% of the gross offering proceeds from the sale of Class W Shares only in the Initial Public Offering, which amount shall be used by the Company towards the payment of Other Organization and Offering Expenses. 

  
 16 

 ARTICLE XI 

NO PARTNERSHIP OR JOINT VENTURE 

The parties to this Advisory Agreement are not partners or joint venturers with each other, and nothing in this Advisory Agreement shall be
construed to make them such partners or joint venturers or impose any liability as such on either of them, and neither shall have the power to bind or obligate any of them except as set forth herein. In all respects, the status of the Advisor under
this Advisory Agreement is that of an independent contractor. 
 ARTICLE XII 

RELATIONSHIP WITH DIRECTORS 

Subject to Article VIII of this Advisory Agreement and to restrictions set forth in the Charter or deemed advisable with respect to the
qualification of the Company as a REIT, directors, officers and employees of the Advisor or an Affiliate of the Advisor or any corporate parents of an Affiliate, or directors, officers or stockholders of any director, officer or corporate parent of
an Affiliate may serve as a Director and as officers of the Company, except that no officer or employee of the Advisor or its Affiliates who also is a Director or officer of the Company shall receive any compensation from the Company for serving as
a Director or officer other than reasonable reimbursement for travel and related expenses incurred in attending meetings of the Directors. Directors who are not Independent Directors will be individuals nominated by the Advisor, provided that such
director nominees are either directors of the Advisor or have been elected by the board of directors of the Advisor as executive officers of the Advisor. 

ARTICLE XIII 

REPRESENTATIONS AND WARRANTIES 

Section 13.1 The Company. To induce the Advisor to enter into this Advisory Agreement, the Company hereby represents
and warrants that: 
 (a) The Company is a corporation, duly organized, validly existing and in good standing under the laws of the State of
Maryland with all requisite corporate power and authority and all material licenses, permits and authorizations necessary to carry out the transactions contemplated by this Advisory Agreement. 

(b) The Company’s execution, delivery and performance of this Advisory Agreement has been duly authorized by the Board of Directors
including a majority of all Independent Directors of the Company. This Advisory Agreement constitutes the valid and binding obligation of the Company, enforceable against the Company in accordance with its terms. The Company’s execution and
delivery of this Advisory Agreement and its fulfillment of and compliance with the respective terms hereof do not and will not (i) conflict with or result in a breach of the terms, conditions or provisions of, (ii) constitute a default
under, (iii) result in the creation of any lien, security interest, charge or encumbrance upon the assets of the Company pursuant to, (iv) give any third party the right to modify, terminate or accelerate any obligation under,
(v) result in a violation of or (vi) require any authorization, consent, approval, exception or other action by or notice to any court or administrative or governmental body pursuant to, the Charter or Bylaws or any law, statute, rule or
regulation to which the Company is subject, or any agreement, instrument, order, judgment or decree by which the Company is bound, in any such case in a manner that would have a material adverse effect on the ability of the Company to perform any of
its obligations under this Advisory Agreement. 

  
 17 

 Section 13.2 The Operating Partnership. To induce the Advisor to enter
into this Advisory Agreement, the Operating Partnership hereby represents and warrants that: 
 (a) The Operating Partnership is a Delaware
limited partnership, duly organized, validly existing and in good standing under the laws of the State of Delaware with all requisite power and authority and all material licenses, permits and authorizations necessary to carry out the transactions
contemplated by this Advisory Agreement. 
 (b) The Operating Partnership’s execution, delivery and performance of this Advisory
Agreement has been duly authorized. This Advisory Agreement constitutes the valid and binding obligation of the Operating Partnership, enforceable against the Operating Partnership in accordance with its terms. The Operating Partnership’s
execution and delivery of this Advisory Agreement and its fulfillment of and compliance with the respective terms hereof do not and will not (i) conflict with or result in a breach of the terms, conditions or provisions of, (ii) constitute
a default under, (iii) result in the creation of any lien, security interest, charge or encumbrance upon the assets of the Operating Partnership pursuant to, (iv) give any third party the right to modify, terminate or accelerate any
obligation under, (v) result in a violation of or (vi) require any authorization, consent, approval, exception or other action by or notice to any court or administrative or governmental body pursuant to, the Operating Partnership
Agreement or any law, statute, rule or regulation to which the Operating Partnership is subject, or any agreement, instrument, order, judgment or decree by which the Operating Partnership is bound, in any such case in a manner that would have a
material adverse effect on the ability of the Operating Partnership to perform any of its obligations under this Advisory Agreement. 

Section 13.3 The Advisor. To induce the Company and the Operating Partnership to enter into this Advisory Agreement,
the Advisor represents and warrants that: 
 (a) The Advisor is a limited liability company, duly organized, validly existing and in good
standing under the laws of the State of Delaware with all requisite company power and authority and all material licenses, permits and authorizations necessary to carry out the transactions contemplated by this Advisory Agreement. 

(b) The Advisor’s execution, delivery and performance of this Advisory Agreement has been duly authorized. This Advisory Agreement
constitutes a valid and binding obligation of the Advisor, enforceable against the Advisor in accordance with its terms. The Advisor’s execution and delivery of this Advisory Agreement and its fulfillment of and compliance with the respective
terms hereof do not and will not (i) conflict with or result in a breach of the terms, conditions or provisions of, (ii) constitute a default under, (iii) result in the creation of any lien, security interest, charge or encumbrance
upon the Advisor’s assets pursuant to, (iv) give any third party the right to modify, terminate or accelerate any obligation under, (v) result in a violation of or (vi) require any authorization, consent, approval, exemption or
other action by or notice to any court or administrative or governmental body pursuant to, the Advisor’s articles of incorporation or bylaws, or any law, statute, rule or regulation to which the Advisor is subject, or any agreement, instrument,
order, judgment or decree by which the Advisor is bound, in any such case in a manner that would have a material adverse effect on the ability of the Advisor to perform any of its obligations under this Advisory Agreement. 

(c) The Advisor has received copies of the Charter, the Bylaws, the Registration Statement and the Operating Partnership Agreement and is
familiar with the terms thereof, including without limitation the investment limitations included therein. The Advisor warrants that it will use reasonable care to avoid any act or omission that would conflict with the terms of the Charter, the
Bylaws, the Registration Statement, or the Operating Partnership Agreement in the absence of the express direction of a majority of the Independent Directors. 

