Exhibit 10.2

 

EXECUTIVE EMPLOYMENT AGREEMENT

 

This EXECUTIVE EMPLOYMENT AGREEMENT (“Agreement”) is made effective as of
April 20, 2011 (“Effective Date”), by and among STAG INDUSTRIAL, INC., a
Maryland corporation (“Company”), STAG INDUSTRIAL OPERATING PARTNERSHIP, L.P.
(“Partnership”), a Delaware limited partnership, and BENJAMIN S. BUTCHER
(“Executive”) to reaffirm and amend the terms and conditions of Executive’s
employment.

 

The parties agree as follows:

 

1.             Employment.  Employer (as defined below) hereby employs
Executive, and Executive hereby accepts such employment, upon the terms and
conditions set forth herein.

 

2.             Duties.

 

2.1           Position.  Executive is employed on a full-time basis as Chief
Executive Officer and President, shall report directly to the Board of Directors
of the Company (the “Board of Directors”), and shall have the duties and
responsibilities commensurate with such positions as shall be reasonably and in
good faith determined from time to time by the Board of Directors, including
such duties and responsibilities with respect to the Company, the Partnership
and/or a subsidiary of either (collectively, “Employer”).

 

2.2           Duties.  Executive shall: (i) abide by all applicable federal,
state and local laws, regulations and ordinances, and (ii) except for vacation
and illness periods, devote substantially all of his business time, energy,
skill and efforts to the performance of his duties hereunder in a manner that
will faithfully and diligently further the business interests of the Employer;
provided, that, notwithstanding the foregoing, Executive may (w) make and manage
personal business investments of his choice, subject to the limitations set
forth in Section 8 hereof, (x) serve as a director or in any other capacity of
any business enterprise, including an enterprise whose activities may involve or
relate to the Employer’s Business (as defined in Section 8), provided that such
service is expressly approved in advance by the Board of Directors, (y) serve in
any capacity with any civic, educational, religious or charitable organization,
or any governmental entity or trade association, and (z) serve as director,
officer or any other capacity in which Executive is currently serving with
respect to STAG Investments II, LLC, STAG Investments III, LLC, STAG Investments
IV, LLC and STAG GI Investments, LLC (collectively, “Funds”); provided that all
such other activities do not materially interfere with the performance of the
Executive’s duties hereunder.

 

3.             Term of Employment.  The term of this Agreement shall commence on
the Effective Date and shall continue until and including the four-year
anniversary of the Effective Date, unless earlier terminated as herein provided
(the “Initial Term”).  The Initial Term shall be automatically renewed for
successive one-year periods (each an “Extended Term”) unless either party gives
notice of non-renewal at least sixty (60) days prior to the end of the Initial
Term or any Extended Term.  As used herein, “Term” shall include the Initial
Term and any Extended Term, but the Term shall end upon any lawful termination
of Executive’s employment with Employer as herein provided.

 

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4.             Compensation.

 

4.1           Base Salary.  As compensation for Executive’s performance of
Executive’s duties as set forth herein and as hereafter determined by the
compensation committee of the Board of Directors from time to time, Employer
shall pay to Executive a base salary of $393,000 per year (“Base Salary”),
payable in accordance with the normal payroll practices of Employer, less all
legally required or authorized payroll deductions and tax withholdings.  Base
Salary shall be reviewed annually, and may be increased, at the sole discretion
of the compensation committee of the Board of Directors, in light of the
Executive’s performance and the Employer’s financial performance and other
economic conditions and relevant factors determined by the compensation
committee.

 

4.2           LTIP Units, Restricted Stock and Other Equity Awards.

 

(a)           In consideration of services to be performed by Executive for the
Partnership in his capacity as a partner thereof, upon execution of this
Agreement, the Employer shall cause to be granted to Executive at least 72,683
long-term incentive plan units (“LTIP Units”).  Such LTIP Units shall be
evidenced by, and subject to, the LTIP Unit award agreement attached to this
Agreement as Exhibit A (“LTIP Agreement”) and the Company’s 2011 Equity
Incentive Plan (a copy of which has been delivered to Executive).  In addition,
as part of the consideration for employment, Executive shall be eligible to
receive additional awards of LTIP Units and other equity awards, subject to the
terms and conditions of the Company’s 2011 Equity Incentive Plan (or such
subsequent equity plan as may be in place from time to time) and the applicable
award agreement.

 

(b)           At any time after the execution of this Agreement, as part of the
consideration for his employment as an officer of the Company, Executive shall
be eligible to receive shares of common stock (“Restricted Stock”), in such
number as the compensation committee of the Board of Directors deems
appropriate, and such Restricted Stock shall be evidenced by, and subject to, a
Restricted Stock award agreement in the form then currently in use by the
Company (“Restricted Stock Agreement”).  Such awards of Restricted Stock and any
other equity awards granted shall be subject to the terms and conditions of the
Company’s 2011 Equity Incentive Plan (or such subsequent equity plan as may be
in place from time to time) and the applicable award agreement.

 

(c)           Any LTIP Units granted to the Executive during the term of this
Agreement shall be deemed to have been granted to the Executive in consideration
of services rendered or to be rendered in Executive’s capacity as a partner of
the Partnership.

 

(d)           During the Term, the Company and the Partnership shall (and shall
cause each subsidiary that is a component Employer to) allocate the services
provided by Executive to each component Employer and compensate Executive from
the respective component Employer on a basis proportionate to the services
provided by Executive to each component Employer.  The parties confirm that
Employer shall (and intends to) require that a sufficient amount of services be
provided hereunder to the Partnership by Executive in his capacity as a partner
of the Partnership to constitute full and adequate consideration for the
issuance of LTIP Units to Executive and to the Company by Executive in his
capacity as an officer of the Company to constitute full and adequate
consideration for the issuance of Restricted Stock to Executive.

 

4.3           Bonus.  At the sole discretion of the Board of Director’s
compensation committee, Executive may be paid a bonus  (“Bonus”) relating to
each calendar year during the

 

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Term, and such discretionary Bonus, if any, shall be paid on or before March 1st
of the following year.

