Exhibit 10.1

 

AMENDED AND RESTATED

AGREEMENT OF LIMITED PARTNERSHIP

 

OF

 

STAG INDUSTRIAL OPERATING PARTNERSHIP, L.P.

a Delaware limited partnership

 

THE SECURITIES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR THE SECURITIES LAWS OF ANY
STATE AND MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF IN THE ABSENCE
OF SUCH REGISTRATION, UNLESS THE TRANSFEROR DELIVERS TO THE PARTNERSHIP AN
OPINION OF COUNSEL, IN FORM AND SUBSTANCE SATISFACTORY TO THE PARTNERSHIP, TO
THE EFFECT THAT THE PROPOSED SALE, TRANSFER OR OTHER DISPOSITION MAY BE EFFECTED
WITHOUT REGISTRATION UNDER THE SECURITIES ACT AND UNDER APPLICABLE STATE
SECURITIES OR “BLUE SKY” LAWS.

 

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TABLE OF CONTENTS

 

Article

 

Page

 

 

 

 

1

DEFINED TERMS

1

 

 

 

 

2

ORGANIZATIONAL MATTERS

14

 

Section 2.1

Continuation

14

 

Section 2.2

Name

14

 

Section 2.3

Registered Office and Agent; Principal Office

14

 

Section 2.4

Power of Attorney

14

 

Section 2.5

Term

16

 

Section 2.6

Partnership Interests Are Securities

16

 

 

 

 

3

PURPOSE

 

16

 

Section 3.1

Purpose and Business

16

 

Section 3.2

Powers

16

 

Section 3.3

Representations and Warranties by the Parties

17

 

Section 3.4

Not Publicly Traded

18

 

 

 

 

4

CAPITAL CONTRIBUTIONS

19

 

Section 4.1

Capital Contributions of the Partners

19

 

Section 4.2

Issuances of Additional Partnership Interests

19

 

Section 4.3

Contribution of Proceeds of Issuance of Securities by STAG REIT

20

 

Section 4.4

Additional Funds

21

 

Section 4.5

Preemptive Rights

21

 

Section 4.6

LTIP Units

21

 

 

 

 

5

DISTRIBUTIONS

24

 

Section 5.1

Requirement and Characterization of Distributions

24

 

Section 5.2

Amounts Withheld

25

 

Section 5.3

Distributions upon Liquidation

25

 

Section 5.4

Restricted Distributions

25

 

 

 

 

6

ALLOCATIONS

26

 

Section 6.1

Allocations for Capital Account Purposes

26

 

 

 

 

7

MANAGEMENT AND OPERATIONS OF BUSINESS

28

 

Section 7.1

Management

28

 

Section 7.2

Certificate of Limited Partnership

31

 

Section 7.3

Restrictions on General Partner Authority

32

 

Section 7.4

Reimbursement of the General Partner

32

 

Section 7.5

Outside Activities of the General Partner

33

 

Section 7.6

Contracts with Affiliates

33

 

Section 7.7

Indemnification

34

 

Section 7.8

Liability of the General Partner

36

 

Section 7.9

Other Matters Concerning the General Partner

37

 

Section 7.10

Title to Partnership Assets

37

 

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TABLE OF CONTENTS

(continued)

 

Article

 

Page

 

 

 

 

Section 7.11

Reliance by Third Parties

38

 

 

 

 

8

RIGHTS AND OBLIGATIONS OF LIMITED PARTNERS

38

 

Section 8.1

Limitation of Liability

38

 

Section 8.2

Management of Business

38

 

Section 8.3

Outside Activities of Limited Partners

39

 

Section 8.4

Return of Capital

39

 

Section 8.5

Rights of Limited Partners Relating to the Partnership

39

 

Section 8.6

Redemption Right

40

 

Section 8.7

Conversion of LTIP Units

42

 

Section 8.8

Voting Rights of LTIP Units

44

 

Section 8.9

Merger and Sale of Assets

45

 

 

 

 

9

BOOKS, RECORDS, ACCOUNTING AND REPORTS

45

 

Section 9.1

Records and Accounting

45

 

Section 9.2

Fiscal Year

45

 

Section 9.3

Reports

45

 

 

 

 

10

TAX MATTERS

46

 

Section 10.1

Preparation of Tax Returns

46

 

Section 10.2

Tax Elections

46

 

Section 10.3

Tax Matters Partner

46

 

Section 10.4

Organizational Expenses

48

 

Section 10.5

Withholding

48

 

 

 

 

11

TRANSFERS AND WITHDRAWALS

49

 

Section 11.1

Transfer

49

 

Section 11.2

Transfer of General Partner’s Partnership Interest

50

 

Section 11.3

Transfer of Limited Partners’ Partnership Interests

51

 

Section 11.4

Substituted Limited Partners

52

 

Section 11.5

Assignees

53

 

Section 11.6

General Provisions

53

 

 

 

 

12

ADMISSION OF PARTNERS

54

 

Section 12.1

Admission of Successor General Partner

54

 

Section 12.2

Admission of Additional Limited Partners

54

 

Section 12.3

Amendment of Agreement and Certificate of Limited Partnership

55

 

Section 12.4

Limit on Number of Partners

55

 

 

 

 

13

DISSOLUTION, LIQUIDATION AND TERMINATION

55

 

Section 13.1

Dissolution

55

 

Section 13.2

Winding Up

56

 

Section 13.3

Compliance with Timing Requirements of Regulations

58

 

Section 13.4

Deemed Contribution and Distribution

58

 

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TABLE OF CONTENTS

(continued)

 

Article

 

Page

 

 

 

 

Section 13.5

Rights of Limited Partners

58

 

Section 13.6

Notice of Dissolution

58

 

Section 13.7

Termination of Partnership and Cancellation of Certificate of Limited
Partnership

59

 

Section 13.8

Reasonable Time for Winding Up

59

 

Section 13.9

Waiver of Partition

59

 

 

 

 

14

AMENDMENT OF PARTNERSHIP AGREEMENT; MEETINGS

59

 

Section 14.1

Amendment of Partnership Agreement

59

 

Section 14.2

Meetings of the Partners

60

 

 

 

 

15

GENERAL PROVISIONS

62

 

Section 15.1

Addresses and Notice

62

 

Section 15.2

Titles and Captions

62

 

Section 15.3

Pronouns and Plurals

62

 

Section 15.4

Further Action

62

 

Section 15.5

Binding Effect

62

 

Section 15.6

Creditors

62

 

Section 15.7

Waiver

62

 

Section 15.8

Counterparts

63

 

Section 15.9

Applicable Law

63

 

Section 15.10

Invalidity of Provisions

63

 

Section 15.11

Entire Agreement

63

 

Section 15.12

No Rights as Stockholders of STAG REIT

63

 

EXHIBITS

 

Exhibit A — Partners’ Contributions and Partnership Interests

Exhibit B — Capital Account Maintenance

Exhibit C — Special Allocation Rules

Exhibit D — Notice of Redemption

Exhibit E — Constructive Ownership Definition

Exhibit F — Notice of Conversion

Exhibit G — Notice of Forced Conversion

Exhibit H — Schedule of Partners’ Ownership with Respect to Tenants

 

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AMENDED AND RESTATED

AGREEMENT OF LIMITED PARTNERSHIP

OF

STAG INDUSTRIAL OPERATING PARTNERSHIP, L.P.