  
 18 

 ARTICLE XIV 

TERM; TERMINATION OF AGREEMENT 

Section 14.1 Term. This Advisory Agreement shall continue in force until the first anniversary of the date hereof.
Thereafter, this Advisory Agreement may be renewed for an unlimited number of successive one-year terms upon mutual consent of the parties. The Company, acting through the Board, will evaluate the performance of the Advisor annually before renewing
the Agreement, and each such renewal shall be for a term of no more than one year. 
 Section 14.2 Termination by Any
Party. This Advisory Agreement may be terminated upon 60 days’ written notice without cause or penalty, by any party (by a majority of the Independent Directors of the Company or the manager of the Advisor). 

Section 14.3 Termination by the Advisor. This Advisory Agreement may be terminated immediately by the Advisor in the
event of any material breach of this Advisory Agreement by the Company or the Operating Partnership not cured within 30 days after written notice thereof. 

Section 14.4 Termination by the Company. This Advisory Agreement may be terminated immediately by the Company or the
Operating Partnership in the event of (a) any material breach of this Advisory Agreement by the Advisor not cured by the Advisor within 30 days after written notice thereof; (b) a decree or order is rendered by a court having jurisdiction
(i) adjudging Advisor as bankrupt or insolvent, or (ii) approving as properly filed a petition seeking reorganization, readjustment, arrangement, composition or similar relief for Advisor under the federal bankruptcy laws or any similar
applicable law or practice, or (iii) appointing a receiver or liquidator or trustee or assignee in bankruptcy or insolvency of Advisor or a substantial part of the property of Advisor, or for the winding up or liquidation of its affairs; or
(c) Advisor (i) institutes proceedings to be adjudicated a voluntary bankrupt or an insolvent, (ii) consents to the filing of a bankruptcy proceeding against it, (iii) files a petition or answer or consent seeking reorganization,
readjustment, arrangement, composition or relief under any similar applicable law or practice, (iv) consents to the filing of any such petition, or to the appointment of a receiver or liquidator or trustee or assignee in bankruptcy or
insolvency for it or for a substantial part of its property, (v) makes an assignment for the benefit of creditors, (vi) is unable to or admits in writing its inability to pay its debts generally as they become due unless such inability
shall be the fault of the Operating Partnership, or (vii) takes company or other action in furtherance of any of the aforesaid purposes. 

Section 14.5 Survival. The provisions of Articles I, VI, VII and XV through XX survive termination of this Advisory
Agreement. 
 ARTICLE XV 

PAYMENTS TO AND DUTIES OF 

PARTIES UPON TERMINATION 

Section 15.1 Reimbursable Expenses and Earned Fees. After the Termination Date, the Advisor shall be entitled to
receive from the Company or the Operating Partnership within thirty (30) days after the effective date of such termination all amounts then accrued and owing to the Advisor, including all unpaid reimbursable expenses and all earned but unpaid
fees payable to the Advisor prior to termination of this Advisory Agreement. 
 Section 15.2 Advisor’s Duties Upon
Termination. The Advisor shall promptly upon termination: 

  
 19 

 (a) pay over to the Company and the Operating Partnership all money collected and held for the
account of the Company and the Operating Partnership pursuant to this Advisory Agreement, after deducting any accrued compensation and reimbursement for its expenses to which it is then entitled; 

(b) deliver to the Board a full accounting, including a statement showing all payments collected by it and a statement of all money held by
it, covering the period following the date of the last accounting furnished to the Board; 
 (c) deliver to the Board all assets, including
Properties, and documents of the Company and the Operating Partnership then in the custody of the Advisor; and 
 (d) cooperate with the
Company and the Operating Partnership to provide an orderly management transition. 
 Section 15.3 Non-Solicitation.
During the period commencing on the effective date of this Advisory Agreement and ending two years following the Termination Date, the Company shall not, without the Advisor’s prior written consent, directly or indirectly, (i) solicit or
encourage any employee, consultant, contractor or other Person performing services on behalf of the Advisor or its Affiliates to leave the employment or other service of the Advisor or any of its Affiliates, or (ii) hire or pay, directly or
indirectly, any compensation to, on behalf of the Company or any other Person, any employee, consultant, contractor or other Person performing services on behalf of the Advisor or its Affiliates who has left the employment of, or engagement by, the
Advisor or any of its Affiliates within the two-year period following the termination of that person’s employment with, or engagement by, the Advisor or any of its Affiliates. During the period commencing on the effective date of this Advisory
Agreement and ending two years following the Termination Date, the Company will not, whether for its own account or for the account of any other Person, intentionally interfere with the relationship of the Advisor or any of its Affiliates with, or
endeavor to entice away from the Advisor or any of its Affiliates, any Person who during the term of this Advisory Agreement is, or during the preceding two-year period was, a tenant, co-investor, co-developer, joint venturer or other customer of
the Advisor or any of its Affiliates. 
 ARTICLE XVI 

ASSIGNMENT TO AN AFFILIATE 

This Advisory Agreement may be assigned by the Advisor to an Affiliate with the approval of a majority of the Independent Directors. The
Advisor may assign any rights to receive fees or other payments under this Advisory Agreement without obtaining the approval of the Directors. This Advisory Agreement shall not be assigned by the Company or the Operating Partnership without the
consent of the Advisor, except in the case of an assignment by the Company or the Operating Partnership, as the case may be, to a legal entity that is a successor to all of the assets, rights and obligations of the Company or the Operating
Partnership, as the case may be, in which case such successor organization shall be bound hereunder and by the terms of said assignment in the same manner as the Company or the Operating Partnership, as the case may be, is bound by this Advisory
Agreement. 
 ARTICLE XVII 

INCORPORATION OF THE CHARTER AND THE OPERATING PARTNERSHIP 

AGREEMENT 
 To the extent
that the Charter or the Operating Partnership Agreement as in effect on the date hereof impose obligations or restrictions on the Advisor or grant the Advisor certain rights which are not set forth in this Advisory Agreement, the Advisor shall abide
by such obligations or restrictions and such rights shall inure to the benefit of the Advisor with the same force and effect as if they were set forth herein. 