 

5.             Customary Fringe Benefits.  Executive shall be eligible for all
customary and usual fringe benefits generally available to full-time employees
of Employer, subject to the terms and conditions of Employer’s policies and
benefit plan documents, as the same may be amended from time to time.  Employer
reserves the right to change or eliminate the fringe benefits on a prospective
basis, at any time, effective upon notice to Executive.  In addition, Executive
shall receive an allowance for his automobile of up to $900.00 a month and an
allowance for parking costs of $500.00 a month. Notwithstanding the standard
vacation policy provisions or vacation accrual rates, Executive shall be
entitled to vacation of four weeks per year.

 

6.             Business Expenses.  Executive shall be reimbursed for all
reasonable, out-of-pocket business expenses incurred in the performance of
Executive’s duties on behalf of Employer.  To obtain reimbursement, expenses
must be submitted within one (1) month of being incurred with appropriate
supporting documentation in accordance with Employer’s policies.  All such
expenses shall be reimbursed within one (1) month of submission and, in any
event, in the same fiscal year in which they were incurred or within one
(1) month after the end of such year.

 

7.             Termination of Employment.  Subject to the terms and conditions
of this Section 7, either Company or Executive may terminate Executive’s
employment with Employer at any time, with or without Cause (as defined in
Section 7.10), during the Term.  Any termination of Executive’s employment
during the Term shall be communicated by written notice of termination from the
terminating party to the other party (“Notice of Termination”).  The Notice of
Termination shall indicate the specific provision(s) of this Agreement relied
upon in effecting the termination and a written statement of the reason(s) for
the termination.  In the case of a Notice of Termination provided by Executive
to Employer, such Notice of Termination shall not be effective for a period of
thirty (30) days after receipt of such Notice of Termination by Employer.  In
the case of a Notice of Termination provided by Company to Executive, such
Notice of Termination shall not be effective for a period of thirty (30) days
after receipt of such Notice of Termination by Executive; provided that Company
may require Executive to leave the Company’s premises and refrain from any
further business activities on behalf of the Company as of the date designated
by Company in the Notice of Termination.  If Executive’s employment is
terminated by either party, for any reason, during the Term, Employer shall pay
to the Executive the accrued and unpaid Base Salary and accrued but unused
vacation as of the date of Executive’s termination of employment.  Further, if
Executive’s employment is terminated by either party, for any reason other than
a termination by the Company for Cause or termination by Executive without Good
Reason, during the Term, Employer shall pay to the Executive an amount equal to
the product of (a) the Bonus (or deemed Bonus) referenced in
Section 7.1(a)(ii) of this Agreement multiplied by (b) a fraction, the numerator
of which is the number of days that have elapsed between the beginning of the
fiscal year in which the termination occurs and the date of termination and the
denominator of which is the number of days in the fiscal year in which the
termination occurs, such payment to be made no later than thirty (30) days
following the date of termination of Executive’s employment and shall be subject
to Executive’s execution of a general release in favor of Company, and all
subsidiary and related entities, and their officers, directors, shareholders,
employees and agents to the fullest extent permitted by law, drafted by Company
and in a form reasonably satisfactory to Company.  Except as otherwise provided
in this Section 7 and its subsections, Employer shall have no further obligation
to make or provide to Executive, and Executive shall have no further right to
receive or obtain from

 

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Employer, any payments or benefits in respect of the termination of Executive’s
employment with Employer during the Term.

 

7.1           Severance Upon Involuntary Termination without Cause.  If Company
terminates Executive’s employment with Employer without Cause (as defined in
Section 7.10)  during the Term, such termination is not in connection with
Executive’s Disability (as defined below), and such termination qualifies as a
“Separation from Service” under Section 409A (as hereinafter defined), Executive
shall be entitled to a “Severance Package” that consists of the following:

 

(a) a single cash lump-sum “Severance Payment” equal to three (3) times the sum
of (i) Executive’s annual rate of Base Salary in effect immediately prior to
Executive’s termination of employment, and (ii) the Bonus (if any) actually paid
to Executive for the most recently completed fiscal year for which the amount of
Executive’s Bonus was determined by the compensation committee of the Board of
Directors and paid (which will be deemed to be $200,000 until such time as the
compensation committee of the Board of Directors makes its first determination
regarding payment of any Bonus, which determination shall occur no later than
March 1, 2012 in respect of fiscal year 2011);

 

(b) Employer’s direct-to-insurer payment of any group health or other insurance
premiums for a period of eighteen (18) months (subject to Executive’s
eligibility for, and proper and timely election of continued group health
benefits under the Consolidated Omnibus Budget and Reconciliation Act (“COBRA”))
to continue Executive’s coverage under the Company’s group health insurance plan
and, if any, the Company’s group life and disability insurance plans;

 

(c) immediate vesting of all outstanding LTIP Units (which shall, in accordance
with the applicable award agreement, remain subject to achieving parity with
common units of limited partnership interest in the Partnership), Restricted
Stock, stock options, and other equity awards granted to Executive under any of
Employer’s equity incentive plans; and

 

(d) continuation of coverage under the Company’s liability insurance for
directors and officers with respect to any of the Executive’s actions as
Executive of the Company during the Term;

 

provided, however, that all of the following conditions are first satisfied:

 

(i) Executive reaffirms Executive’s commitment to comply with all surviving
provisions of this Agreement, including Section 9 and Section 10 hereof; and

 

(ii) Executive executes a Separation Agreement that includes a general release
in favor of Company, and all subsidiary and related entities, and their
officers, directors, shareholders, employees and agents to the fullest extent
permitted by law, drafted by Company and in a form reasonably satisfactory to
Company, and the general release becomes effective in accordance with its terms
no later than thirty (30) days following the date of termination of Executive’s
employment.

 

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The Severance Payment shall be subject to all legally required and authorized
deductions and tax withholdings and shall be paid on the date that is the
thirtieth (30th) day following the date of termination of Executive’s
employment, provided that Executive has complied with all of the
above-referenced conditions to receiving the Severance Payment. Effective
immediately upon termination of employment, Executive shall no longer be
eligible to contribute to or to be an active participant in any retirement or
benefit plan covering employees of Employer; provided, however, Executive may
effect a rollover or other transfer of his interests in any such retirement or
benefit plan in accordance with the terms of such plan and applicable law.  All
other Employer obligations to Executive shall be automatically terminated and
completely extinguished.