 

THIS AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP OF STAG INDUSTRIAL
OPERATING PARTNERSHIP, L.P. (this “Agreement”), dated as of April 20, 2011, is
entered into by and among STAG Industrial GP, LLC, a Delaware limited liability
company (the “General Partner”), STAG Investments III, LLC, a Delaware limited
liability company (“Fund III”), STAG REIT (as defined below) and the other
Persons (as defined below) that are party hereto from time to time and whose
names are set forth on Exhibit A as attached hereto (as it may be amended from
time to time) (each, a “Limited Partner”).

 

WHEREAS, the limited partnership was formed on December 21, 2009 and an
Agreement of Limited Partnership, dated as of December 21, 2009 (the “Original
Agreement”), was entered into between the General Partner, as general partner,
and STAG REIT and STAG Investments II, LLC, a Delaware limited liability company
(“Fund II”), as the initial limited partners.

 

WHEREAS, Fund II assigned its limited partnership interest in the limited
partnership to Fund III (the General Partner, STAG REIT and Fund III
collectively, the “Initial Partners”);

 

WHEREAS, STAG REIT and the other Partners intend to consolidate the ownership
and management of a portfolio of primarily single tenant real estate assets in
STAG Industrial Operating Partnership, L.P. (the “Partnership”) through the
Initial Public Offering (as defined below) and a series of contribution
transactions involving the Limited Partners (other than STAG REIT) pursuant to
that certain Master Roll-Up Agreement as amended as of December 21, 2010 (the
“Roll-Up Agreement”) and those certain contribution agreements dated as of April
4, 2011 (each, a “Contribution Agreement” and together, the “Contribution
Agreements”);

 

WHEREAS, the Initial Partners desire to amend and restate the Original Agreement
in its entirety and enter into this Amended and Restated Agreement of Limited
Partnership of the Partnership.

 

NOW, THEREFORE, in consideration of the mutual covenants herein contained, and
other valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the foregoing recitals are incorporated into, and made a part of
this Agreement, and the parties hereto hereby further agree as follows:

 

ARTICLE 1
DEFINED TERMS

 

The following definitions shall be for all purposes, unless otherwise clearly
indicated to the contrary, applied to the terms used in this Agreement.

 

“704(c) Value” means (i) in the case of Contributed Property, the fair market
value of such Contributed Property or other consideration at the time of
contribution, and (ii) in the case

 

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of Adjusted Property, the fair market value of such Adjusted Property at the
time its carrying value is adjusted pursuant to Exhibit B, in each case as
determined by the General Partner using such reasonable method of valuation as
it may adopt.  Subject to Exhibit B hereof, the General Partner shall, in its
sole and absolute discretion, use such method as it deems reasonable and
appropriate to allocate the aggregate of the 704(c) Values of Contributed
Properties or Adjusted Properties in a single or integrated transaction among
separate properties on a basis proportional to their respective fair market
values.

 

“Act” means the Delaware Revised Uniform Limited Partnership Act, 6 Del. C.
§17-101, et seq., as it may be amended from time to time, and any successor to
such statute.

 

“Additional Funds” has the meaning set forth in Section 4.4(a) hereof.

 

“Additional Limited Partner” means a Person admitted to the Partnership as a
Limited Partner pursuant to Section 12.2 hereof and who is shown as such on the
books and records of the Partnership.

 

“Adjusted Capital Account” means the Capital Account maintained for each Partner
as of the end of each Partnership taxable year (i) increased by any amounts
which such Partner is obligated to restore pursuant to any provision of this
Agreement or is deemed to be obligated to restore pursuant to the penultimate
sentences of Regulations Sections 1.704-2(g)(l) and 1.704-2(i)(5) and
(ii) decreased by the items described in Regulations Sections
1.704-l(b)(2)(ii)(d)(4), 1.704-1(b)(2)(ii)(d)(5), and 1.704-1(b)(2)(ii)(d)(6).
The foregoing definition of Adjusted Capital Account is intended to comply with
the provisions of Regulations Section 1.704-1(b)(2)(ii)(d) and shall be
interpreted consistently therewith.

 

“Adjusted Capital Account Deficit” means, with respect to any Partner, the
deficit balance, if any, in such Partner’s Adjusted Capital Account as of the
end of the relevant Partnership taxable year.

 

“Adjusted Property” means any property, the Carrying Value of which has been
adjusted pursuant to Exhibit B hereof.

 

“Adjustment Event” means any of the following events: (i) the Partnership makes
a distribution on all outstanding OP Units in OP Units; (ii) the Partnership
subdivides the outstanding OP Units into a greater number of OP Units or
combines the outstanding OP Units into a smaller number of OP Units; or
(iii) the Partnership issues any OP Units in exchange for its outstanding OP
Units by way of a reclassification or recapitalization of its OP Units.  If more
than one Adjustment Event occurs, the adjustment to the LTIP Units under
Section 4.6(a) need be made only once using a single formula that takes into
account each and every Adjustment Event as if all Adjustment Events occurred
simultaneously.  For the avoidance of doubt, the following shall not be
Adjustment Events: (x) the issuance of OP Units in a financing, reorganization,
acquisition or other similar business transaction, (y) the issuance of OP Units
pursuant to the Plan, or any other long-term incentive plan, any employee
benefit or compensation plan or distribution reinvestment plan, or (z) the
issuance of any OP Units to STAG REIT in respect of a capital contribution to
the Partnership of proceeds from the sale of securities by STAG REIT.

 

2

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“Affiliate” means, with respect to any Person, any Person directly or indirectly
controlling, controlled by or under common control with such Person.  For the
purposes of this definition, “control” when used with respect to any Person
means the possession, directly or indirectly, of the power, alone or together,
to direct or cause the direction of the management and policies of such Person,
whether through the ownership of voting securities, by contract or otherwise,
and the terms “controlling” and “controlled” have meanings correlative to the
foregoing.

 

“Agreed Value” means (i) in the case of any Contributed Property as of the time
of its contribution to the Partnership, the 704(c) Value of such property, as
reduced by any liabilities either assumed by the Partnership upon such
contribution or to which such property is subject when contributed; and (ii) in
the case of any property distributed to a Partner by the Partnership, the
Partnership’s Carrying Value of such property at the time such property is
distributed, reduced by any indebtedness either assumed by such Partner upon
such distribution or to which such property is subject at the time of
distribution as determined under Section 752 of the Code and the Regulations
thereunder.

 

“Agreement” means this Amended and Restated Agreement of Limited Partnership of
the Partnership, as it may be amended, supplemented or restated from time to
time.

 

“Assignee” means a Person to whom all or a portion of a Partnership Interest has
been transferred in a manner permitted under this Agreement, but who has not
become a Substituted Limited Partner, and who has the rights set forth in
Section 11.5.

 

“Available Cash” means, with respect to any period for which such calculation is
being made, all cash revenues and funds received plus any reduction in reserves
and less interest and principal payments on debt, all cash expenditures
(including capital expenditures), investments in any entity and any additions to
reserves and other adjustments, as determined by the General Partner in its sole
and absolute discretion.

 

“Board of Directors” means the Board of Directors of STAG REIT.

 

“Book-Tax Disparities” means, with respect to any item of Contributed Property
or Adjusted Property, as of the date of any determination, the difference
between the Carrying Value of such Contributed Property or Adjusted Property and
the adjusted basis thereof for federal income tax purposes as of such date.  A
Partner’s share of the Partnership’s Book-Tax Disparities in all of its
Contributed Property and Adjusted Property will be reflected by the difference
between such Partner’s Capital Account balance as maintained pursuant to
Exhibit B and the hypothetical balance of such Partner’s Capital Account
computed as if it had been maintained strictly in accordance with federal income
tax accounting principles.