  
 20 

 ARTICLE XVIII 

INDEMNIFICATION BY THE COMPANY AND THE OPERATING PARTNERSHIP 

The Company and the Operating Partnership shall indemnify and hold harmless the Advisor and its Affiliates, including their respective
officers, directors, partners and employees, from all liability, claims, damages or losses arising in the performance of their duties hereunder, and related expenses, including reasonable attorneys’ fees, to the extent such liability, claims,
damages or losses and related expenses are not fully reimbursed by insurance, subject to any limitations imposed by the laws of the State of Maryland and the State of Delaware, as applicable, and only if all of the following conditions are met: 

(a) The directors or the Advisor or its Affiliates have determined, in good faith, that the course of conduct that caused the loss or
liability was in the best interests of the Company and the Operating Partnership, as applicable; 
 (b) The Advisor or its Affiliates were
acting on behalf of or performing services for the Company or the Operating Partnership; 
 (c) Such liability or loss was not the result of
negligence or misconduct by the Advisor or its Affiliates; and 
 (d) Such indemnification or agreement to hold harmless is recoverable only
out of the Company’s net assets, including insurance proceeds, and not from its Stockholders. 
 (e) With respect to losses,
liabilities or expenses arising from or out of an alleged violation of federal or state securities laws, one or more of the following conditions are met: (i) there has been a successful adjudication on the merits of each count involving alleged
securities law violations as to the particular indemnitee; (ii) such claims have been dismissed with prejudice on the merits by a court of competent jurisdiction as to the particular indemnitee; or (iii) a court of competent jurisdiction
approves a settlement of the claims against a particular indemnitee and finds that indemnification of the settlement and the related costs should be made, and the court considering the request for indemnification has been advised of the position of
the Securities and Exchange Commission and of the published position of any state securities regulatory authority in which securities of the Company were offered or sold as to indemnification for violations of securities laws. Notwithstanding the
foregoing, the Advisor shall not be entitled to indemnification or be held harmless pursuant to this Article XVIII for any activity which the Advisor shall be required to indemnify or hold harmless the Company and the Operating Partnership pursuant
to Article XIX. 
 ARTICLE XIX 

INDEMNIFICATION BY ADVISOR 

The Advisor shall indemnify and hold harmless the Company and the Operating Partnership from contract or other liability, claims, damages,
taxes or losses and related expenses including attorneys’ fees, to the extent that such liability, claims, damages, taxes or losses and related expenses are not fully reimbursed by insurance and are incurred by reason of the Advisor’s
gross negligence, bad faith, fraud, willful misfeasance, misconduct, or reckless disregard of its duties, but Advisor shall not be held responsible for any action of the Board in declining to follow any advice or recommendation given by the Advisor.

  
 21 

 ARTICLE XX 

LIMITATION OF LIABILITY 

In no event will the parties be liable for damages based on loss of income, profit or savings or indirect, incidental, consequential,
exemplary, punitive or special damages of the other party or person, including third parties, even if such party has been advised of the possibility of such damages in advance, and all such damages are expressly disclaimed. 

ARTICLE XXI 

NOTICES 
 Any notice in
this Advisory Agreement permitted to be given, made or accepted by either party to the other, must be in writing and may be given or served by (1) overnight courier, (2) depositing the same in the United States mail, postpaid, certified,
return receipt requested, or (3) facsimile transfer. Notice deposited in the United States mail shall be deemed given when mailed. Notice given in any other manner shall be effective when received at the address of the addressee. For purposes
hereof the addresses of the parties, until changed as hereafter provided, shall be as follows: 
  

					
	To the Company:	 	Strategic Storage Trust IV, Inc.	 	
		 	Attention: H. Michael Schwartz	 	
		 	111 Corporate Drive, Suite 120	 	
		 	Ladera Ranch, California 92694	 	
		 	Fax: 949-429-6606	 	
		
	With a copy to:	 	Chairman of the Nominating and Corporate Governance Committee
		 	111 Corporate Drive, Suite 120	 	
		 	Ladera Ranch, California 92694	 	
		 	Fax: 949-429-6606	 	
		
	To the Operating Partnership:	 	Strategic Storage Operating Partnership IV, L.P.
		 	Attention: H. Michael Schwartz	 	
		 	111 Corporate Drive, Suite 120	 	
		 	Ladera Ranch, California 92694	 	
		 	Fax: 949-429-6606	 	
		
	To the Advisor:	 	Strategic Storage Advisor IV, LLC
		 	Attention: H. Michael Schwartz	 	
		 	111 Corporate Drive, Suite 120	 	
		 	Ladera Ranch, California 92694	 	
		 	Fax: 949-429-6606	 	

 Any party may at any time give notice in writing to the other party of a change in its address for the
purposes of this Article XXI. 
 ARTICLE XXII 

MODIFICATION 
 This
Advisory Agreement shall not be changed, modified, terminated, or discharged, in whole or in part, except by an instrument in writing signed by the parties hereto, or their respective successors or assignees. 

  
 22 

 ARTICLE XXIII 

SEVERABILITY 
 The
provisions of this Advisory Agreement are independent of and severable from each other, and no provision shall be affected or rendered invalid or unenforceable by virtue of the fact that for any reason any other or others of them may be invalid or
unenforceable in whole or in part. 
 ARTICLE XXIV 

CONSTRUCTION/GOVERNING LAW 

The provisions of this Advisory Agreement shall be construed and interpreted in accordance with the laws of the State of California. 

ARTICLE XXV 
 ENTIRE
AGREEMENT 
 This Advisory Agreement contains the entire agreement and understanding among the parties hereto with respect to the
subject matter hereof, and supersedes all prior and contemporaneous agreements, understandings, inducements and conditions, express or implied, oral or written, of any nature whatsoever with respect to the subject matter hereof. The express terms
hereof control and supersede any course of performance and/or usage of the trade inconsistent with any of the terms hereof. This Advisory Agreement may not be modified or amended other than by an agreement in writing. 