 

7.2           Severance Upon Resignation for Good Reason.  If Executive resigns
from employment with Employer for Good Reason (as defined in Section 7.10)
during the Term and such resignation qualifies as a “Separation from Service”
under Section 409A, Executive shall be entitled to a “Severance Package” that
consists of the following:

 

(a) a single cash lump-sum “Severance Payment” equal to three (3) times the sum
of (i) Executive’s annual rate of Base Salary in effect immediately prior to
Executive’s termination of employment, and (ii) an amount equal to the Bonus (if
any) actually paid to Executive for the most recently completed fiscal year for
which the amount of Executive’s Bonus was determined by the compensation
committee of the Board of Directors and paid (which will be deemed to be
$200,000 until such time as the compensation committee of the Board of Directors
makes its first determination regarding payment of any Bonus, which
determination shall occur no later than March 1, 2012 in respect of fiscal year
2011);

 

(b) Employer’s direct-to-insurer payment of any group health or other insurance
premiums for a period of eighteen (18) months (subject to Executive’s
eligibility for, and proper and timely election of continued group health
benefits under COBRA) to continue Executive’s coverage under the Company’s group
health insurance plan and, if any, the Company’s group life and disability
insurance plans;

 

(c) immediate vesting of all outstanding LTIP Units (which shall, in accordance
with the applicable award agreement, remain subject to achieving parity with
common units of limited partnership interest in the Partnership), Restricted
Stock, stock options, and other equity awards granted to Executive under any of
Employer’s equity incentive plans; and

 

(d) continuation of coverage under the Company’s liability insurance for
directors and officers with respect to any of the Executive’s actions as
Executive of the Company during the Term;

 

provided, however, that all of the following conditions are first satisfied:

 

(i) Executive reaffirms Executive’s commitment to comply with all surviving
provisions of this Agreement, including Section 9 and Section 10 hereof; and

 

(ii) Executive executes a Separation Agreement that includes a general release
in favor of Company, and all subsidiary and related entities, and their
officers, directors, shareholders, employees and agents to the fullest extent

 

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permitted by law, drafted by Company and in a form reasonably satisfactory to
Company, and the general release becomes effective in accordance with its terms
no later than thirty (30) days following the date of termination of Executive’s
employment.

 

The Severance Payment shall be subject to all legally required and authorized
deductions and tax withholdings and shall be paid on the thirtieth (30th) day
following the date of termination of Executive’s employment, provided that
Executive has complied with all of the above-referenced conditions to receiving
the Severance Payment. Effective immediately upon termination of employment,
Executive shall no longer be eligible to contribute to or to be an active
participant in any retirement or benefit plan covering employees of Employer;
provided, however, Executive may effect a rollover or other transfer of his
interests in any such retirement or benefit plan in accordance with the terms of
such plan and applicable law.  All other Employer obligations to Executive shall
be automatically terminated and completely extinguished.

 

7.3           Severance Upon Change of Control.   If during the last year of the
Initial Term or during any Extended Term, a “Change of Control” (as defined in
Section 7.10) occurs and the Company gives notice of non-renewal of this
Agreement within twelve (12) months following such Change of Control, Executive
shall be entitled to a “Severance Package” that consists of the following:

 

(a) a single cash lump-sum “Severance Payment” equal to three (3) times the sum
of (i) Executive’s annual rate of Base Salary in effect immediately prior to
Executive’s termination of employment, and (ii) an amount equal to the Bonus (if
any) actually paid to Executive for the most recently completed fiscal year for
which the amount of Executive’s Bonus was determined by the compensation
committee of the Board of Directors and paid (which will be deemed to be
$200,000 until such time as the compensation committee of the Board of Directors
makes its first determination regarding payment of any Bonus, which
determination shall occur no later than March 1, 2012 in respect of fiscal year
2011);

 

(b) Employer’s direct-to-insurer payment of any group health or other insurance
premiums for a period of eighteen (18) months (subject to Executive’s
eligibility for, and proper and timely election of continued group health
benefits under COBRA) to continue Executive’s coverage under the Company’s group
health insurance plan and, if any, the Company’s group life and disability
insurance plans;

 

(c) immediate vesting of all outstanding LTIP Units (which shall, in accordance
with the applicable award agreement, remain subject to achieving parity with
common units of limited partnership interest in the Partnership), Restricted
Stock, stock options, and other equity awards granted to Executive under any of
Employer’s equity incentive plans; and

 

(d) continuation of coverage under the Company’s liability insurance for
directors and officers with respect to any of the Executive’s actions as
Executive of the Company during the Term;

 

provided, however, that all of the following conditions are first satisfied:

 

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(i) Executive reaffirms Executive’s commitment to comply with all surviving
provisions of this Agreement, including Section 9 and Section 10 hereof; and

 

(ii) Executive executes a Separation Agreement that includes a general release
in favor of Company, and all subsidiary and related entities, and their
officers, directors, shareholders, employees and agents to the fullest extent
permitted by law, drafted by Company and in a form reasonably satisfactory to
Company, and the general release becomes effective in accordance with its terms
no later than thirty (30) days following the date of termination of Executive’s
employment.

 

The Severance Payment shall be subject to all legally required and authorized
deductions and tax withholdings and shall be paid on the thirtieth (30th) day
following the date of termination of Executive’s employment, provided that
Executive has complied with all of the above-referenced conditions to receiving
the Severance Payment.  Effective immediately upon termination of employment,
Executive shall no longer be eligible to contribute to or to be an active
participant in any retirement or benefit plan covering employees of Employer;
provided, however, Executive may effect a rollover or other transfer of his
interests in any such retirement or benefit plan in accordance with the terms of
such plan and applicable law.  All other Employer obligations to Executive shall
be automatically terminated and completely extinguished.

 

7.4           Beneficial Excise Tax Treatment.  In the event that any payment or
benefit received or to be received by Executive pursuant to this Agreement or
otherwise would subject Executive to any excise tax pursuant to Section 4999 of
the Code due to the characterization of such payment or benefit as an excess
parachute payment under Section 280G of the Code, Executive may elect, in his
sole discretion, to reduce the amounts of any payments or benefits called for
under this Agreement in order to avoid such characterization.  To aid Executive
in making any election called for under this Section 7.4, upon the occurrence of
any event that might reasonably be anticipated to give rise to the application
of this Section 7.4 (an “Event”), Company shall promptly request a determination
in writing by independent public accountants selected by Employer (the
“Accountants”).  Unless Company and Executive otherwise agree in writing, the
Accountants, within thirty (30) days after the date of the Event, shall
determine and report to Company and Executive whether any reduction in payments
or benefits at the election of Executive would produce a greater after-tax
benefit to Executive and shall provide to Company and Executive a written report
containing a sufficiently detailed quantitative substantiation of their analysis
and presented in a manner that Executive can readily understand.  For the
purposes of such determination, the Accountants may rely on reasonable, good
faith interpretations concerning the application of Sections 280G and 4999 of
the Code.  Company  and Executive shall furnish to the Accountants such
information and documents as the Accountants may reasonably request in order to
make their required determination.  The Company shall bear all fees and expenses
the Accountants may reasonably charge in connection with their services
contemplated by this Section 7.4.  Under no circumstances shall Executive be
entitled to any tax reimbursement or tax gross-up payment by virtue of the
occurrence of an Event or any additional payment or benefit under this
Section 7.4.