 

“Business Day” means any day except a Saturday, Sunday or other day on which
commercial banks in New York, New York or Boston, Massachusetts are authorized
or required by law to close.

 

“Capital Account” means the Capital Account maintained for a Partner pursuant to
Exhibit B hereof.

 

3

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“Capital Account Limitation” has the meaning set forth in Section 8.7(a).

 

“Capital Contribution” means, with respect to any Partner, any cash, cash
equivalents or the Agreed Value of Contributed Property which such Partner
contributes or is deemed to contribute to the Partnership pursuant to Sections
4.1, 4.2, or 4.3 hereof.

 

“Carrying Value” means (i) with respect to a Contributed Property or Adjusted
Property, the 704(c) Value of such property, reduced (but not below zero) by all
Depreciation with respect to such property charged to the Partners’ Capital
Accounts following the contribution of or adjustment with respect to such
property; and (ii) with respect to any other Partnership property, the adjusted
basis of such property for federal income tax purposes, all as of the time of
determination.  The Carrying Value of any property shall be adjusted from time
to time in accordance with Exhibit B hereof, and to reflect changes, additions
or other adjustments to the Carrying Value for dispositions and acquisitions of
Partnership properties, as deemed appropriate by the General Partner.

 

“Cash Amount” means an amount of cash per OP Unit equal to the Value on the
Valuation Date of the REIT Shares Amount.

 

“Certificate” means the Certificate of Limited Partnership of the Partnership as
filed in the office of the Delaware Secretary of State on December 21, 2009, as
amended and/or restated from time to time in accordance with the terms hereof
and the Act.

 

“Charter” means the charter of STAG REIT filed with the State Department of
Assessments and Taxation of the State of Maryland on July 21, 2010, as amended
and/or restated from time to time.

 

“Closing Date” means the date of consummation of the first sale of REIT Shares
pursuant to the Initial Public Offering.

 

“Code” means the Internal Revenue Code of 1986, as amended and in effect from
time to time or any successor statute thereto, as interpreted by the applicable
regulations thereunder.  Any reference herein to a specific section or sections
of the Code shall be deemed to include a reference to any corresponding
provision of future law.

 

“Common Units” means the OP Units other than any series of units of limited
partnership interest issued in the future and designated as preferred or
otherwise different from the common units, including, but not limited to, with
respect to the payment of distributions, including distributions upon
liquidation.

 

“Compensation Committee” means the Compensation Committee of the Board of
Directors.

 

“Consent” means the consent to, approval of, or vote in favor of a proposed
action by a Partner given in accordance with Section 14.2 hereof.

 

“Constituent Person” has the meaning set forth in Section 8.7(g).

 

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“Constructively Own” means ownership under the constructive ownership
rules described in Exhibit E.

 

“Contribution Agreement” and “Contribution Agreements” each has the meaning set
forth in the recitals hereto.

 

“Contributed Property” means each property or other asset, in such form as may
be permitted by the Act (but excluding cash), contributed or deemed contributed
to the Partnership.  Once the Carrying Value of a Contributed Property is
adjusted pursuant to Exhibit B hereof, such property shall no longer constitute
a Contributed Property for purposes of Exhibit B hereof, but shall be deemed an
Adjusted Property for such purposes.

 

“Conversion Date” has the meaning set forth in Section 8.7(b).

 

“Conversion Factor” means 1.0, subject to adjustment as follows: (i) in case
STAG REIT shall (A) make a distribution on the outstanding REIT Shares in REIT
Shares and the Partnership does not make a corresponding distribution with
respect to all OP Units, (B) subdivide or reclassify the outstanding REIT Shares
into a greater number of REIT Shares, or (C) combine or reclassify the
outstanding REIT Shares into a smaller number of REIT Shares, the Conversion
Factor in effect at the opening of business on the day following the date fixed
for the determination of stockholders entitled to receive such distribution or
subject to such subdivision, combination or reclassification shall be
proportionately adjusted so that a holder of OP Units shall be entitled to
receive, upon exchange thereof, the number of REIT Shares which the holder would
have owned at the opening of business on the day following the date fixed for
such determination had such OP Units been exchanged immediately prior to such
determination; (ii) in case the Partnership shall subdivide or reclassify the
outstanding OP Units into a greater number of OP Units, the Conversion Factor in
effect at the opening of business on the day following the date fixed for the
determination of OP Unit holders subject to such subdivision or reclassification
shall be proportionately adjusted so that a holder of OP Units shall be entitled
to receive, upon exchange thereof, the number of REIT Shares which the holder
would have owned at the opening of business on the day following the date fixed
for such determination had such OP Units been exchanged immediately prior to
such determination; (iii) in case the General Partner or STAG REIT distributes
any rights, options or warrants to all holders of REIT Shares to subscribe for
or to purchase or to otherwise acquire REIT Shares, or other securities or
rights convertible into, exchangeable for or exercisable for REIT Shares, at a
price per share less than the Value of a REIT Share on the record date for such
distribution (each a “Distributed Right”), then, as of the distribution date of
such Distributed Rights or, if later, the time such Distributed Rights become
exercisable, the Conversion Factor shall be adjusted by multiplying the
Conversion Factor previously in effect by a fraction (a) the numerator of which
shall be the number of REIT Shares issued and outstanding on the record date
(or, if later, the date such Distributed Rights become exercisable) plus the
maximum number of REIT Shares purchasable under such Distributed Rights and
(b) the denominator of which shall be the sum of (x) number of REIT Shares
issued and outstanding on the record date (or, if later, the date such
Distributed Rights become exercisable) plus (y) a fraction (1) the numerator of
which is the maximum number of REIT Shares purchasable under such Distributed
Rights times the minimum purchase price per REIT Share under such Distributed
Rights and (2) the denominator of which is the Value of a REIT Share as of the
record date (or, if later, the date such Distributed Rights become exercisable);

 

5

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provided, however, that, if any such Distributed Rights expire or become no
longer exercisable, then the Conversion Factor shall be adjusted, effective
retroactive to the date of distribution of the Distributed Rights, to reflect a
reduced maximum number of REIT Shares or any change in the minimum purchase
price for the purposes of the above fraction; and (iv) in case STAG REIT shall,
by distribution or otherwise, distribute to all holders of its REIT Shares,
(A) capital shares of any class other than its REIT Shares, (B) evidence of its
indebtedness or (C) assets (excluding any rights or warrants referred to in
clause (iii) above, any cash distribution lawfully paid under the laws of the
state of organization of STAG REIT, and any distribution referred to in clause
(i) above) and shall not cause a corresponding distribution to be made to all
holders of OP Units, the Conversion Factor shall be adjusted so that the same
shall equal the ratio determined by multiplying the Conversion Factor in effect
immediately prior to the close of business on the date fixed for the
determination of stockholders entitled to receive such distribution by a
fraction of which the numerator shall be the Daily Market Price per REIT Share
on the date fixed for such determination, and of which the denominator shall be
such Daily Market Price per REIT Share less the fair market value (as determined
by the Board of Directors, whose determination shall be conclusive and described
in a Board resolution certified by the Secretary of STAG REIT and delivered to
the holders of the OP Units) of the portion of the capital shares or evidences
of indebtedness or assets so distributed applicable to one REIT Share, such
adjustment to become effective immediately prior to the opening of business on
the day following the date fixed for the determination of stockholders entitled
to receive such distribution.