ARTICLE XXVI 

INDULGENCES, NOT WAIVERS 

Neither the failure nor any delay on the part of a party to exercise any right, remedy, power or privilege under this Advisory Agreement shall
operate as a waiver thereof, nor shall any single or partial exercise of any right, remedy, power or privilege preclude any other or further exercise of the same or of any other right, remedy, power or privilege, nor shall any waiver of any right,
remedy, power or privilege with respect to any occurrence be construed as a waiver of such right, remedy, power or privilege with respect to any other occurrence. No waiver shall be effective unless it is in writing and is signed by the party
asserted to have granted such waiver. 
 ARTICLE XXVII 

GENDER 
 Words used herein
regardless of the number and gender specifically used, shall be deemed and construed to include any other number, singular or plural, and any other gender, masculine, feminine or neuter, as the context requires. 

ARTICLE XXVIII 

TITLES NOT TO AFFECT INTERPRETATION 

The titles of paragraphs and subparagraphs contained in this Advisory Agreement are for convenience only, and they neither form a part of this
Advisory Agreement nor are they to be used in the construction or interpretation hereof. 

  
 23 

 ARTICLE XXIX 

EXECUTION IN COUNTERPARTS 

This Advisory Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original as against any party
whose signature appears thereon, and all of which shall together constitute one and the same instrument. This Advisory Agreement shall become binding when the counterparts hereof, taken together, bear the signatures of all of the parties reflected
hereon as the signatories. 
 ARTICLE XXX 

INITIAL INVESTMENT 
 The
Advisor has purchased 44.44 shares of Common Stock for $1,000.00. The Advisor has purchased 8,888.89 OP Units for $200,000. In addition, the Advisor may not sell any of the OP Units while the Advisor acts in such advisory capacity to the Company or
the Operating Partnership, provided, that such OP Units may be transferred to Affiliates of the Advisor. Affiliates of the Advisor may not sell any of the OP Units while the Advisor acts in such advisory capacity to the Company or the Operating
Partnership, provided, that such OP Units may be transferred to the Advisor or other Affiliates of the Advisor. The restrictions included above shall not apply to any other Securities acquired by the Advisor or its Affiliates. With respect to any
Securities owned by the Advisor, the Directors, or any of their Affiliates, neither the Advisor, nor the Directors, nor any of their Affiliates may vote or consent on matters submitted to the Stockholders regarding the removal of the Advisor,
Directors or any of their Affiliates or any transaction between the Company and any of them. In determining the requisite percentage in interest of Securities necessary to approve a matter on which the Advisor, Directors and any of their Affiliates
may not vote or consent, any Securities owned by any of them shall not be included. 
 [SIGNATURES APPEAR ON NEXT PAGE] 

  
 24 

 IN WITNESS WHEREOF, the parties hereto have executed this Advisory Agreement as of the date and
year first above written. 
  

			
	THE COMPANY:
	
	STRATEGIC STORAGE TRUST IV, INC.
		
	By:	 	 
		 	H. Michael Schwartz
		 	President and Chief Executive Officer

  

			
	THE OPERATING PARTNERSHIP:
	
	STRATEGIC STORAGE OPERATING PARTNERSHIP IV, L.P.
		
	BY:	 	STRATEGIC STORAGE TRUST IV, INC., ITS GENERAL PARTNER
		
	By:	 	 
		 	H. Michael Schwartz
		 	President and Chief Executive Officer

  

			
	THE ADVISOR:
	
	STRATEGIC STORAGE ADVISOR IV, LLC
		
	By:	 	 
		 	H. Michael Schwartz
		 	President

  
 25dhc20160721_8k.htm

Exhibit 10.1

 

 

DCP HOLDING COMPANY
EMPLOYMENT AGREEMENT

 

This Agreement (this “Agreement”) is entered into effective as of January 1, 2016 (the “Effective Date”), by and between DCP Holding Company, an Ohio corporation, with its principal offices at 100 Crowne Point Place, Cincinnati, Ohio 45241 (“Company”), and Robert C. Hodgkins, Jr. (“Employee”).

 

In consideration of the mutual obligations and promises contained herein, and intending to be legally bound, the parties hereto agree as follows:

 

1.     EMPLOYMENT. Company hereby employs Employee as an employee of Company and Employee hereby accepts such exclusive employment under the terms and conditions of this Agreement.

 

2.     TERM. Subject to the provisions in Section 7 hereof, the term of employment shall continue after the Effective Date for a period of one (1) year ending on December 31, 2016, and shall be automatically extended for successive one (1) year periods on the same terms and conditions as stated herein, unless on or prior to November 15th of any year either party provides written notice to the other party of termination of this Agreement, effective upon the expiration of the current one-year term.

 

3.     OFFICE AND DUTIES. During the term of his employment hereunder, Employee shall serve in the capacity of Vice President and Chief Financial Officer of the Company. In such capacity, Employee shall do all things necessary and incident to this position and otherwise shall perform such functions as the President and CEO of the Company may establish from time to time commensurate with Employee’s skill, position and background as reasonably determined by the President and CEO. The performance of the duties hereunder shall be performed at such reasonable time and places as shall be determined by the President and CEO. The Employee shall report directly to the President and CEO. A description of the current duties is attached hereto as Exhibit A.

 

4.     COMPENSATION AND BENEFITS. In consideration for Employee’s performance of services and the non-competition provisions as described below, and subject to modifications as may be approved from time to time by Company and Employee, Employee shall receive, during the term of this Agreement, compensation and benefits as follows:

 

(A)     Base Salary. Employee shall be paid a base annual salary in accordance with the regular payroll practices of the Company and Exhibit B of this Agreement. Employee’s base annual salary for 2016 and all subsequent years of the term of this Agreement shall not be less than $258,677.00 or such higher amount as is reflected on subsequent agreed revisions of Exhibit B.

 

(B)     Bonus. Employee will be eligible to receive an annual bonus equal to between 15% and 40% of annual base salary pursuant to the Annual Incentive Plan and a stock and cash award pursuant to the Long Term Incentive Plan in accordance with Exhibit B of this Agreement, as revised on an annual basis.

 

(C)     Employee Benefits. Employee will be eligible to participate in all health, welfare, insurance and other benefits available to all other employees of the Company.

