Exhibit 10.1

 

First Amendment to the

 

Amended and Restated

 

Agreement of Limited Partnership

of

STAG Industrial Operating Partnership, L.P.

 

This Amendment is made as of November 2, 2011 by and among STAG Industrial GP,
LLC, a Delaware limited liability company (the “General Partner”), as the
general partner of STAG Industrial Operating Partnership, L.P., a Delaware
limited partnership (the “Partnership”), and as attorney-in-fact for the Persons
named on Exhibit A to the Amended and Restated Agreement of Limited Partnership
of STAG Industrial Operating Partnership, L.P., dated as of April 20, 2011 (as
amended from time to time, the “Partnership Agreement”) for the purpose of
amending the Partnership Agreement. Capitalized terms used herein and not
defined shall have the meanings given to them in the Partnership Agreement.

 

WHEREAS, the Board of Directors (the “Board”) of STAG Industrial, Inc., a
Maryland corporation and the sole member of the General Partner (“STAG REIT”),
met and approved on September 15, 2011, and the Special Pricing Committee of the
Board approved by unanimous written consent on October 26, 2011, certain
resolutions classifying and designating 2,760,000 shares of Preferred Stock (as
defined in the Articles of Amendment and Restatement of STAG REIT (the
“Charter”)) as shares of Series A Preferred Stock (as defined below);

 

WHEREAS, STAG REIT filed Articles Supplementary to the Charter (the “Articles
Supplementary”) with the State Department of Assessments and Taxation of
Maryland on October 31, 2011, establishing a series of preferred stock,
designated the “9.0% Series A Cumulative Redeemable Preferred Stock” (the
“Series A Preferred Stock”);

 

WHEREAS, on November 2, 2011, STAG REIT issued 2,760,000 shares of Series A
Preferred Stock;

 

WHEREAS, the General Partner has determined that, in connection with the
issuance of the shares of Series A Preferred Stock, it is necessary and
desirable to amend the Partnership Agreement to create additional OP Units
having designations, preferences and other rights that are substantially the
same as the economic rights of the shares of Series A Preferred Stock.

 

NOW, THEREFORE, in consideration of the premises and for other good and valuable
consideration, the receipt and sufficiency of which hereby are acknowledged, the
General Partner hereby amends the Partnership Agreement as follows:

 

1.             The definition of “Percentage Interest” under Article 1 of the
Partnership Agreement is hereby deleted in its entirety and replaced with the
following:

 

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“Percentage Interest” means, as to a Partner, its interest in the Partnership as
determined by dividing the Common Units owned by such Partner by the total
number of Common Units then outstanding and as specified in Exhibit A attached
hereto, as such Exhibit may be amended from time to time.

 

2.             Article 1 of the Partnership Agreement is hereby amended by
adding the following definitions:

 

“Series A Preferred Stock” means shares of the 9.0% Series A Cumulative
Redeemable Preferred Stock, $0.01 par value per share (liquidation preference
$25.00 per share) of STAG REIT, with the preferences, liquidation and other
rights, voting powers, restrictions, limitations as to distributions,
qualifications and terms and conditions of redemption of shares as described in
the Articles Supplementary; and

 

“Series A Preferred Units” means the series of OP Units representing units of
Limited Partner Interest designated as the 9.0% Series A Cumulative Redeemable
Preferred Units, with the preferences, liquidation and other rights, voting
powers, restrictions, limitations as to distributions, qualifications and terms
and conditions of redemption of units as described herein.

 

3.             In accordance with Section 4.2(a) of the Partnership Agreement,
set forth below are the terms and conditions of the Series A Preferred Units
hereby established and issued to STAG REIT in consideration of STAG REIT’s
contribution to the Partnership of the net proceeds from the issuance and sale
of the Series A Preferred Stock by STAG REIT:

 

A.            Designation and Number

 

A series of OP Units in the Partnership designated as the “9.0% Series A
Cumulative Redeemable Preferred Units” is hereby established, with the rights,
priorities and preferences set forth herein. The number of Series A Preferred
Units shall be 2,760,000.