 

“Conversion Notice” has the meaning set forth in Section 8.7(b).

 

“Conversion Right” has the meaning set forth in Section 8.7(a).

 

“Covered Person” has the meaning set forth in Section 7.8(a).

 

“Daily Market Price” means, with respect to a Trading Day, the last sale price
for REIT Shares, or, in case no such sale takes place on such day, the average
of the closing bid and asked prices for REIT Shares, in either case as reported
in the principal consolidated transaction reporting system with respect to
securities listed or admitted to trading on the New York Stock Exchange or, if
such REIT Shares are not listed or admitted to trading on the New York Stock
Exchange, as reported on the principal consolidated transaction reporting system
with respect to securities listed on the principal national securities exchange
on which such REIT Shares are listed or admitted to trading or, if such REIT
Shares are not listed or admitted to trading on any national securities
exchange, the last quoted price, or, if not so quoted, the average of the high
bid and low asked prices in the over-the-counter market, as reported by the
principal automated quotation system that may then be in use or, if such REIT
Shares are not quoted by any such organization, the average of the closing bid
and asked prices as furnished by a professional market maker making a market in
such REIT Shares selected by the Board of Directors or, in the event that no
trading price is available for such REIT Shares, the fair market value of the
REIT Shares, as determined in good faith by the Board of Directors.

 

“Debt” means, as to any Person, as of any date of determination; (i) all
indebtedness of such Person for borrowed money or for the deferred purchase
price of property or services; (ii) all amounts owed by such Person to banks or
other Persons in respect of reimbursement obligations under letters of credit,
surety bonds and other similar instruments guaranteeing

 

6

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payment or other performance of obligations by such Person; (iii) all
indebtedness for borrowed money or for the deferred purchase price of property
or services secured by any lien on any property owned by such Person, to the
extent attributable to such Person’s interest in such property, even though such
Person has not assumed or become liable for the payment thereof; and
(iv) obligations of such Person incurred in connection with entering into a
lease which, in accordance with GAAP, should be capitalized.

 

“Depreciation” means, for each taxable year or other period, an amount equal to
the federal income tax depreciation, amortization, or other cost recovery
deduction allowable with respect to an asset for such year or other period,
except that if the Carrying Value of an asset differs from its adjusted basis
for federal income tax purposes at the beginning of such year or other period,
“Depreciation” shall be an amount which bears the same ratio to the beginning
Carrying Value of such asset as the federal income tax depreciation,
amortization, or other cost recovery deduction for such year or other period
bears to the beginning adjusted tax basis of such asset; provided, however, that
if the federal income tax depreciation, amortization, or other cost recovery
deduction for such year or other period is zero, Depreciation shall be
determined with reference to the beginning Carrying Value of such asset using
any reasonable method selected by the General Partner.

 

“Distributed Right” shall have the meaning set forth in subsection (iii) of the
definition of “Conversion Factor.”

 

“Distribution Payment Date” means the dates upon which the General Partner makes
distributions in accordance with Section 5.1 of this Agreement.

 

“Economic Capital Account Balances” has the meaning set forth in Section 6.1(c).

 

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended
and in effect from time to time, as interpreted by the applicable regulations
thereunder.  Any reference herein to a specific section or Title of ERISA shall
be deemed to include a reference to any corresponding provision of future law.

 

“Event of Bankruptcy” has the meaning set forth in Section 13.1(g).

 

“Exchange Act” means the Securities Exchange Act of 1934, as amended, and any
successor statute thereto, and the rules and regulations of the Securities and
Exchange Commission promulgated thereunder.

 

“final adjustment” has the meaning set forth in Section 10.3(b)(ii).

 

“flow through entity” has the meaning set forth in Section 3.3(c)(iii).

 

“Forced Conversion” has the meaning set forth in Section 8.7(c).

 

“Forced Conversion Notice” has the meaning set forth in Section 8.7(d).

 

“Fund II” has the meaning set forth in the recitals hereto.

 

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“Funding Debt” means any Debt incurred by or on behalf of the General Partner or
STAG REIT for the purpose of providing funds to the Partnership.

 

“GAAP” means U.S. generally accepted accounting principles.

 

“General Partner” means STAG Industrial GP, LLC, a Delaware limited liability
company, or any Person who becomes an additional or a successor general partner
of the Partnership.  STAG Industrial, GP, LLC is wholly-owned by the STAG REIT,
and is an entity that is disregarded as separate from its sole owner for federal
income tax purposes under Treas. Reg. Section 301.7701-3.

 

“General Partner Interest” means a Partnership Interest held by the General
Partner, in its capacity as general partner of the Partnership.  A General
Partner Interest may be (but is not required to be) expressed as a number of OP
Units.

 

“Incapacity” or “Incapacitated” means, (i) as to any individual Partner, death,
total physical disability or entry by a court of competent jurisdiction
adjudicating him incompetent to manage his Person or his estate; (ii) as to any
corporation which is a Partner, the filing of a certificate of dissolution, or
its equivalent, for the corporation or the revocation of its charter; (iii) as
to any partnership or limited liability company which is a Partner, the
dissolution and commencement of winding up of the partnership or limited
liability company; (iv) as to any estate which is a Partner, the distribution by
the fiduciary of the estate’s entire interest in the Partnership; (v) as to any
trustee of a trust which is a Partner, the termination of the trust (but not the
substitution of a new trustee); or (vi) as to any Partner, the bankruptcy of
such Partner. For purposes of this definition, bankruptcy of a Partner shall be
deemed to have occurred when (a) the Partner commences a voluntary proceeding
seeking liquidation, reorganization or other relief under any bankruptcy,
insolvency or other similar law now or hereafter in effect; (b) the Partner is
adjudged as bankrupt or insolvent, or a final and non-appealable order for
relief under any bankruptcy, insolvency or similar law now or hereafter in
effect has been entered against the Partner; (c) the Partner executes and
delivers a general assignment for the benefit of the Partner’s creditors;
(d) the Partner files an answer or other pleading admitting or failing to
contest the material allegations of a petition filed against the Partner in any
proceeding of the nature described in clause (b) above; (e) the Partner seeks,
consents to or acquiesces in the appointment of a trustee, receiver or
liquidator for the Partner or for all or any substantial part of the Partner’s
properties; (f) any proceeding seeking liquidation, reorganization or other
relief of or against such Partner under any bankruptcy, insolvency or other
similar law now or hereafter in effect has not been dismissed within one hundred
twenty (120) days after the commencement thereof; (g) the appointment without
the Partner’s consent or acquiescence of a trustee, receiver or liquidator has
not been vacated or stayed within ninety (90) days of such appointment; or
(h) an appointment referred to in clause (g) which has been stayed is not
vacated within ninety (90) days after the expiration of any such stay.

 

“Indemnitee” means (i) any Person made, or threatened to be made, a party to a
proceeding by reason of (a) his or its status as the General Partner, or as a
trustee, director, officer, stockholder, partner, member, employee,
representative or agent of STAG REIT or the General Partner or any of their
Subsidiaries or as an officer, employee, representative or agent of the
Partnership or (b) his or its liabilities, pursuant to a loan guarantee or
otherwise, for any

 

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indebtedness of the Partnership or any Subsidiary of the Partnership (including,
without limitation, any indebtedness which the Partnership or any Subsidiary of
the Partnership has assumed or taken assets subject to); and (ii) such other
Persons (including Affiliates or employees of STAG REIT, the General Partner or
the Partnership) as the General Partner may designate from time to time (whether
before or after the event giving rise to potential liability), in its sole and
absolute discretion.