 

7.5           Section 409A Compliance.  The parties intend for this Agreement
either to satisfy the requirements of Section 409A or to be exempt from the
application of Section 409A, and this Agreement shall be construed and
interpreted accordingly.  If this Agreement either fails to satisfy the
requirements of Section 409A or is not exempt from the application of
Section 409A, then the parties hereby agree to amend or to clarify this
Agreement in a timely

 

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manner so that this Agreement either satisfies the requirements of Section 409A
or is exempt from the application of Section 409A.

 

(a)           Notwithstanding any provision in this Agreement to the contrary,
in the event that Executive is a “specified employee” (as defined in
Section 409A), any Severance Payment, severance benefits or other amounts
payable under this Agreement that would be subject to the special rule regarding
payments to “specified employees” under Section 409A(a)(2)(B) of the Code
(together, “Specified Employee Payments”) shall not be paid before the
expiration of a period of six (6) months following the date of Executive’s
termination of employment (or before the date of Executive’s death, if
earlier).  The Specified Employee Payments to which Executive would otherwise
have been entitled during the six-month period following the date of Executive’s
termination of employment shall be accumulated and paid as soon as
administratively practicable following the first date of the seventh month
following the date of Executive’s termination of employment.

 

(b)           To ensure satisfaction of the requirements of
Section 409A(b)(3) of the Code, assets shall not be set aside, reserved in a
trust or other arrangement, or otherwise restricted for purposes of the payment
of amounts payable under this Agreement.

 

(c)           Notwithstanding anything herein to the contrary, the reimbursement
of expenses or in-kind benefits provided pursuant to this Agreement shall be
subject to the following conditions: (i) the expenses eligible for reimbursement
or in-kind benefits in one taxable year shall not affect the expenses eligible
for reimbursement or in-kind benefits in any other taxable year; (ii) the
reimbursement of eligible expenses or in-kind benefits shall be made promptly,
subject to Company’s applicable policies, but in no event later than the end of
the year after the year in which such expense was incurred; and (iii) the right
to reimbursement or in-kind benefits shall not be subject to liquidation or
exchange for another benefit.

 

(d)           Employer hereby informs Executive that the federal, state, local,
and/or foreign tax consequences (including without limitation those tax
consequences implicated by Section 409A) of this Agreement are complex and
subject to change.  Executive acknowledges and understands that Executive should
consult with his or her own personal tax or financial advisor in connection with
this Agreement and its tax consequences.  Executive understands and agrees that
Employer has no obligation and no responsibility to provide Executive with any
tax or other legal advice in connection with this Agreement and its tax
consequences.  Executive agrees that Executive shall bear sole and exclusive
responsibility for any and all adverse federal, state, local, and/or foreign tax
consequences (including without limitation any and all tax liability under
Section 409A) of this Agreement to Executive.

 

7.6           Effect of Death or Disability.  If Executive dies or his
employment is terminated by Company upon his experiencing a Disability (as
defined in Section 7.10) during the Term, Executive (or his estate) shall be
entitled to payment of his accrued and unpaid Base Salary as of the date of
Executive’s death or termination of employment by the Company upon his
experiencing a Disability, a single cash lump-sum payment equal to the product
of (a) the Bonus (or deemed Bonus) referenced in Section 7.1(a)(ii) of this
Agreement multiplied by (b) a fraction, the numerator of which is the number of
days that have elapsed between the beginning of the fiscal year in which
Executive’s death or termination of his employment occurs and the date of
Executive’s death or termination of employment and the denominator of which is
the number of days in the fiscal year in which Executive’s death or termination
of employment occurs.  The payments described in the previous sentence shall be
subject to all legally required and authorized deductions and tax withholdings,
including for wage garnishments, if applicable, to the extent required or
permitted by law, and shall be paid on the thirtieth (30th) day following

 

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the date of termination of Executive’s employment.  Payment under this
Section 7.6 shall be made not more than once, if at all.

 

7.7           Employment Reference.  If Executive’s employment is terminated
without Cause, or Executive resigns for Good Reason, or this Agreement is not
renewed by Company pursuant to a Change of Control, Executive and Employer will
negotiate in good faith to reach an agreement on a neutral statement for
termination or resignation, to the extent necessary or appropriate.  This
statement will include, at minimum and as applicable, positions held, date of
hire, employment period and confirmation of salary history (if requested by
Executive).

 

7.8           Ineligibility For Severance.  For avoidance of doubt, Executive
shall not be entitled to any Severance Package under this Agreement, and none of
Sections 7.1, 7.2 and 7.3 shall apply to Executive, if at any time during the
Term, either (a) Executive voluntarily resigns or otherwise terminates
employment with Employer other than for Good Reason, or (b) Company terminates
Executive’s employment for Cause.  Effective immediately upon termination of
employment, Executive shall no longer be eligible to contribute to or to be an
active participant in any retirement or benefit plan covering employees of
Employer; provided, however, Executive may effect a rollover or other transfer
of his interests in any such retirement or benefit plan in accordance with the
terms of such plan and applicable law.  All other Employer obligations to
Executive shall be automatically terminated and completely extinguished.

 

7.9           Taxes and Withholdings.  The Employer may withhold from any
amounts payable under this Agreement, including any benefits or Severance
Payment, such federal, state or local taxes as may be required to be withheld
pursuant to applicable law or regulations, which amounts shall be deemed to have
been paid to Executive.