 

(D)     Vacations. Employee shall be entitled to vacation and personal time in accordance with the Company’s PTO policy as it exists from time to time. Employee will not be permitted to receive cash in lieu of unused PTO hours except in the event of the employee’s termination.

 

 

 

 

 

(E)     Automobile Allowance. The Company will pay up to Five Hundred ($500.00) Dollars per month for the lease of an automobile of Employee’s choice and will reimburse Employee for all documented fuel costs.

 

(F)     Payroll Withholdings. Employee authorizes the Company to deduct from any payment made pursuant to Section 4 hereof all amounts required to be withheld by federal, state and/or local taxing authorities.

 

(G)     Annual Performance Review. The Employee’s performance of his duties under this Agreement shall be reviewed by the President and Chief Executive Officer at least annually and finalized within thirty (30) days of the receipt of the annual audited financial statements. The President and CEO shall additionally review the base salary, bonus and benefits provided to the Employee under this Agreement and may, in his discretion, recommend the adjustment of same, as outlined in Addendum B of this Agreement, with such adjustment subject to the approval the Board of Directors or a committee of the Board of Directors; provided, however, that Employee’s annual base salary shall not be less than the base salary set forth in Section 4(A) hereof.

 

5.     EXPENSES. Company shall pay or reimburse Employee for all travel and out-of-pocket expenses reasonably incurred or paid by Employee in connection with the performance of his duties upon presentation of expense statements or receipts or such other supporting documentation as the Company may reasonably require.

 

6.     OUTSIDE EMPLOYMENT. Employee shall devote his full time and attention to the performance of the duties incident to his position with the Company, and shall not have any other employment with any other enterprise or substantial responsibility for any enterprise which would be inconsistent with Employee’s duty to devote his full time and attention to Company matters without the prior consent of the President and CEO.

 

7.     TERMINATION AND SEVERANCE PAY.

 

(A)     Death. This Agreement shall be terminated on the death of Employee, effective as of the end of the month in which his death occurs.

 

(B)     Disability. This Agreement may be terminated, at the option of the Company, if, because of a disability, Employee is unable to perform his job responsibilities after reasonable accommodations. This section will be applied consistent with the Company’s obligations under applicable federal and state law, including the Americans with Disabilities Act Amendments Act.

 

(C)     Termination – Good Cause. Nothing in this Agreement shall be construed to prevent the Company from terminating Employee’s employment hereunder for good cause (“Good Cause”) at any time. For this purpose, Good Cause shall include the following: alcohol or other drug dependence or addiction; conviction for any crime involving moral turpitude; fraud or misrepresentation; material neglect of duty; misappropriation, embezzlement or theft of Company funds or property; conduct which is materially injurious to the reputation, business or business relationships of the Company; or material violation of Company policy or any of the provisions of this Agreement. The effective date of such termination for Good Cause shall be the date of receipt by Employee or his legal representative of written notice of the termination stating the full basis for such cause or such later date as may be specified in such notice. Termination of Employee’s employment for Good Cause shall not constitute a breach of this Agreement and Employee shall not be entitled to any compensation arising on or after the effective date of such termination. In the event the Company is sold, transferred and/or merged with or to another entity, it shall not be deemed an event of Good Cause to terminate Employee, and if the new entity elects to retain Employee, Employee may be terminated without Good Cause only in accordance with Section 7(D) of this Agreement, and the Employee may terminate this Agreement as provided in Section 7(F) of this Agreement.

 

 

 

 

 

(D)     Termination Without Good Cause – Severance Pay. The Company may, by action of the Board, terminate this Agreement without Good Cause upon the payment of the amounts described in this paragraph. If, and only if, the Company terminates this Agreement either (i) in accordance with the notice provision of Section 2 or (ii) at any time during the term of this Agreement without Good Cause, then the Employee shall be entitled to severance pay as determined herein. Employee shall receive the greater of (a) eight (8) months of severance pay or (b) one (1) month of severance pay for each month remaining under the initial or any renewal term of the Agreement. One (1) month of severance pay shall equal one month of the Employee’s base salary as in effect on the date of termination. The Company shall pay such severance pay consistent with the Company’s severance policy and practice, as it exists from time to time. All bonuses to which Employee would otherwise be eligible during the year in which an Employee’s employment is terminated shall be pro-rated through the date of termination, regardless of whether such benefit is deemed to accrue or be payable after the date of termination. Moreover, during the stated severance pay period, Employee shall continue to receive the stated benefits as described in Section 4(C), but not any benefits described in Section 4(E).

 

(E)     Termination – Good Reason. Employee’s employment with the Company may also be terminated by the Employee for Good Reason. “Good Reason” means (i) a material breach by the Company of any provision of this Agreement, which breach is not cured or offending conduct ceased by the Company within thirty (30) days after the Company receives written notice thereof from the Employee or (ii) the assignment of duties or responsibilities to the Employee by the President and CEO that are inconsistent with the Employee’s position with the Company as of the Effective Date or reflect a material diminution in the status of the Employee within the Company. In the event Employee terminates employment for Good Reason, he shall be entitled to severance pay and benefits as provided for in Section 7(D) above.

 

(F)     Change in Control. In the event that, at any time during the Employee’s employment under this Agreement, the Company experiences a Change in Control (as defined in the DCP Holding Company 2006 Dental Care Plus Management Equity Incentive Plan, as amended), then, provided that Employee shall have executed a release in the form and substance acceptable to the Company and subject to the other terms and conditions contained in this Agreement, the Employee may terminate his employment hereunder within fifteen (15) days of the occurrence of the Change in Control and, if so timely elected, shall be entitled to receive severance benefits in accordance with and subject to the terms of Section 7(D) above.