 

“Initial Partners” has the meaning set forth in the recitals hereto.

 

“Initial Public Offering” means the initial public offering of REIT Shares under
the Securities Act pursuant to that certain underwriting agreement, dated April
15, 2011 among STAG REIT, the Partnership and the underwriters named therein.

 

“Initial REIT Capitalization” means the issuance of one hundred ten (110) REIT
Shares by STAG REIT for cash on July 21, 2010, constituting the initial
capitalization of STAG REIT.

 

“IRS” means the Internal Revenue Service, which administers the internal revenue
laws of the United States.

 

“Limited Partner” means any Person named as a limited partner of the Partnership
in Exhibit A attached hereto, as such Exhibit may be amended from time to time,
or any Substituted Limited Partner or Additional Limited Partner, in such
Person’s capacity as a limited partner of the Partnership.  For purposes of this
Agreement and the Act, the Limited Partners shall constitute a single class or
group of limited partners.  The initial Limited Partners are Fund III and STAG
REIT.

 

“Limited Partner Interest” means a Partnership Interest of a Limited Partner in
the Partnership representing a fractional part of the Partnership Interests of
all Partners and includes any and all benefits to which the holder of such a
Partnership Interest may be entitled, as provided in this Agreement, together
with all obligations of such Person to comply with the terms and provisions of
this Agreement.  A Limited Partner Interest may be (but is not required to be)
expressed as a number of OP Units.

 

“Liquidating Event” has the meaning set forth in Section 13.1.

 

“Liquidator” has the meaning set forth in Section 13.2.

 

“LTIP Unit” means an OP Unit which is designated as an “LTIP Unit,” which
represents a profits interest in future appreciation and certain distributions
of Available Cash, and which has the rights, preferences and other privileges
designated in Section 4.6 hereof and elsewhere in this Agreement and in the Plan
in respect of LTIP Unitholders.  The allocation of LTIP Units among the Partners
shall be set forth on Exhibit A, as may be amended from time to time by the
General Partner.

 

“LTIP Unit Agreement” means each or any, as the context implies, LTIP unit
agreement entered into by an LTIP Unitholder and the Partnership upon acceptance
of an award of LTIP

 

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Units under the Plan (as such agreement may be amended, modified or supplemented
from time to time).

 

“LTIP Unitholder” means a Person that holds LTIP Units.

 

“Management Company” means STAG Industrial Management, LLC, a Delaware limited
liability company and a wholly owned Subsidiary of the Partnership, and any
successor thereto, provided that such successor continues to manage or advise
the General Partner.

 

“Net Income” means, for any taxable period, the excess, if any, of the
Partnership’s items of income and gain for such taxable period over the
Partnership’s items of loss and deduction for such taxable period.  The items
included in the calculation of Net Income shall be determined in accordance with
federal income tax accounting principles, subject to the specific adjustments
provided for in Section l(b) of Exhibit B.

 

“Net Loss” means, for any taxable period, the excess, if any, of the
Partnership’s items of loss and deduction for such taxable period over the
Partnership’s items of income and gain for such taxable period.  The items
included in the calculation of Net Loss shall be determined in accordance with
federal income tax accounting principles, subject to the specific adjustments
provided for in Section l(b) of Exhibit B.

 

“New Securities” has the meaning set forth in Section 4.2(b) hereof.

 

“Nonrecourse Deductions” has the meaning set forth in Regulations
Section 1.704-2(b)(l), and the amount of Nonrecourse Deductions for a
Partnership taxable year shall be determined in accordance with the rules of
Regulations Section 1.704-2(c).

 

“Nonrecourse Liability” has the meaning set forth in Regulations
Section 1.752-l(a)(2).

 

“Notice of Redemption” means the Notice of Redemption substantially in the form
of Exhibit D to this Agreement.

 

“OP Unit” means a fractional, undivided share of the Partnership Interests of
all Partners issued pursuant to Sections 4.1, 4.2 and 4.3.  The number of OP
Units outstanding and the Percentage Interest in the Partnership represented by
such OP Units are set forth in Exhibit A attached hereto, as such Exhibit may be
amended from time to time.  The ownership of some or all of the OP Units shall
be evidenced by such form of certificate for units as the General Partner adopts
from time to time unless the General Partner determines that the OP Units shall
be uncertificated securities.

 

“OP Unit Economic Balance” has the meaning set forth in Section 6.1(c).

 

“Original Agreement” has the meaning set forth in the recitals hereto.

 

“Partner” means the General Partner or a Limited Partner, and “Partners” means
the General Partner and the Limited Partners collectively.

 

“Partner Minimum Gain” means an amount, with respect to each Partner Nonrecourse
Debt, equal to the Partnership Minimum Gain that would result if such Partner
Nonrecourse Debt

 

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were treated as a Nonrecourse Liability, determined in accordance with
Regulations Section 1.704-2(i)(3).

 

“Partner Nonrecourse Debt” has the meaning set forth in Regulations
Section 1.704-2(b)(4).

 

“Partner Nonrecourse Deductions” has the meaning set forth in Regulations
Section 1.704-2(i)(2), and the amount of Partner Nonrecourse Deductions with
respect to a Partner Nonrecourse Debt for a Partnership taxable year shall be
determined in accordance with the rules of Regulations Section 1.704-2(i)(2).

 

“Partnership” means STAG Industrial Operating Partnership, L.P., a limited
partnership heretofore formed and continued under the Act and pursuant to this
Agreement, and any successor thereto.

 

“Partnership Interest” means an ownership interest in the Partnership held by
either a Limited Partner or the General Partner and includes any and all
benefits to which the holder of such a Partnership Interest may be entitled as
provided in this Agreement, together with all obligations of such Person to
comply with the terms and provisions of this Agreement.  There may be one or
more classes or series of Partnership Interests.  A Partnership Interest may be
(but is not required to be) expressed as a number of OP Units.

 

“Partnership Minimum Gain” has the meaning set forth in Regulations
Section 1.704-2(b)(2), and the amount of Partnership Minimum Gain, as well as
any net increase or decrease in a Partnership Minimum Gain, for a Partnership
taxable year shall be determined in accordance with the rules of Regulations
Section 1.704-2(d).

 

“Partnership Record Date” means the record date established by the General
Partner for the distribution of Available Cash pursuant to Section 5.1 hereof,
which record date shall be the same as the record date established by STAG REIT
for a distribution to its stockholders of some or all of its portion of such
distribution.

 

“Partnership Year” means the fiscal year of the Partnership, which shall be the
calendar year.

 

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

 

“Person” means an individual or a real estate investment trust, corporation,
partnership, limited liability company, trust, unincorporated organization,
association or other entity.

 

“Plan” means the STAG Industrial, Inc. 2010 Equity Incentive Plan, as such plan
may be amended from time to time.

 

“Plan Asset Regulation” has the meaning set forth in Section 7.9(e) hereof.

 

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“Recapture Income” means any gain recognized by the Partnership upon the
disposition of any property or asset of the Partnership, which gain is
characterized as ordinary income because it represents the recapture of
deductions previously taken with respect to such property or asset.

 

“Redeeming Partner” has the meaning set forth in Section 8.6(a) hereof.

 

“Redemption Right” has the meaning set forth in Section 8.6(a) hereof.