 

7.10         Definitions.

 

(a)           “Cause” shall mean the occurrence during the Term  of any of the
following: (i) Executive’s indictment for, formal admission to (including a plea
of guilty or nolo contendere to), or conviction of: a felony, a crime of moral
turpitude, fraud and dishonesty, breach of trust or unethical business conduct,
or any crime involving Employer, (ii) gross negligence or willful misconduct by
Executive in the performance of Executive’s duties which has materially damaged
Employer’s financial position or reputation; (iii) willful or knowing
unauthorized dissemination with the intent to cause harm by Executive of
Confidential Employer Information; (iv) repeated failure by Executive to perform
Executive’s duties that are reasonably and in good faith requested in writing by
the Board of Directors or the member of the Board of Directors authorized by it 
(the “Delegator”), and which are not substantially cured by Executive within
thirty (30) days following receipt by Executive of such written request;
(v) failure of Executive to perform any lawful and reasonable directive of the
Delegator communicated to Executive in the form of a written request from the
Delegator, which is consistent with the Employer Business, and which failure
Executive does not begin to cure within ten (10) days following receipt by
Executive of such written request or Executive has not substantially cured
within forty-five (45) days following receipt by Executive of such written
request, or (vi) material breach of this Agreement by Executive which breach has
been communicated to Executive in the form of a written notice from a Delegator,
which material breach Executive does not begin to cure within ten (10) days
following receipt by Executive of such written notice or Executive has not
substantially cured within forty-five (45) days following receipt by Executive
of such written notice.

 

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(b)                                 “Disability” shall mean the occurrence
during the Term of a medically determinable physical or mental impairment of
Executive that can be expected to result in death or can be expected to last for
a continuous period of not less than twelve (12) months and which either
(i) renders Executive unable to engage in any substantial gainful activity, with
or without leave accommodation, for a period of not less than three (3) months;
or (ii) results in Executive receiving income replacement benefits for a period
of not less than three (3) months under any policy of long-term disability
insurance that may be maintained by the Company for the benefit of its
employees.

 

(c)                                  “Change of Control” shall have the meaning
ascribed to it in the 2011 Equity Incentive Plan as of the date hereof.

 

(d)                                 “Good Reason” shall mean the occurrence
during the Term of any of the following: (i) a material breach of this Agreement
by Company which is not cured by Company within 30 days following Company’s
receipt of written notice by Executive to Company describing such alleged
breach; (ii) Executive’s Base Salary is materially reduced by Company; (iii) a
material reduction in Executive’s title, duties and/or responsibilities, or the
assignment to Executive of any duties materially inconsistent with Executive’s
position; or (iv) a material change in the Company headquarters’ geographic
location; provided, however, none of the occurrences described in (i) through
(iv) hereof shall constitute Good Reason unless within ninety (90) days of any
such occurrence Executive provides a Notice of Termination effective no more
than 31 days after receipt by the Company and specifying the occurrence.

 

(e)                                  “Section 409A” means Section 409A of the
Internal Revenue Code of 1986, as amended (the “Code”), and all applicable
regulations or guidance promulgated thereunder.

 

7.11                           Nonduplication of Benefits.  Notwithstanding any
provision in this Agreement or in any other Employer benefit plan or
compensatory arrangement to the contrary, but at all times subject to
Section 7.4, (a) any payments due under Section 7.1, Section 7.2 or Section 7.3
shall be made not more than once, if at all, (b) payments may be due under
Section 7.1, Section 7.2 or Section 7.3, but under no circumstances shall
payments be made under all of or any combination of Section 7.1, Section 7.2 and
Section 7.3, (c) no payments made under Sections 7.1, 7.2 and 7.3 this Agreement
shall be considered compensation for purposes of any benefit plan or
compensatory arrangement of Employer, and (d) Executive shall not be entitled to
severance benefits from Employer other than as contemplated under this
Agreement, unless such other severance benefits offset and reduce the benefits
due under this Agreement on a dollar-for-dollar basis, but not below zero.

 

8.                                       No Competition and No Conflict of
Interest.  Except as otherwise provided in Section 2.2 of this Agreement or as
set forth in Exhibit B to this Agreement, during the Term, Executive must not
(a) engage in any work, paid or unpaid, that creates an actual conflict of
interest with the essential business-related interests of the Employer where
such conflict would materially and substantially disrupt operations,
(b) directly or indirectly, whether as an owner, partner, stockholder,
principal, agent, employee, consultant, or in any other relationship or
capacity, engage in, or acquire any interest in any Person, corporation,
partnership or other entity (other than Company or any entity directly or
indirectly controlled by Company) engaged in the Employer Business, or (c) in
any way other than on behalf of and as an employee of Employer, act as an
officer, director, employee, consultant, shareholder, volunteer, lender, or
agent of any business enterprise engaged in the Employer Business or any
business in which Employer becomes actively engaged during the Term.  In
addition, Executive agrees not to refer any tenant or potential tenant of
Employer to competitors of Employer, without obtaining

 

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Company’s prior written consent, during the Term.  Notwithstanding the
foregoing, Executive’s passive investment in, or passive ownership of, less than
five percent (5%) of the capital stock or other equity interests of any business
entity (including a business entity engaged in the Employer Business) shall not
be treated as a breach of this Section 8.  For purposes of this Agreement, the
term “Employer Business” shall mean the acquisition, disposition, development,
redevelopment, ownership, operation, management or financing of single tenant
industrial properties in the United States, and “passive” means no employment or
involvement in management, operations or policy decisions of the business entity
and excludes any service as a director (or equivalent), manager, officer,
employee or consultant or as a general partner or managing member (or
equivalent) of the business entity

 

9.                                       Confidentiality.  During the Term,
Executive has been and will continue to be given access to a wide variety of
information about the Employer, its affiliates and other related businesses that
the Employer considers “Confidential Employer Information.”  As a condition of
continued employment, Executive agrees to abide by Employer’s business policies
and directives on confidentiality and nondisclosure of Confidential Employer
Information.  Confidential Employer Information shall mean all information
applicable to the business of the Employer which confers or may confer a
competitive advantage upon the Employer over one who does not possess the
information; and has commercial value in the business of the Employer or any
other business in which the Employer engages or is preparing to engage during
Executive’s employment with Employer.  Confidential Employer Information
includes, but is not limited to, information regarding the Employer’s business
plans and strategies; contracts and proposals (including leases and proposed
leases); artwork, designs, drawings and specifications for development and
redevelopment projects; tenants and prospective tenants; suppliers and other
business partners and Employer’s business arrangements and strategies with
respect to them; current and future marketing or advertising campaigns; software
programs; codes, underwriting models, credit analyses, formulae or techniques;
rent rolls; financial information; personnel information; and all ideas, plans,
processes or information related to the current, future and proposed projects or
other business of the Employer that has not been disclosed to the public by an
authorized representative of the Employer, acting within the scope of his or her
authority, whether or not such information would be enforceable as a trade
secret of the Employer or enjoined or restrained by a court or arbitrator as
constituting unfair competition.  Confidential Employer Information also
includes confidential information of any third party who may disclose such
information to the Employer or Executive in the course of the Employer’s
business.