 

8.     CONFIDENTIAL INFORMATION. Employee recognizes and acknowledges that information gained by Employee while employed by the Company, including without limitation that concerning the Company’s customers, suppliers and participating providers, and the methods, techniques, devices and operations of the Company, as they may exist from time to time, are of a confidential nature and are valuable, special and unique assets of the Company’s business. Employee shall not, during the term of or after the termination of employment, disclose in any way any such confidential information to any person, firm, corporation or any other operation or entity, or use the same on the Employee’s own behalf, for any reason or purpose. Upon termination of employment, the Employee shall deliver up to the Company all lists of the Company’s customers, suppliers and participating providers, and all copies thereof (including without limitation electronically stored information), and all notes, records, memoranda, complete correspondence files and other papers, and all copies thereof (including without limitation electronically stored information) relating to the methods, techniques, devices and operations of the Company, and the Employee does not have, nor can Employee acquire, any property right therein or claim thereto or in the underlying confidential information. The parties acknowledge that the Employee has substantial skills and experience as an executive which have been enhanced during the period of his employment by the Company. The intent of this Section 8 is not to preclude Employee from using such skills and experience in other permitted employment, but only to preclude the use of those methods, techniques, devices and operations which are unique or proprietary to the Company.

 

 

 

 

 

9.     DIVERSION OF BUSINESS. The Employee shall not, during the period of employment by the Company and for a period ending six (6) months following termination of employment (for any reason), either for the Employee or on behalf of any person, firm, corporation or any other operation or entity, directly or indirectly:

 

(A)     Divert or attempt to divert from the Company any business whatsoever by influencing or attempting to influence, or soliciting or attempting to solicit any of the customers or participating providers of the Company with whom Employee may have dealt at any time or who were customers or participating providers of the Company on the date of termination of the Employee’s employment or had been customers or participating providers of the Company prior thereto; or

 

(B)     Divert or attempt to divert from the Company any person employed by the Company by influencing or attempting to influence such person to leave the Company’s employ.

 

10.     NON-COMPETITION AGREEMENT. For a period ending six (6) months from the termination of Employee’s employment with the Company for any reason, Employee hereby agrees that he will not, directly or indirectly render any services as an officer, director, employee, agent, consultant or in any other capacity to, or own any interest (other than an interest of less than five percent (5%) of the stock or a publicly held company), as an individual owner, stockholder, partner or in any other manner in any person, firm, corporation, partnership or other entity which is a competitive business (“Competitive Business”) in any standard metropolitan statistical area in which the Company has customers or participating providers or has a Certificate of Authority to do business at the time of such termination.

 

For the purpose of this Agreement, Competitive Business shall mean any business operation (including a sole proprietorship), which engages in, as all or a significant part of its business, the business of a dental insurance company or engages in any other business in competition with the Company in any geographic area in which the Company then operates.

 

11.     ACKNOWLEDGMENT. The Company and Employee each hereby acknowledge and agree as follows:

 

(A)     The covenants, restrictions, agreements and obligations set forth herein are founded upon valuable consideration, and with respect to the covenants, restrictions, agreements and obligations set forth in Sections 9 and 10 hereof, are reasonable in duration and geographic scope;

 

(B)     In the event of a breach or threatened breach by Employee of any of the covenants, restrictions, agreements and obligations set forth herein, monetary damages or the other remedies at law that may be available to the Company for such breach or threatened breach will be inadequate and, without prejudice to the Company’s right to pursue any remedies at law or in equity available to it for such breach or threatened breach, including, without limitation, the recovery of damages from Employee, the Company will be entitled to injunctive relief; and

 

(C)     In the event that the covenant not to compete contained in Section 10 is the subject of an arbitration dispute pursuant to Section 16 and is found to be invalid or unenforceable as to such time period and/or geographical area, it will be valid and enforceable in such geographical area(s) and for such time period(s) which the arbitrator(s) determine to be reasonable and enforceable. Furthermore, any period of restriction or covenant herein stated shall not include any period of violation or period of time required for arbitration or litigation to enforce such restriction or covenant.

 

 

 

 

 

12.     INDEMNIFICATION. Company shall indemnify and defend Employee for acts or omissions performed by the Employee in the scope of his employment and in a manner reasonably believed to be lawful providing that Employee’s acts or omission do not constitute gross negligence, recklessness, willful misconduct, or the intentional infliction of harm.

 

13.     ASSIGNMENT, SUCCESSORS AND ASSIGNS. This Agreement shall inure to the benefit of and be binding upon the parties hereto and their respective legal representatives, successors and assigns. The Company shall assign or otherwise transfer its rights under this Agreement to any successor or affiliated business or corporation (whether by sale or stock, merger, consolidation, sale of assets or otherwise), but this Agreement may not be assigned, nor may the duties hereunder be delegated, by Employee. In the event that the Company assigns or otherwise transfers its rights under this Agreement to any successor or affiliated business or corporation (whether by sale of stock, merger, consolidation, sale of assets or otherwise), for all purposes of this Agreement, the “Company” shall then be deemed to include the successor or affiliated business or corporation to which the Company assigned or otherwise transferred its rights hereunder. Should an ownership transfer event as described above occur, the Company may choose to terminate this Agreement, in which case Section 7(D) (Termination Without Good Cause – Severance Pay) would apply. Such action will not be deemed a Termination for Good Cause.

 

14.     NOTICE. Any notice required or which may be given under the provisions of this Agreement shall be in writing and shall be personally delivered or sent by certified mail, return receipt requested. All notices shall be deemed to have been given on the date personally delivered or, if mailed, on the date received or three (3) business days after the date of mailing, whichever is earlier. If mailed to Company, such notice shall be mailed to its then principal office. If mailed to Employee, it shall be addressed to Employee’s home address then shown on Company’s records.

 

15.     GOVERNING LAW. This Agreement shall be subject to, governed by and interpreted in accordance with the laws of the State of Ohio without regard to its rules as to conflicts of laws.

 

16.     ARBITRATION OF DISPUTES. All disputes and controversies of every kind and nature between the Company and Employee arising out of or in connection with this Agreement, including, but not limited to, the existence, validity, interpretation or meaning, performance or nonperformance, breach, continuance, termination, or any claim of discrimination by the Employee, shall be submitted to arbitration with the American Arbitration Association in Hamilton County, Ohio in accordance with its procedures and guidelines. The parties hereby agree that the decision of such arbitration shall be a binding and final decision upon the parties.

 

17.     SEVERABILITY. Each of the provisions of this Agreement shall stand independently and severally, and the invalidity of any one Section or portion thereof shall not affect the validity of any other Section. In the event any Section or portion thereof shall be construed to be invalid, no other Section of this Agreement shall be affected thereby.