 

B.            Ranking

 

The Series A Preferred Units will, with respect to distribution rights and
rights upon liquidation, dissolution or winding up of the Partnership, rank
(a) senior to the Common Units and LTIP Units and to all other Partnership
Interests issued by the Partnership the terms of which specifically provide that
such Partnership Interests shall rank junior to the Series A Preferred Units;
(b) on parity with all Partnership Interests issued by the Partnership the terms
of which specifically provide that such Partnership Interests shall rank on
parity with the Series A Preferred Units; and (c) junior to all Partnership
Interests issued by the Partnership the terms of which specifically provide that
such Partnership Interests shall rank senior to the Series A Preferred Units.

 

C.            Distributions

 

(i)            Payment of Distributions. Subject to the preferential rights of
the holders of any class or series of Partnership Interests ranking senior to
the Series A Preferred Units as to distributions, holders of the Series A
Preferred Units, will be entitled to receive, when, as and if declared by the
Partnership acting through the General Partner, out of Available Cash,

 

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cumulative cash distributions at the rate of nine percent (9.0%) per annum on
the stated value of twenty-five dollars ($25.00) per unit (equivalent to a fixed
annual amount of $2.25 per unit). Such distributions shall accrue and be
cumulative from and including the first date on which any Series A Preferred
Units are issued (the “Series A Preferred Unit Original Issue Date”) and shall
be payable quarterly in arrears on each Series A Preferred Unit Distribution
Payment Date (as defined below), commencing December 30, 2011; provided, however
that if any Series A Preferred Unit Distribution Payment Date is not a Business
Day (as defined below), then the distribution which would otherwise have been
payable on such Series A Preferred Unit Distribution Payment Date may be paid on
the next succeeding Business Day, except that, if such Business Day is in the
next succeeding calendar year, such payment shall be made on the immediately
preceding Business Day, in each case with the same force and effect as if paid
on such Series A Preferred Unit Distribution Payment Date, and no interest or
additional distributions or other sums shall accrue on the amount so payable
from such Series A Preferred Unit Distribution Payment Date to such next
succeeding Business Day. The amount of any distribution payable on the Series A
Preferred Units for any Series A Preferred Unit Distribution Period (as defined
below) shall be computed on the basis of a 360-day year consisting of twelve
30-day months. Distributions will be payable to holders of record as they appear
in the records of the Partnership at the close of business on the applicable
Series A Preferred Unit Distribution Record Date (as defined below).
Notwithstanding any provision to the contrary contained herein, each outstanding
Series A Preferred Unit shall be entitled to receive a distribution with respect
to any Series A Preferred Unit Distribution Record Date equal to the
distribution paid with respect to each other Series A Preferred Unit that is
outstanding on such date. “Series A Preferred Unit Distribution Record Date”
shall mean the date designated by the Partnership for the payment of
distributions that is not more than 35 or fewer than 10 days prior to the
applicable Series A Preferred Unit Distribution Payment Date. “Series A
Preferred Unit Distribution Payment Date” shall mean the last calendar day of
each March, June, September and December, commencing on December 30, 2011.
“Series A Preferred Unit Distribution Period” shall mean the respective periods
commencing on and including the first day of January, April, July and October of
each year and ending on and including the day preceding the first day of the
next succeeding Series A Preferred Unit Distribution Period (other than the
initial Series A Preferred Unit Distribution Period, which shall commence on the
Series A Preferred Unit Original Issue Date and end on and include December 31,
2011, and other than the Series A Preferred Unit Distribution Period during
which any Series A Preferred Units shall be redeemed pursuant to Section 3.F,
which shall end on and include the day preceding the call date with respect to
the Series A Preferred Units being redeemed).  For purposes of this Section 3 of
this Amendment, “Business Day” shall mean each day, other than a Saturday or
Sunday, which is not a day on which banking institutions in New York, New York
are authorized or required by law, regulation or executive order to close.

 

(ii)           Distributions Cumulative. Notwithstanding anything contained
herein to the contrary, distributions on the Series A Preferred Units will
accrue whether or not the Partnership has earnings, whether or not there are
funds legally available for the payment of such distributions and whether or not
such distributions are authorized or declared.