 

9.1                                 Nondisclosure.  Executive acknowledges that
Confidential Employer Information constitutes valuable, special and unique
assets of the Employer’s business and that the unauthorized disclosure of such
information to competitors of the Employer, or to the general public, will be
highly detrimental to the Employer.  Executive therefore agrees to hold
Confidential Employer Information in strictest confidence.  Except as shall
occur as and to the extent that Executive performs his duties to Employer,
Executive agrees not to disclose or allow to be disclosed to any individual or
entity, other than those individuals or entities authorized by the Company, any
Confidential Employer Information that Executive has or may acquire during
Executive’s employment by Employer (whether or not developed or compiled by
Executive and whether or not Executive has been authorized to have access to
such Confidential Employer Information).

 

9.2                                 Continuing Obligation.  Executive agrees
that the agreement not to disclose Confidential Employer Information will be
effective during Executive’s employment and continue even after Executive is no
longer employed by Employer.  Any obligation not to

 

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disclose any portion of any Confidential Employer Information will continue
indefinitely unless such information (a) has become public knowledge through no
fault of Executive; or (b) has been developed independently without any
reference to any information obtained during Executive’s employment with
Employer; or (c) must be disclosed in response to a valid order by a court or
government agency or is otherwise required by law.

 

9.3                                 Return of Employer Property.  On termination
of employment with Employer for whatever reason, or at the request of the
Employer before termination, Executive agrees to promptly deliver to Employer
all records, files, computer disks, memoranda, documents, lists and other
information regarding or containing any Confidential Employer Information,
including all copies, reproductions, summaries or excerpts thereof, then in
Executive’s possession or control, whether prepared by Executive or others. 
Executive also agrees to promptly return, on termination or the Employer’s
request, any and all Employer property issued to Executive, including but not
limited to computers, cellular phones, keys and credits cards.  Executive
further agrees that should Executive discover any Employer property or
Confidential Employer Information in Executive’s possession after the return of
such property has been requested, Executive agrees to return it promptly to
Employer without retaining copies, summaries or excerpts of any kind.

 

9.4                                 No Violation of Rights of Third Parties. 
Executive warrants that the performance of all the terms of this Agreement does
not and will not breach any agreement to keep in confidence proprietary
information, knowledge or data acquired by Executive prior to Executive’s
employment with Employer.  Executive agrees not to disclose to Employer, or
induce Employer to use, any confidential or proprietary information or material
belonging to any previous employers or others.  Executive warrants that
Executive is not a party to any other agreement that will interfere with
Executive’s full compliance with this Agreement.  Executive further agrees not
to enter into any agreement, whether written or oral, in conflict with the
provisions of this Agreement while such provisions remain effective.

 

10.                                 Interference with Business Relations.

 

10.1                           Interference with Sellers, Tenants, Brokers and
Other Business Partners.  Executive acknowledges that Employer’s seller
information, tenant base, broker network, pipeline, leasing and
acquisitions/sales strategies and its other business arrangements have been
developed through substantial effort and expense, and its nonpublic business
information regarding these matters is confidential and constitutes trade
secrets.  In addition, because of Executive’s position, Executive understands
that Employer will be particularly vulnerable to significant harm from
Executive’s use of such information for purposes other than to further
Employer’s business interests.  Accordingly, Executive agrees that during
Executive’s employment with Employer, and for a period of twelve (12) months
thereafter, Executive will not, either directly or indirectly, separately or in
association with others, interfere with, impair, disrupt or damage Employer’s
relationship with any of the sellers, tenants, brokers or other business
partners of Employer with whom Executive has had contact, or conducted business,
during the Term of Employment by contacting them for the purpose of inducing or
encouraging any of them to divert or take away business from Employer.

 

10.2                           Interference with Employer’s Employees. 
Executive acknowledges that the services provided by Employer’s employees are
unique and special, and that Employer’s employees possess trade secrets and
Confidential Employer Information that is protected against misappropriation and
unauthorized use.  As such, Executive agrees that during, and for a period of
twelve (12) months after, Executive’s employment with Employer, Executive will
not, either directly or indirectly, separately or in association with others,
interfere

 

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with, impair, disrupt or damage Employer’s business by contacting any Employer
employees for the purpose of inducing or encouraging them to discontinue their
employment with Employer.

 

10.3                           Negative Information.  During the Term and
thereafter, Executive shall not disclose confidential or negative non-public
information regarding, or take any action materially detrimental to the
reputation of Employer or its directors, officers, employees, investors,
shareholders or advisors and any affiliates of any of the foregoing
(collectively, the “Employer Affiliates”);  provided, however, that nothing
contained in this Section 10.3 shall affect any legal obligation of Executive to
respond to mandatory governmental inquiries concerning the Employer Affiliates
or to act in accordance with, or to establish, his rights under this Agreement. 
Employer likewise agrees that no one acting with the actual authority of
Employer shall disclose negative non-public information regarding, or take any
action materially detrimental to the reputation of, Executive;  provided,
however, that nothing contained in this Section 10.3 shall affect any legal
obligation of the Employer Affiliates to respond to mandatory governmental
inquiries concerning Executive or to act in accordance with, or to establish,
the rights of the Employer Affiliates under this Agreement.