 

18.     SURVIVAL. Any provision of the Agreement which imposes an obligation after termination of employment under this Agreement shall survive the termination of employment hereunder and shall be binding upon the parties hereto.

 

 

 

 

 

19.     ENTIRE AGREEMENT. This Agreement constitutes the entire agreement and understanding between the Company and Employee and shall supersede all prior oral or written statements of any kind whatsoever made by the parties with respect to the subject matter hereof, including the Long Term Compensation Agreement, dated the Effective Date, between the parties. No statement subsequent to this Agreement purporting to modify any of its terms and conditions shall be binding unless expressly agreed to in writing and signed by both the Company and Employee. The foregoing restrictions shall not apply with respect to any change by the Company of the Employee’s compensation or benefits pursuant to Section 4 or to any change in the Employee’s title or duties to which Employee has acquiesced or consented.

 

20.     WAIVER. No waiver by either party of any breach of this Agreement by the other party shall operate or be construed as a waiver of any subsequent breach of the same or any other provision. No waiver shall be effective unless in writing.

 

IN WITNESS WHEREOF, the parties have hereunto set their hands effective as of the Effective Date.

 

	
EMPLOYEE: Robert C. Hodgkins, Jr.

 

 

 

/s/ Robert C. Hodgkins, Jr.

 

Robert C. Hodgkins, Jr.

 

Date:          July 21, 2016                         
	  	
COMPANY: DCP Holding Company

 

 

 

By: /s/ Anthony A. Cook

 

Anthony A. Cook, MS, MBA

President and CEO

Date:          July 21, 2016                         

 

 

 

 

 

EXHIBIT “A”

 

DCP HOLDING COMPANY POSITION DESCRIPTION

 

	POSITION TITLE:  	Vice President and Chief Financial Officer
	 	 
	REPORTS TO: 	President and Chief Executive Officer
	 	 
	
PURPOSE:
	
Responsible for the financial management and administration of DCP Holding Company in accordance with Board policy, sound business practices, and the legal requirements of all states in which the Company is authorized to do business.

 

DUTIES AND RESPONSIBILITIES:

 

	
1.
	
ADMINISTRATIVE MANAGEMENT

 

	 	
A.
	
Participates in formulating overall mission, establishes policies and develops long-range goals, strategies and objectives to meet the mission. 

 

	 	
B.
	
Prescribes duties, limitations and responsibilities of staff through effective position descriptions, encouraging success and ongoing communication. 

 

	 	
C.
	
Maintains effective, responsive and cost conscious daily operations.

 

	 	
D.
	
Sets up and implements proper internal controls. 

 

	 	
E.
	
Involved with systems decisions to assure that financial needs are met with system changes, modifications or additions. 

 

2.      FINANCIAL 

	 	
A.
	
Directs and establishes financial strategies, objectives, and policies. 

	 	 	 
	 	B. 	Develops long-range financial plans for the organization. 

 

	 	
C.
	
Develops and coordinates necessary and appropriate accounting and statistical data and reports.

 

	 	
D.
	
Provides timely reviews of financial status and progress in its various programs and activities.

 

	 	
E.
	
Oversees the audit process for both internal and external audits. Resolves audit issues. 

 

	 	
F.
	
Identifies and analyzes financial trends and keeps management up to date on any relevant issues.

	 	 	 
	 	G.	Maintains banking relationships.  

 

3.     TAX

	 	
A.
	
Oversees the preparation of all appropriate tax returns. 

 

	 	
B.
	
Researches and keeps abreast of all current tax changes that will have potential effect on income, payroll, employment laws, COBRA changes, benefit plans and other areas. 

 

 

 

 

 

4.     BUDGET

 

	 	
A.
	
Oversees and directs the preparation of the annual and semiannual Operating and Capital budgets.

 

	 	
B.
	
Monitors cash flow projections. 

 

5.      REPORTING

 

	 	
A.
	
Manages the preparation of SEC reporting documents including 10K, 8K and quarterly filings.

 

	 	
B.
	
Works with corporate attorneys to prepare and file annual statements with SEC. 

 

	 	
C.
	
Manages the preparation and filing of Quarterly and Annual Statements with the various departments of Insurance.

 

	 	
D.
	
Serves as the Company’s chief spokesperson with A.M. BEST.

 

	 	
E.
	
Works with and helps the various committees prepare and develop their responsibilities as it relates to the Company, the SEC and the Company’s shareholders. 

 

JOB SPECIFICATIONS:

 

	 	-	Degree in relevant field of study or related equal job experience.
	 	
-
	
Five to seven years of related experience in the health/dental insurance field in a financial management position, where budgetary, policy and operational decisions have been made.

 

 

 

 

 

EXHIBIT “B”

 

ADDENDUM TO DCP HOLDING COMPANY VICE PRESIDENT AND 

CHIEF FINANCIAL OFFICER EMPLOYMENT AGREEMENT

 

The salary range of the Vice President and Chief Financial Officer shall be reviewed and adjusted annually as recommended by the President and CEO and approved by the Compensation and Benefits Committee of the Board of Directors. The Base Compensation for 2016 shall be $258,677.00.

 

	
ANNUAL INCENTIVE PLAN
	
 
	
Value 
	 	
RSUs

	
 
	
 
	
 
	 	
 

	
CASH AWARD
	
 
	
 
	 	
 

	Threshold	15% of Base	$ 38,802.00	 	 
	Target	25% of Base 	$ 64,670.00	 	 
	Stretch	35% of Base	$ 77,603.00	 	 
	Maximum	45% of Base	$103,470.00	 	 
	 	 	 	 	 
	LONG TERM INCENTIVE PLAN	 	 	 	 
	 	 	 	 	 
	A) RSU AWARD	5% of Base	$12,934.00	 	12 RSUs
	B) CASH AWARD	 	 	 	 
	Threshold	10% of Base	$25,868.00 	 	 
	Target 	15% of Base	$38,802.00	 	 
	Maximum	25% of Base	$64,670.00 	 	 

                

 

 

 

 

2016 ANNUAL LONG TERM INCENTIVE BONUS DETAIL

 

A.     Restricted Share Unit (“RSU”) Award – Retention Based

 

The stock award for DCP’s Vice President and CFO is authorized under the “DCP Holding Company Amended and Restated 2006 Dental Care Plus Management Equity Incentive Plan” (the “Management Incentive Plan”) and is subject to the “Dental Care Plus and DCP Holding Company Deferred Compensation Plan”. Stock RSUs are awarded in an amount equal to five percent (5%) of base salary and is considered “Long Term” as it vests incrementally over four years, 10% on December 31 of the first year, 20% at the end of the second year, 30% at the end of the third year and 40% at the end of the fourth year. There are no performance targets other than longevity with the Company.