 

(iii)          Priority as to Distributions

 

(a)           Except as provided in Section 3.C(iii)(b) below, no distributions
shall be declared and paid or declared and set apart for payment, and no other
distribution of

 

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cash or other property may be declared and made, directly or indirectly, on or
with respect to any Common Units, LTIP Units or any other Partnership Interests
of any other class or series ranking, as to distributions, on parity with or
junior to the Series A Preferred Units (other than a distribution paid in Common
Units, LTIP Units or any other Partnership Interests of any class or series
ranking junior to the Series A Preferred Units as to distributions and upon
liquidation) for any period, nor shall any Common Units, LTIP Units or any other
Partnership Interests of any class or series ranking, as to distributions, on
parity with or junior to the Series A Preferred Units be redeemed, purchased or
otherwise acquired for any consideration, nor shall any funds be paid or made
available for a sinking fund for the redemption of such units, and no other
distribution of cash or other property may be made, directly or indirectly, on
or with respect thereto by the Partnership (except by conversion into or
exchange for Common Units, LTIP Units or any Partnership Interests of any class
or series ranking junior to the Series A Preferred Units as to distributions and
upon liquidation, except for the redemption of Partnership Interests
corresponding to any shares of Series A Preferred Stock or any other REIT Shares
to be purchased by STAG REIT pursuant to the provisions of Article VI of the
Charter or Section 9 of the Articles Supplementary to the extent necessary to
preserve the STAG REIT’s status as a real estate investment trust,  provided
that such redemption shall be upon the same terms as the corresponding stock
purchase pursuant to the Charter or the Articles Supplementary, and except for
the redemption of Partnership Interests corresponding to the purchase or
acquisition of any shares of Series A Preferred Stock or any other shares of
capital stock of STAG REIT ranking on parity with the Series A Preferred Stock
as to payment of dividends and upon liquidation pursuant to a purchase or
exchange offer made on the same terms to holders of all outstanding shares of
Series A Preferred Stock), unless full cumulative distributions on the Series A
Preferred Units for all past Series A Preferred Unit Distribution Periods that
have ended shall have been or contemporaneously are (i) declared and paid in
cash or (ii) declared and a sum sufficient for the payment thereof in cash is
set apart for such payment.

 

(b)           When distributions are not paid in full (and a sum sufficient for
such full payment is not so set apart) on the Series A Preferred Units and any
other Partnership Interests of any class or series ranking, as to distributions,
on parity with the Series A Preferred Units, all distributions declared upon the
Series A Preferred Units and each such other Partnership Interests ranking on
parity, as to distributions, with the Series A Preferred Units shall be declared
pro rata so that the amount of distributions declared per Series A Preferred
Unit and each such other Partnership Interest shall in all cases bear to each
other the same ratio that accrued distributions per Series A Preferred Unit and
each such other Partnership Interest (which shall not include any accrual in
respect of unpaid distributions on such other class or series of Partnership
Interests for prior distribution periods if such Partnership Interests do not
have a cumulative distribution) bear to each other. No interest, or sum of money
in lieu of interest, shall be payable in respect of any distribution payment or
payments on the Series A Preferred Units which may be in arrears.

 

(iv)          No Further Rights. Holders of the Series A Preferred Units shall
not be entitled to any distributions, whether payable in cash, property or
Partnership Interests, in excess of full cumulative distributions on the
Series A Preferred Units as provided herein. Any distribution payment made on
the Series A Preferred Units shall first be credited against the earliest
accrued but unpaid distributions due with respect to such Series A Preferred
Units which remain payable. Accrued but unpaid distributions on the Series A
Preferred Units will

 

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accumulate as of the Series A Preferred Unit Distribution Payment Date on which
they first become payable.

 

D.            Allocations

 

Allocations of the Partnership’s items of income, gain, loss and deduction shall
be allocated among holders of Series A Preferred Units in accordance with
Article VI of the Partnership Agreement.