 

10.4                                          Post-Termination Noncompetition.
For a period of twelve (12) months following Executive’s employment with the
Employer, Executive will not engage in Competitive Activities (as hereinafter
defined). Notwithstanding any other provision herein to the contrary, this
Section 10.4 shall terminate and be null and void in the event that the Employer
terminates Executive’s employment without Cause or Executive resigns from
employment with Employer for Good Reason.  The term “Competitive Activities,”
for purposes of this Section 10.4, shall mean the taking of any of the following
actions by Executive: (a) Executive’s direct or indirect participation (for his
own account or jointly with others) in the management of, or as an employee,
board member, partner, manager, member, joint venturer, representative or other
agent of, or advisor or consultant to, any other business operation if a
material portion (either in comparison to the size of Employer’s Business or, if
smaller, to such business operation’s business) of such operation is engaging in
the Employer Business or any business in which Employer has been actively
engaged at the time of the termination of Executive’s employment with Employer
(a “Competitive Operation”); (b) Executive’s investment in, or ownership of, the
capital stock or other equity interests in any business entity that is a
Competitive Operation; or (c) Executive’s lending of funds for the purpose of
establishing or operating any Competitive Operation, or otherwise giving advice
to any Competitive Operation, or lending or allowing his name or reputation to
be used by any Competitive Operation or otherwise allowing his skill, knowledge
or experience to be so used. Notwithstanding the foregoing, Executive’s passive
investment in, or passive ownership of, up to five percent (5%) of the capital
stock or other equity interests of any business entity (including a business
entity engaged in the Employer Business) shall not be treated as a breach of
this Section 10.4.  For purposes of this Section 10.4, “Employer Business” and
“passive” have the meanings set forth in Section 8 above and “material portion”
shall mean that either (i) the total assets engaged in a Competitive Operation
exceeds 20% of such business operation’s total assets or (ii) the total assets
engaged in a Competitive Operation of such business operation equals or exceeds
20% of the Employer’s Business.  Notwithstanding the foregoing, the activities
described on Exhibit B attached hereto shall not be deemed to be Competitive
Activities.  This Section 10.4 governs the period of time following Executive’s
employment with Employer, and Section 8 above governs during the Term.

 

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11.                                 Injunctive Relief.  Executive acknowledges
that Executive’s breach of the covenants contained in Sections 8 through 10 of
this Agreement inclusive (collectively “Covenants”) would cause irreparable
injury and continuing harm to Employer for which there will be no adequate
remedy at law, and agrees that Employer shall be entitled to temporary and
preliminary injunctive relief upon a showing of a likelihood of such a breach,
and shall be entitled to permanent injunctive relief upon establishing such a
breach, to the fullest extent allowed by Massachusetts law, without the
necessity of proving irreparable harm or actual damages or of posting any bond
or other security.

 

12.                                 Agreement to Arbitrate.

 

12.1                           Mandatory Arbitration.  Any dispute or
controversy arising out of or relating to any interpretation, construction,
performance, termination or breach of this Agreement, will be settled by final
and binding arbitration by a single arbitrator to be held in Boston,
Massachusetts, in accordance with the American Arbitration Association national
rules for resolution of employment disputes then in effect, except as provided
herein.  The arbitrator selected shall have the authority to grant any party all
remedies otherwise available by law, including injunctions, but shall not have
the power to grant any remedy that would not be available in a state or federal
court.  The arbitrator shall have the authority to hear and rule on dispositive
motions (such as motions for summary adjudication or summary judgment).  The
arbitrator shall have the powers granted by Massachusetts law and the rules of
the American Arbitration Association which conducts the arbitration, except as
modified or limited herein.  In aid of arbitration, either party may seek
temporary and/or preliminary injunctive relief in the Business Litigation
Session of the Suffolk County Massachusetts Superior Court (or in a regular
session of that court if the case is not accepted into the Business Litigation
Session) at any time before an arbitration demand has been filed and served, or
before an arbitrator has been selected.

 

12.2                           Principles Governing Arbitration. 
Notwithstanding anything to the contrary in the rules of the American
Arbitration Association, the arbitration shall provide (i) for written discovery
and depositions as provided under Massachusetts law and (ii) for a written
decision by the arbitrator that includes the essential findings and conclusions
upon which the decision is based which shall be issued no later than thirty (30)
days after a dispositive motion is heard and/or an arbitration hearing has
completed.  Except in disputes where Executive asserts a claim otherwise under a
state or federal statute prohibiting discrimination in employment (a “Statutory
Discrimination Claim”), each side shall split equally the fees and
administrative costs charged by the arbitrator and American Arbitration
Association.  In disputes where Executive asserts a Statutory Discrimination
Claim against Employer, Executive shall be required to pay the American
Arbitration Association’s filing fee only to the extent such filing fee does not
exceed the fee to file a complaint in state or federal court.  Employer shall
pay the balance of the arbitrator’s fees and administrative costs.

 

12.3                           Rules Governing Arbitration.  Executive and
Employer shall have the same amount of time to file any claim against any other
party as such party would have if such a claim had been filed in state or
federal court.   In conducting the arbitration, the arbitrator shall follow the
rules of evidence of the Commonwealth of Massachusetts (including but not
limited to all applicable privileges), and the award of the arbitrator must
follow Massachusetts and/or federal law, as applicable.

 

12.4                           Selection of Arbitrator.  The arbitrator shall be
selected by the mutual agreement of the parties.  If the parties cannot agree on
an arbitrator, the parties shall

 

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alternately strike names from a list provided by the American Arbitration
Association until only one name remains.

 

12.5                           Arbitrator Decision.  The decision of the
arbitrator will be final, conclusive and binding on the parties to the
arbitration.  The parties in the arbitration shall each pay their respective
attorneys fees and one half of the costs or fees charged by the arbitrator and
the American Arbitration Association.  In disputes where Executive asserts a
Statutory Discrimination Claim, reasonable attorneys’ fees shall be awarded by
the arbitrator based on the same standard as such fees would be awarded if the
Statutory Discrimination Claim had been asserted in state or federal court. 
Judgment may be entered on the arbitrator’s decision in any court having
jurisdiction.

 

13.                                 General Provisions.

 

13.1                           Successors and Assigns.  The rights and
obligations of Employer under this Agreement shall inure to the benefit of and
shall be binding upon the successors and assigns of Employer.  The Employer will
require any successor (whether direct or indirect, by purchase, merger,
consolidation or otherwise) or assignee to all or substantially all of the
business and/or assets of the Employer to assume expressly and agree to perform
this Agreement in the same manner and to the same extent that the Employer would
be required to perform it if no such succession or assignment had taken place. 
Executive shall not be entitled to assign any of Executive’s rights or
obligations under this Agreement without Employer’s written consent.

 

13.2                           Nonexclusivity of Rights.  Except as expressly
provided in this Agreement, Executive is not prevented from continuing or future
participation in any Employer benefit, bonus, incentive or other plans,
programs, policies or practices provided by Employer subject to the terms and
conditions of such plans, programs, or practices.