 

RSU AWARD BASED ON 5% OF BASE SALARY OF $258,677.00          12 RSUs

 

B.     Cash Award – Performance Based

 

The Long Term Incentive (LTI) is a bonus designed to motivate the CFO to achieve long term success for the Company, as well as assist in the retention of the Vice President and CFO over time. LTI bonus compensation is based on achieving sustainable growth in shareholder value over a period of three years, January 1, 2016 through December 31, 2018 and is measured by the average yearly increase in the “Adjusted Share Value” (ASV) of a Common Share.

 

ADJUSTED SHARE VALUE OF A COMMON SHARE AT 12/31/2015 = $1,011.72

 

BASE SALARY 2016: $258,677.00

 

	
Level 
	
Definition
	
3yr Ave.
	
Adjusted Share Value

On 12/31/2018
	
Cash

	
 
	
 
	
 
	
 
	
 

	
Threshold 
	
10% of Base
	
8%
	
$1,274.48
	
$25,868.00

	
Target
	
15% of Base
	
10%
	
$1,346.60
	
$38,802.00

	Maximum	25% of Base	14%	$1,498.91	$64,670.00

                           

 

Notes:

 

	 	
1.
	
The ASV of a Common Share at the end of any one year shall mean the total book value of the all classes of Common Shares of the Company, as determined from the audited financial statements of the Company on the last day of business in that year, increased by: (a) the aggregate amount of all provider withhold return payments paid in that year; (b) the aggregate amount of dividends on all classes of Common Shares paid in that year; and (c) the aggregate amount of Common Share redemptions paid in that year, and decreased by the aggregate amount received from the sale of all classes of Common Shares in that year. This amount shall be divided by the total number of all classes of Common Shares outstanding on the first day of business of that year.

 

	 	
2.
	
Actual LTI compensation will be paid on a continuum between Threshold and Target levels and Target and Maximum levels.

 

	 	
3.
	
No LTI compensation will be paid if the average increase in the ASV of a Common Share is less than eight percent (8%) and no additional LTI compensation will be paid if the average increase in the ASV of a Common Share is over fourteen percent (14%).

 

 

 

 

 

	 	
4.
	
With President and CEO recommendation and approval by the Board of Directors or a committee thereof, a new multi-year performance measurement period begins each new year.

 

	 	
5.
	
In the event of a Change in Control, as defined in the Management Incentive Plan, the ASV of a Common Share as of December 31, 2018 shall be deemed to be the portion of the Enterprise Value of the Company, as defined in Article Fourth, Section 8(h)(ii)(C) of the Company’s Amended Articles of Incorporation allocated to the Common Shares divided by the total number of all classes of Common Shares outstanding as of the date on which the Change in Control occurs and the LTI bonus shall be determined as of that date and paid within thirty (30) days thereafter.

 

 

2016 ANNUAL INCENTIVE SHORT TERM BONUS DETAIL

 

The Annual Incentive (Short Term Bonus) compensation is designed to motivate the CFO to meet and/or exceed goals for budget performance on 1) 2016 Operating Revenue (OR), 2) 2016 Adjusted Net Operating Income (ANOI), and 3) Discretion/MOB (MOB). The CFO’s individual goals are established by the President and CEO and approved by the Corporate Affairs Committee. Achievement of these goals is determined at the discretion of the President and CEO with approval of the Corporate Affairs Committee. Adjusted Net Operating Income is equal to Net Operating Income plus the amount of any provider withhold return approved by the Board of Directors during 2016. These performance criteria are weighted respectively as 30%, 50% and 20% of the total Annual Incentive Short Term Bonus.

 

TOTAL OPERATING REVENUE (2016 BUDGET OF $105,928,938)

	
Level
	
Definition
	
Performance
	
2016 OR
	
Bonus paid

	
Threshold
	
15% of Base
	
90% Budget
	
$ 95,336,044
	
$ 7,760.00

	
Target
	
20% of Base
	
100% Budget
	
$ 105,928,938
	
$ 15,521.00

	
Stretch
	
30% of Base
	
115% Budget
	
$ 121,818,279
	
$ 23,281.00

	
Maximum
	
40% of Base
	
130% Budget
	
$ 137,707,619
	
$ 31,042.00

 

ADJUSTED NET OPERATING INCOME (2016 BUDGET OF $3,600,607)

	
Level
	
Definition
	
Performance
	
2016 ANOI
	
Bonus paid

	
Threshold
	
15% of Base
	
75% Budget
	
$ 2,700,455.00
	
$ 12,934.00

	
Target
	
20% of Base
	
100% Budget
	
$ 3,600,607.00
	
$ 25,868.00

	
Stretch
	
30% of Base
	
115% Budget
	
$ 4,140,698.00
	
$ 38,802.00

	
Maximum
	
40% of Base
	
130% Budget
	
$ 4,680,789.00
	
$ 51,736.00

 

DISCRETION/MOB

	
Level
	
Definition
	
Achievement
	  	
Bonus paid

	
Threshold
	
15% of Base
	
90% of Goals
	  	
$ 5,174.00

	
Target
	
20% of Base
	
103% of Goals
	  	
$ 10,347.00

	
Stretch
	
30% of Base
	
115% of Goals
	  	
$ 15,521.00

	
Maximum
	
40% of Base
	
130% of Goals
	  	
$ 20,694.00

 

Notes:

	 	
1.
	
If performance is under Threshold Level in any criteria, no bonus is paid for that criteria.

 

	 	
2.
	
No additional Bonus is paid for performance beyond Maximum Level.

 

	 	
3.
	
Actual Bonus paid is calculated and paid on a continuum between any two performance levels.

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