 

E.             Liquidation Proceeds

 

(i)            Distributions.  Upon any voluntary or involuntary liquidation,
dissolution or winding-up of the Partnership, distributions on the Series A
Preferred Units shall be made in accordance with Section 13.2(a) of the
Partnership Agreement.

 

(ii)           Notice. Written notice of any voluntary or involuntary
liquidation, dissolution or winding-up of the Partnership, stating the payment
date or dates when, and the place or places where, the amounts distributable in
such circumstances shall be payable, shall be given by the General Partner
pursuant to Section 13.6 of the Partnership Agreement.

 

(iii)          No Further Rights. After payment of the full amount of the
liquidating distributions to which it is entitled, the holders of Series A
Preferred Units, will have no right or claim to any of the remaining assets of
the Partnership.

 

F.             Redemption

 

In connection with any redemption by STAG REIT of any shares of Series A
Preferred Stock pursuant to Sections 5 or 6 of Article THIRD of the Articles
Supplementary, the Partnership shall redeem, on the date of such redemption, an
equal number of Series A Preferred Units held by STAG REIT in exchange for a
cash amount per unit equal to $25.00 plus any accrued but unpaid distributions
with respect to such unit to but excluding such payment date. In addition, in
the event of the liquidation, dissolution or winding up of STAG REIT prior to
the occurrence of a Liquidating Event pursuant to Section 13.1 of the
Partnership Agreement, STAG REIT shall have the right to redeem, on any payment
date established by STAG REIT for liquidating distributions to the Series A
Preferred Stock, Series A Preferred Units for an amount per unit equal to $25.00
plus any accrued but unpaid distributions with respect to such unit to but
excluding such payment date. From and after the Series A Preferred Unit
redemption date, the Series A Preferred Units so redeemed shall no longer be
outstanding, and all rights hereunder, to distributions or otherwise, with
respect to such Series A Preferred Units shall cease.

 

G.            Conversion

 

In the event of a conversion of shares of Series A Preferred Stock into REIT
Shares in accordance with the Articles Supplementary, upon conversion of such
shares of Series A Preferred Stock, the Partnership shall convert an equal whole
number of Series A Preferred Units into a number of Common Units equal to the
quotient obtained by dividing (A) the number of REIT Shares into which such
Series A Preferred Stock was converted by (B) the Conversion Factor in effect as
of the date of such conversion. In the event of a conversion of

 

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Series A Preferred Stock into REIT Shares, (a) to the extent STAG REIT is
required to pay cash in lieu of fractional REIT Shares pursuant to the Articles
Supplementary in connection with such conversion, the Partnership shall
distribute an equal amount of cash to STAG REIT; and (b) to the extent STAG REIT
receives cash proceeds in addition to the shares of Series A Preferred Stock
tendered for conversion, STAG REIT shall contribute such proceeds to the
Partnership.

 

H.            Voting Rights

 

Holders of Series A Preferred Units shall not have any voting or consent rights
in respect of their Partnership Interests represented by the Series A Preferred
Units.

 

I.              Transfer Restrictions

 

The Series A Preferred Units shall not be transferable except in accordance with
Section 11.3 of the Partnership Agreement.

 

J.             No Sinking Fund

 

No sinking fund shall be established for the retirement or redemption of
Series A Preferred Units.

 

4.             The second and third sentences of Section 4.6(a) of the
Partnership Agreement are hereby deleted in their entirety and replaced with the
following:

 

Subject to the following provisions of this Section 4.6 and the special
provisions of Sections 6.1(c), 8.7 and 8.8, LTIP Units shall be treated
as Common Units, with all of the rights, privileges and obligations attendant
thereto.  For purposes of computing the Partners’ Percentage Interests, holders
of LTIP Units shall be treated as Limited Partners and LTIP Units shall be
treated as Common Units.

 

5.             Section 6.1(a) —(c) of the Partnership Agreement is hereby
deleted in its entirety and replaced with the following:

 

Section 6.1             Allocations for Capital Account Purposes.

 

For purposes of maintaining the Capital Accounts and in determining the rights
of the Partners among themselves, the Partnership’s items of income, gain, loss
and deduction (computed in accordance with Exhibit B hereof) shall be allocated
among the Partners in each taxable year (or portion thereof) as provided herein
below.