 

13.3                           Waiver.  Either party’s failure to enforce any
provision of this Agreement shall not in any way be construed as a waiver of any
such provision, or prevent that party thereafter from enforcing each and every
other provision of this Agreement.

 

13.4                           Attorneys’ Fees.  Each side will bear its own
attorneys’ fees in any dispute unless a statutory section at issue, if any,
authorizes the award of attorneys’ fees to the prevailing party, and the
arbitrator awards such attorneys’ fees accordingly.

 

13.5                           Severability.  In the event any provision of this
Agreement is found to be unenforceable by an arbitrator or court of competent
jurisdiction, such provision shall be deemed modified to the extent necessary to
allow enforceability of the provision as so limited, it being intended that the
parties shall receive the benefit contemplated herein to the fullest extent
permitted by law.  If a deemed modification is not satisfactory in the judgment
of such arbitrator or court, the unenforceable provision shall be deemed
deleted, and the validity and enforceability of the remaining provisions shall
not be affected thereby.

 

13.6                           Interpretation; Construction.  The headings set
forth in this Agreement are for convenience only and shall not be used in
interpreting this Agreement.  This Agreement has been drafted by legal counsel
representing Employer, but Executive has participated in the negotiation of its
terms.  Furthermore, Executive acknowledges that Executive has had an
opportunity to review and revise the Agreement and have it reviewed by legal
counsel, if desired, and, therefore, the normal rule of construction to the
effect that any ambiguities are to

 

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be resolved against the drafting party shall not be employed in the
interpretation of this Agreement.

 

13.7                           Governing Law.  This Agreement will be governed
by and construed in accordance with the laws of the Commonwealth of
Massachusetts.  Except as and to the extent that Section 12 does not properly
apply, each party consents to the jurisdiction and venue of the state or federal
courts in Suffolk County, Massachusetts in any action, suit, or proceeding
arising out of or relating to this Agreement.

 

13.8                           Notices.  Any notice required or permitted by
this Agreement shall be in writing and shall be delivered as follows with notice
deemed given as indicated:  (a) by personal delivery when delivered personally;
(b) by overnight courier upon written verification of receipt; (c) by telecopy
or facsimile transmission upon acknowledgment of receipt of electronic
transmission; or (d) by certified or registered mail, return receipt requested,
upon verification of receipt.  Notice shall be sent to the addresses set forth
below, or such other address as either party may specify in writing.

 

13.9                           Survival.  The following provisions shall survive
Executive’s employment with Employer to the extent reasonably necessary to
fulfill the parties’ expectations in entering this Agreement:  Section 7
(“Termination of Employment”), Section 9 (“Confidentiality”), 10 (“Interference
with Business Relations”) Section 11 (“Injunctive Relief”),
Section 12 (“Agreement to Arbitrate”), Section 13 (“General Provisions”), and
Section 14 (“Entire Agreement”).

 

14.                                 Entire Agreement.  This Agreement, together
with the other agreements and documents governing the benefits described in this
Agreement, constitute the entire agreement among the parties relating to this
subject matter hereof and supersedes all prior or simultaneous representations,
discussions, negotiations, and agreements, whether written or oral.  This
Agreement may be amended or modified only with the written consent of Board of
Directors of the Company and Executive.  No oral waiver, amendment or
modification will be effective under any circumstances whatsoever.

 

THE PARTIES TO THIS AGREEMENT HAVE READ THE FOREGOING AGREEMENT AND FULLY
UNDERSTAND EACH AND EVERY PROVISION CONTAINED HEREIN. WHEREFORE, THE PARTIES
HAVE EXECUTED THIS AGREEMENT ON THE DATES SHOWN BELOW.

 

 

 

STAG INDUSTRIAL, INC.

 

 

 

 

Dated: April 20, 2011

By:

/s/ Stephen C. Mecke

 

 

Name: Stephen C. Mecke

 

 

Title: Executive Vice President

 

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STAG INDUSTRIAL OPERATING

 

  PARTNERSHIP, L.P.

 

 

 

By: STAG Industrial GP, LLC, its sole general partner

 

 

 

 

Dated: April 20, 2011

By:

/s/ Stephen C. Mecke

 

 

Name: Stephen C. Mecke

 

 

Title: Executive Vice President

 

 

 

 

 

BENJAMIN S. BUTCHER

 

 

 

 

Dated: April 20, 2011

By:

/s/ Benjamin S. Butcher

 

 

Address:

 

 

 

 

 

 

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Exhibit A

 

LTIP Unit Award Agreement

 

18

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Exhibit B

 

Exceptions to No Competition and No Conflict of Interest Obligations

 

1.               Serving as an officer, board member, management committee
member or any other position with, or performing any and all activities related
to, or having any ownership interest in a any direct or indirect member of, STAG
Investments II, LLC, its members and its subsidiaries; provided that such
entities do not engage in the Employer Business, except with respect to the
disposition, development, redevelopment, ownership, operation, management and
financing of the properties owned by such entities on the date hereof.

 

2.               Serving as an officer, board member, management committee
member or any other position with, or performing any and all activities related
to, or having any ownership interest in a any direct or indirect member of, STAG
Investments III, LLC, its members and its subsidiaries; provided that such
entities do not engage in the Employer Business, except with respect to the
disposition, development, redevelopment, ownership, operation, management and
financing of the properties and, to the extent applicable, equity interests in
the Partnership, owned by such entities on the date hereof.

 

3.               Serving as an officer, board member, management committee
member or any other position with, or performing any and all activities related
to, or having any ownership interest in a any direct or indirect member of, STAG
Investments IV, LLC, its members and its subsidiaries; provided that such
entities do not engage in the Employer Business, except with respect to the
ownership, financing and disposition of the equity interests in the Partnership
owned by such entities on the date hereof.

 

4.               Serving as an officer, board member, management committee
member or any other position with, or performing any and all activities related
to, or having any ownership interest in a any direct or indirect member of, STAG
GI Investments, LLC, its members and its subsidiaries; provided that such
entities do not engage in the Employer Business, except with respect to the
ownership, financing and disposition of the equity interests in the Partnership
owned by such entities on the date hereof.

 

5.               Serving as an officer, board member, management committee
member or any other position with, or performing any and all activities related
to, or having any ownership interest in any direct or indirect member of any
Butcher Family real estate trusts and offices; provided that such trusts and
offices do not engage in the Employer Business.

 

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