 

“Regulations” means the Income Tax Regulations promulgated under the Code, as
such regulations may be amended from time to time (including corresponding
provisions of succeeding regulations).

 

“REIT” means a real estate investment trust under Section 856 of the Code.

 

“REIT Share” means a share of common stock, par value $0.01 per share, of STAG
REIT.

 

“REIT Share Offering” means a primary offering by STAG REIT of its REIT Shares,
including, without limitation, the Initial Public Offering and any other
offerings.

 

“REIT Shares Amount” means a number of REIT Shares equal to the product of the
number of OP Units offered for redemption by a Redeeming Partner, multiplied by
the Conversion Factor in effect as of the specified redemption date; provided,
that, in the event that STAG REIT or the General Partner issues to all holders
of REIT Shares and not to holders of OP Units as of a certain record date
Distributed Rights, with the record date for such Distributed Rights issuance
falling within the period starting on the date of the Notice of Redemption and
ending on the day immediately preceding the Specified Redemption Date, which
Distributed Rights have not expired or are still exercisable as of the relevant
Specified Redemption Date, then the REIT Shares Amount shall also include such
Distributed Rights that a holder of that number of REIT Shares would be entitled
to receive, expressed, where relevant hereunder, in a number of REIT Shares
determined by the General Partner.

 

“Residual Gain” or “Residual Loss” means any item of gain or loss, as the case
may be, of the Partnership recognized for federal income tax purposes resulting
from a sale, exchange or other disposition of Contributed Property or Adjusted
Property, to the extent such item of gain or loss is not allocated pursuant to
Section 2(b)(i)(A) or 2(b)(ii)(A) of Exhibit C to eliminate Book-Tax
Disparities.

 

“Roll-Up Agreement” has the meaning set forth in the recitals hereto.

 

“Securities Act” means the Securities Act of 1933, as amended, and any successor
statute thereto, and the rules and regulations of the Securities and Exchange
Commission promulgated thereunder.

 

“Specified Redemption Date” means the tenth (10th) Business Day after receipt by
the Partnership of a Notice of Redemption; provided, that if STAG REIT combines
its outstanding

 

12

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REIT Shares, no Specified Redemption Date shall occur after the record date of
such combination of REIT Shares and prior to the effective date of such
combination.

 

“STAG REIT” means STAG Industrial, Inc., a Maryland corporation and the sole
member of the General Partner, and any successor thereto.

 

“Subsidiary” means, with respect to any Person, any real estate investment
trust, corporation, partnership, limited liability company or other entity of
which a majority of (i) the voting power of the voting equity securities; or
(ii) the outstanding equity interests, is owned, directly or indirectly, by such
Person.

 

“Substituted Limited Partner” means a Person who is admitted as a Limited
Partner to the Partnership pursuant to Section 11.4.

 

“Tenant” means any tenant from which STAG REIT derives rent either directly or
indirectly through partnerships or limited liability companies, including
through the General Partner and the Partnership.

 

“Terminating Capital Transaction” means any sale or other disposition of all or
substantially all of the assets of the Partnership or a related series of
transactions that, taken together, result in the sale or other disposition of
all or substantially all of the assets of the Partnership.

 

“Trading Days” means days on which the primary trading market for REIT Shares,
if any, is open for trading.

 

“Transaction” has the meaning set forth in Section 8.7(g).

 

“Unrealized Gain” attributable to any item of Partnership property means, as of
any date of determination, the excess, if any, of (i) the fair market value of
such property (as determined under Exhibit B hereof) as of such date; over
(ii) the Carrying Value of such property (prior to any adjustment to be made
pursuant to Exhibit B hereof) as of such date.

 

“Unrealized Loss” attributable to any item of Partnership property means, as of
any date of determination, the excess, if any, of (i) the Carrying Value of such
property (prior to any adjustment to be made pursuant to Exhibit B hereof) as of
such date; over (ii) the fair market value of such property (as determined under
Exhibit B hereof) as of such date.

 

“Unvested LTIP Units” has the meaning set forth in Section 4.6(b)(i).

 

“Valuation Date” means the date of receipt by the General Partner of a Notice of
Redemption or, if such date is not a Business Day, the first Business Day
thereafter.

 

“Value” means, on any Valuation Date with respect to a REIT Share, the average
of the Daily Market Price for the ten (10) consecutive Trading Days immediately
preceding the Valuation Date.

 

“Vested LTIP Units” has the meaning set forth in Section 4.6(b)(i).

 

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ARTICLE 2

ORGANIZATIONAL MATTERS

 

Section 2.1             Continuation.

 

The Partners hereby continue the Partnership as a limited partnership under and
pursuant to the Act.  Except as expressly provided herein to the contrary, the
rights and obligations of the Partners and the administration and termination of
the Partnership shall be governed by the Act.  The Partnership Interest of each
Partner shall be personal property for all purposes.

 

Section 2.2             Name.

 

The name of the Partnership heretofore formed and continued hereby shall be
“STAG Industrial Operating Partnership, L.P.”.  The Partnership’s business may
be conducted under any other name or names deemed advisable by the General
Partner, including the name of the General Partner or any Affiliate thereof. 
The words “Limited Partnership,” “LP”, “L.P.,” “Ltd.” or similar words or
letters shall be included in the Partnership’s name where necessary for the
purposes of complying with the laws of any jurisdiction that so requires.  The
General Partner in its sole and absolute discretion may change the name of the
Partnership at any time and from time to time and shall notify the Limited
Partners of such change in the next regular communication to the Limited
Partners.

 

Section 2.3             Registered Office and Agent; Principal Office.

 

The address of the registered office of the Partnership in the State of Delaware
and the name and address of the registered agent for service of process on the
Partnership in the State of Delaware is The Corporation Trust Company,
Corporation Trust Center, 1209 Orange Street, Wilmington, Delaware 19801.  The
principal office of the Partnership shall be c/o STAG Industrial, Inc., 99
Chauncy Street, 10th Floor, Boston, MA 02111, or such other place as the General
Partner may from time to time designate by notice to the Limited Partners.  The
Partnership may maintain offices at such other place or places within or outside
the State of Delaware as the General Partner deems advisable.

 

Section 2.4             Power of Attorney.

 

(a)           Each Limited Partner and each Assignee hereby irrevocably
constitutes and appoints the General Partner, any Liquidator, and authorized
officers and attorneys-in-fact of each, and each of those acting singly, in each
case with full power of substitution, as its true and lawful agent and
attorney-in-fact, with full power and authority in its name, place and stead to:

 

(i)            execute, swear to, acknowledge, deliver, file and record in the
appropriate public offices (A) all certificates, documents and other instruments
(including, without limitation, this Agreement and the Certificate and all
amendments, supplements or restatements thereof) that the General Partner or the
Liquidator deems appropriate or necessary to form, qualify or continue the
existence or qualification of the Partnership as a limited partnership (or a
partnership in which the Limited Partners have limited liability to the extent
provided by applicable law) in the State of Delaware and in all other
jurisdictions in which the Partnership may or plans to conduct business or own
property; (B) all instruments that the

 

14

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General Partner deems appropriate or necessary to reflect any amendment, change,
modification or restatement of this Agreement in accordance with the terms of
this Agreement; (C) all conveyances and other instruments or documents that the
General Partner or the Liquidator deems appropriate or necessary to reflect the
dissolution and liquidation of the Partnership pursuant to the terms of this
Agreement, including, without limitation, a certificate of cancellation; (D) all
conveyances and other instruments or documents that the General Partner or the
Liquidator deems appropriate or necessary to reflect the distribution or
exchange of assets of the Partnership pursuant to the terms of this Agreement;
(E) all instruments relating to the admission, withdrawal, removal or
substitution of any Partner pursuant to, or other events described in,
Article 11, 12 or 13 hereof or the Capital Contribution of any Partner; and
(F) all certificates, documents and other instruments relating to the
determination of the rights, preferences and privileges of Partnership
Interests; and

 

(ii)           execute, swear to, seal, acknowledge and file all ballots,
consents, approvals, waivers, certificates and other instruments appropriate or
necessary, in the sole and absolute discretion of the General Partner or any
Liquidator, to make, evidence, give, confirm or ratify any vote, consent,
approval, agreement or other action which is made or given by the Partners
hereunder or is consistent with the terms of this Agreement or appropriate or
necessary, in the sole discretion of the General Partner or any Liquidator, to
effectuate the terms or intent of this Agreement.