 

(a)           After giving effect to the special allocations set forth in
Section 1 of Exhibit C attached hereto, Net Income shall be allocated to the
Partners in the following order of priority:

 

(i)            First, to the Partners that have been allocated Net Losses under
Section 6.1(b)(iv), in proportion to and to the extent of the excess, in the
case of each such Partner, of (A) the Net Loss allocated to such Partner under
Section 6.1(b)(iv), over (B) all prior allocations of Net Income to such Partner
under this Section 6.1(a)(i).

 

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(ii)           Second, to the Partners that have been allocated Net Losses under
Section 6.1(b)(iii), in proportion to and to the extent of the excess, in the
case of each such Partner, of (A) the Net Loss allocated to such Partner under
Section 6.1(b)(iii), over (B) all prior allocations of Net Income to such
Partner under this Section 6.1(a)(ii).

 

(iii)          Third, to the Partners holding Series A Preferred Units, in
proportion to and to the extent of the excess, in the case of each such Partner,
of (A) the sum of (x) the accrued preferred return payable with respect to such
Partner’s Series A Preferred Units under Section 3C(i) of this Amendment
(without regard to whether such return has actually been paid) plus (y) the
amount of all Net Losses allocated to such Partner under Section 6.1(b)(ii),
over (B) all prior allocations of Net Income to such Partner under this
Section 6.1(a)(iii).

 

(iv)          Fourth, to the Partners in accordance with their respective
Percentage Interests.

 

(b)           After giving effect to the special allocations set forth in
Section 1 of Exhibit C attached hereto, Net Losses shall be allocated to the
Partners in the following order of priority:

 

(i)            First,pro rata based on Percentage Interests, (A) to holders of
Common Units in proportion to their Percentage Interests associated with their
Common Units until the portion of their Capital Accounts attributable to their
Common Units is reduced to zero and (B) to holders of LTIP Units in proportion
to their Percentage Interests associated with their LTIP Units until the portion
of their Capital Accounts attributable to their LTIP Units is reduced to zero;.

 

(ii)           Second, to the Partners holding Series A Preferred Units, in
proportion to and to the extent of the excess, in the case of each such Partner,
of (A) the amount of all Net Profits allocated to such Partner under
Section 6.1(a)(iii) over (B) the sum of (x) the amount of all cash distributions
to that Partner under Section 3C(i) of this Amendment, plus (y) the amount of
all Net Losses previously allocated to such Partner under this
Section 6.1(b)(ii).

 

(iii)          Third, to the holders of Series A Preferred Units, in proportion
to and to the extent of their positive Capital Account balances with respect to
their Series A Preferred Units.

 

(iv)          Fourth, to the Partners in accordance with their respective
Percentage Interests.

 

In no event shall Net Losses be allocated to a Limited Partner to the extent
such allocation would result in such partner having an Adjusted Capital Account
Deficit (as determined on a per Unit basis, taking into account the portion of
the Limited Partner’s Adjusted Capital Account Deficit attributable to such
Unit) at the end of any taxable year in excess of the Adjusted Capital Account
Deficit (as determined on a per Unit basis, taking into account the portion of
the Limited Partner’s Adjusted Capital Account Deficit attributable to such
Unit) of any other Limited Partner.  All such Net Losses shall be allocated to
the other Partners in accordance with the other provisions of this
Section 6.1(b).

 

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(c)           Notwithstanding the provisions of Section 6.1(a)(iv) and
Section  6.1(b), but subject to Sections 6.1(a)(i), (ii) and (iii), any net
capital gains (computed in accordance with Exhibit B) realized in connection
with the actual or hypothetical sale of all or substantially all of the assets
of the Partnership, including but not limited to net capital gain realized in
connection with an adjustment to the Carrying Value of Partnership assets under
Section 704(b) of the Code, shall first be allocated to the LTIP Unitholders
until the aggregate Economic Capital Account Balances of such LTIP Unitholders,
to the extent attributable to their ownership of LTIP Units, are equal to the
product of (i) the OP Unit Economic Balance, multiplied by (ii) the number of
such LTIP Unitholders’ LTIP Units.

 

For this purpose, the “Economic Capital Account Balances” of the LTIP
Unitholders will be equal to their Capital Account balances, computed for book
purposes, plus the amount of their shares of any Partner Minimum Gain or
Partnership Minimum Gain, in either case to the extent attributable to their
ownership of LTIP Units.  Similarly, the “OP Unit Economic Balance” shall mean
(i) the Capital Account balance of STAG REIT, plus the amount of STAG REIT’s
share of any Partner Minimum Gain or Partnership Minimum Gain, in either case to
the extent attributable to STAG REIT’s ownership of Common Units and computed on
a hypothetical basis after taking into account all allocations through the date
on which any allocation is made under this Section 6.1(c), divided by (ii) the
number of STAG REIT’s Common Units.  Any allocations under this
Section 6.1(c) shall be made among the LTIP Unitholders in proportion to the
amounts required to be allocated to each under this Section 6.l(c).  The parties
agree that the intent of this Section 6.1(c) is to make the Capital Account
balances of the LTIP Unitholders with respect to each of their LTIP Units
economically equivalent to the Capital Account balance of STAG REIT with respect
to each of its Common Units if the Carrying Value of the Partnership’s property
has been adjusted in accordance with Exhibit B in a corresponding amount.

 

6.             Section 13.2(c) of the Partnership Agreement is hereby deleted in
its entirety and replaced with the following:

 

(c)           In the discretion of the Liquidator, a portion of the
distributions that would otherwise be made to the General Partner and Limited
Partners pursuant to this Article 13 may be:

 

(i)            distributed to a trust established for the benefit of the General
Partner and Limited Partners for the purposes of liquidating Partnership assets,
collecting amounts owed to the Partnership, and paying any contingent or
unforeseen liabilities or obligations of the Partnership or the General Partner
arising out of or in connection with the Partnership.  The assets of any such
trust shall be distributed to the General Partner and Limited Partners from time
to time, in the reasonable discretion of the Liquidator, in the same proportions
as the amount distributed to such trust by the Partnership would otherwise have
been distributed to the General Partner and Limited Partners pursuant to this
Agreement; or

 

(ii)           withheld or escrowed to provide a reasonable reserve for
Partnership liabilities (contingent or otherwise) and to reflect the unrealized
portion of any installment obligations owed to the Partnership; provided, that
such withheld or escrowed amounts shall be distributed to the General Partner
and Limited Partners in the same

 

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proportions as the amount withheld or escrowed would otherwise have be
distributed to the Partners under this Agreement.

 

The portion of any amounts otherwise distributable to the Partners that is
distributed to a trust or withheld or escrowed under this Section 13.2(c) shall
reduce the amount then distributable to each Partner in the reverse order of
priority that would apply if the amount then distributable under
Section 13.2(a)(iv) were distributed under Section 5.1, such that, for example,
any funds that would be distributable under the most junior priority under
Section 5.1 shall be the funds first distributed to a trust or withheld or
escrowed under this Section 13.2(c).

 

7.             The Partnership hereby issues 2,760,000 Series A Preferred Units
to STAG REIT.

 

8.             Except as modified herein, all terms and conditions of the
Partnership Agreement shall remain in full force and effect, which terms and
conditions the General Partner hereby ratifies and confirms.

 

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IN WITNESS WHEREOF, the undersigned has executed this Amendment as of the date
first set forth above.

 

 

 

STAG INDUSTRIAL OPERATING PARTNERSHIP, L.P.

 

 

 

By:

STAG Industrial GP, LLC, a Delaware limited liability company, its General
Partner, and attorney-in-fact of each Limited Partner

 

 

 

 

 

By:

STAG Industrial, Inc., its member

 

 

 

 

 

 

By:

/s/ Benjamin S. Butcher

 

 

Name:

Benjamin S. Butcher

 

 

Title.

Chief Executive Officer

 

[Signature page to Amendment to the Partnership Agreement]

 

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