 

Nothing contained herein shall be construed as authorizing the General Partner
or any Liquidator to amend this Agreement except in accordance with Article 14
hereof or as may be otherwise expressly provided for in this Agreement.

 

(b)           The foregoing power of attorney is hereby declared to be
irrevocable and a power coupled with an interest, in recognition of the fact
that each of the Partners will be relying upon the power of the General Partner
and any Liquidator to act as contemplated by this Agreement in any filing or
other action by it on behalf of the Partnership, and it shall survive and not be
affected by the subsequent Incapacity of any Limited Partner or Assignee and the
transfer of all or any portion of such Limited Partner’s or Assignee’s OP Units
and shall extend to such Limited Partner’s or Assignee’s heirs, successors,
assigns and personal representatives. Each such Limited Partner or Assignee
hereby agrees to be bound by any representation made by the General Partner or
any Liquidator, acting in good faith pursuant to such power of attorney, and
each such Limited Partner or Assignee hereby waives any and all defenses which
may be available to contest, negate or disaffirm the action of the General
Partner or any Liquidator, taken in good faith under such power of attorney. 
Each Limited Partner or Assignee shall execute and deliver to the General
Partner or the Liquidator, within fifteen (15) days after receipt of the General
Partner’s or Liquidator’s request therefor, such further designation, powers of
attorney and other instruments as the General Partner or the Liquidator, as the
case may be, deems necessary to effectuate this Agreement and the purposes of
the Partnership.  Notwithstanding anything to the contrary set forth in this
Section 2.4(b), no Limited Partner shall incur any personal liability for any
action of the General Partner or the Liquidator taken under such power of
attorney.

 

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Section 2.5             Term.

 

The term of the Partnership commenced on the date that the Certificate was filed
with the Secretary of State of the State of Delaware and shall continue in
perpetuity, unless the Partnership is dissolved sooner pursuant to the
provisions of Article 13 or as otherwise provided by law.

 

Section 2.6             Partnership Interests Are Securities.

 

All Partnership Interests shall be securities within the meaning of, and
governed by, (i) Article 8 of the Delaware Uniform Commercial Code and
(ii) Article 8 of the Uniform Commercial Code of any other applicable
jurisdiction.

 

ARTICLE 3

PURPOSE

 

Section 3.1             Purpose and Business.

 

The purpose and nature of the business to be conducted by the Partnership is
(i) to conduct any business that may be lawfully conducted by a limited
partnership formed pursuant to the Act; provided, however, that, from and after
the Closing Date, such business shall be limited to and conducted in such a
manner as to permit STAG REIT at all times to qualify as a REIT, unless STAG
REIT ceases to qualify as a REIT for reasons other than the conduct of the
business of the Partnership or voluntarily revokes its election to be a REIT;
(ii) to enter into any partnership, joint venture or other similar arrangement
to engage in any of the foregoing or to own interests in any entity engaged in
any of the foregoing; and (iii) to do anything necessary, convenient or
incidental to the foregoing. In connection with the foregoing, and without
limiting the right of the board of STAG REIT, in its sole discretion, to cause
STAG REIT to cease to qualify as a REIT, the Partners acknowledge that, after
the Closing Date, STAG REIT’s status as a REIT shall inure to the benefit of all
of the Partners and not solely to the General Partner, STAG REIT or their
Affiliates.

 

Section 3.2             Powers.

 

The Partnership is empowered to do any and all acts and things necessary,
appropriate, proper, advisable, incidental to or convenient for the furtherance
and accomplishment of the purposes and business described herein and for the
protection and benefit of the Partnership, and shall have, without limitation,
any and all of the powers that may be exercised on behalf of the Partnership by
the General Partner pursuant to this Agreement; provided, however, that the
Partnership shall not take, or refrain from taking, any action which, in the
judgment of the General Partner, in its sole and absolute discretion; (i) could
adversely affect the ability of STAG REIT to qualify and to continue to qualify
as a REIT; (ii) could subject STAG REIT to any additional taxes under Code
Section 857 or Code Section 4981 or any other related or successor provision of
the Code; or (iii) could violate any law or regulation of any governmental body
or agency having jurisdiction over STAG REIT, its securities, the General
Partner or the Partnership, unless such action (or inaction) under clause (i),
clause (ii) or clause (iii) above shall have been specifically consented to by
the General Partner in writing.

 

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Section 3.3             Representations and Warranties by the Parties.

 

(a)           Each Partner that is an individual (including, without limitation,
each Additional Limited Partner or Substituted Limited Partner as a condition to
becoming an Additional Limited Partner or a Substituted Limited Partner)
represents and warrants to each other Partner that (i) such Partner has the
legal capacity to enter into this Agreement and perform such Partner’s
obligations hereunder; (ii) the consummation of the transactions contemplated by
this Agreement to be performed by such Partner will not result in a breach or
violation of, or a default under, any agreement by which such Partner or any of
such Partner’s property is or are bound, or any statute, regulation, order or
other law to which such Partner is subject; and (iii) this Agreement is binding
upon, and enforceable against, such Partner in accordance with its terms, as
such enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, fraudulent conveyance, moratorium or similar laws affecting
creditors’ rights generally, as from time to time in effect, or the application
of equitable principles.

 

(b)           Each Partner that is not an individual (including, without
limitation, each Additional Limited Partner or Substituted Limited Partner as a
condition to becoming an Additional Limited Partner or a Substituted Limited
Partner) represents and warrants to each other Partner that (i) its execution
and delivery of this Agreement and all transactions contemplated by this
Agreement to be performed by it have been duly authorized by all necessary
action, including without limitation, that of its general partner(s),
committee(s), trustee(s), beneficiaries, director(s), member(s) and/or
stockholder(s), as the case may be, as required; (ii) the consummation of such
transactions shall not result in a breach or violation of, or a default under,
its certificate of limited partnership, partnership agreement, trust agreement,
limited liability company operating agreement, charter or bylaws, as the case
may be, any agreement by which such Partner or any of such Partner’s properties
or any of its partners, beneficiaries, trustees, directors, members or
stockholders, as the case may be, is or are bound, or any statute, regulation,
order or other law to which such Partner or any of its partners, trustees,
beneficiaries, directors, members or stockholders, as the case may be, is or are
subject; and (iii) this Agreement is binding upon, and enforceable against, such
Partner in accordance with its terms, as such enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, fraudulent conveyance,
moratorium or similar laws affecting creditors’ rights generally, as from time
to time in effect, or the application of equitable principles.

 

(c)           Each Partner further represents, warrants, covenants and agrees as
follows:

 

(i)            Except as provided in Exhibit H hereto, at any time such Partner
actually owns or Constructively Owns a 25% or greater capital interest or
profits interest in the Partnership, it does not and will not, without the prior
written consent of the General Partner, actually own or Constructively Own
(A) with respect to any Tenant that is a corporation, any stock of such Tenant;
and (B) with respect to any Tenant that is not a corporation, any interest in
either the assets or net profits of such Tenant.

 

(ii)           Upon request of the General Partner, it will promptly disclose to
the General Partner the amount of REIT Shares or other capital shares of STAG
REIT that it actually owns or Constructively Owns.

 

Each Partner understands that if, for any reason; (A) the representations,
warranties or agreements set forth above are violated, or (B) the Partnership’s
actual or Constructive

 

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Ownership of REIT Shares or other capital shares of STAG REIT violates the
limitations set forth in the Charter, then (x) some or all of the Redemption
Rights of the Partners may become non-exercisable; and (y) some or all of the
REIT Shares owned by the Partners may be automatically transferred to a trust
for the benefit of a charitable beneficiary, as provided in the Charter.

 

(iii)          Without the consent of the General Partner, which may be given or
withheld in its sole discretion, no Partner shall take any action that would
cause the Partnership at any time to have more than one hundred (100) partners
(including as partners those Persons indirectly owning an interest in the
Partnership through a partnership, limited liability company, S corporation or
grantor trust (such entity, a “flow through entity”), but only if substantially
all of the value of such Person’s interest in the flow through entity is
attributable to the flow through entity’s interest (direct or indirect) in the
Partnership).

 

(d)           The representations and warranties contained in this Section 3.3
shall survive the execution and delivery of this Agreement by each Partner (and,
in the case of an Additional Limited Partner or a Substituted Limited Partner,
the admission of such Additional Limited Partner or Substituted Limited Partner
as a Limited Partner in the Partnership) and the dissolution and winding up of
the Partnership.

 

(e)           Each Partner (including, without limitation, each Additional
Limited Partner or Substituted Limited Partner as a condition to becoming an
Additional Limited Partner or a Substituted Limited Partner) hereby acknowledges
that no representations as to potential profit, cash flows, funds from
operations or yield, if any, in respect of the Partnership, the General Partner
or STAG REIT have been made by any Partner or any employee or representative or
Affiliate of any Partner, and that projections and any other information,
including, without limitation, financial and descriptive information and
documentation, which may have been in any manner submitted to such Partner shall
not constitute any representation or warranty of any kind or nature, express or
implied.

 

Section 3.4             Not Publicly Traded.

 

The General Partner, on behalf of the Partnership, shall use its best efforts
not to take any action which would result in the Partnership being a publicly
traded partnership within the meaning of either Section 469(k)(2) or 7704(b) of
the Code.  Subject to this Section 3.4, it is expressly acknowledged and agreed
by the Partners that the General Partner may, in its sole and absolute
discretion, waive or otherwise modify the application with respect to any
Partner(s) or Assignee(s) of any provision herein restricting, prohibiting or
otherwise relating to (i) the transfer of a Limited Partner Interest or the OP
Units evidencing the same; (ii) the admission of any Limited Partners; and
(iii) the Redemption Rights of such Partners, and that such waivers or
modifications may be made by the General Partner at any time or from time to
time, including, without limitation, concurrently with the issuance of any OP
Units pursuant to the terms of this Agreement.

 

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ARTICLE 4
CAPITAL CONTRIBUTIONS

 

Section 4.1             Capital Contributions of the Partners.

 

At the time of their respective execution of this Agreement, the Partners shall
make or shall have made Capital Contributions as set forth in Exhibit A to this
Agreement.  Following their respective contributions, the Partners shall own OP
Units in the amounts set forth in Exhibit A and shall have a Percentage Interest
in the Partnership as set forth in Exhibit A, which Percentage Interest shall be
adjusted from time to time by the General Partner to the extent necessary to
reflect accurately exchanges, redemptions, additional Capital Contributions, the
issuance of additional OP Units, or similar events having an effect on any
Partner’s Percentage Interest, as set forth in the records of the Partnership. 
Except as provided in Sections 4.2, 4.3, 4.4 and 10.5, the Partners shall have
no obligation to make any additional Capital Contributions or loans to the
Partnership.

 

Section 4.2             Issuances of Additional Partnership Interests.

 

(a)           The General Partner is hereby authorized, without the need for any
vote or approval of any Partner or any other Person who may hold OP Units or
Partnership Interests, to cause the Partnership from time to time to issue to
any existing Partner (including the General Partner) or to any other Person
(including Affiliates of the General Partner), and to admit such Person as a
limited partner in the Partnership, OP Units (including, without limitation,
Common Units and preferred OP Units) or other Partnership Interests, in each
case in exchange for the contribution by such Person of property or other
assets, in one or more classes, or one or more series of any of such classes, or
otherwise with such designations, preferences, redemption and conversion rights
and relative, participating, optional or other special rights, powers and
duties, including rights, powers and duties senior to other classes of Limited
Partner Interests, all as shall be determined by the General Partner in its sole
and absolute discretion subject to Delaware law, including, without limitation,
(i) the allocations of items of Partnership income, gain, loss, deduction and
credit to each such class or series of Partnership Interests; (ii) the right of
each such class or series of Partnership Interests to share in Partnership
distributions; and (iii) the rights of each such class or series of Partnership
Interests upon dissolution and liquidation of the Partnership; provided, that no
such additional OP Units or other Partnership Interests shall be issued to the
General Partner or STAG REIT unless either (A)(1) the additional Partnership
Interests are issued in connection with an issuance of REIT Shares or other
securities by STAG REIT, which securities have designations, preferences and
other rights such that the economic interests attributable to such securities
are comparable to the designations, preferences and other rights, except voting
rights, of the additional Partnership Interests issued to the General Partner or
STAG REIT in accordance with this Section 4.2(a), and (2) the General Partner or
STAG REIT shall make a Capital Contribution to the Partnership in an amount
equal to the proceeds, if any, raised in connection with such issuance; or
(B) the additional Partnership Interests are issued to all Partners holding
Partnership Interests in the same class in proportion to their respective
Percentage Interests in such class.  In addition, the General Partner or STAG
REIT may acquire OP Units from other Partners pursuant to this Agreement.

 

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(b)           In accordance with, and subject to the terms of Section 4.3
hereof, STAG REIT shall not issue any REIT Shares (other than REIT Shares issued
pursuant to Section 8.6) or other securities, or rights, options, warrants or
convertible or exchangeable securities containing the right to subscribe for or
purchase REIT Shares or other securities of STAG REIT (or any Debt issued by
STAG REIT that provides any of the foregoing rights) (collectively, “New
Securities”) other than to all holders of REIT Shares unless (i) the General
Partner shall cause the Partnership to issue to STAG REIT Partnership Interests
or rights, options, warrants or convertible or exchangeable securities of the
Partnership having designations, preferences and other rights, all such that the
economic interests are comparable to those of the REIT Shares or other
securities or New Securities; and (ii) STAG REIT contributes to the Partnership
the proceeds, if any, from the issuance of such REIT Shares, other securities or
New Securities and, if applicable, from the exercise of rights contained in such
New Securities. Without limiting the foregoing, STAG REIT is expressly
authorized to issue REIT Shares, other securities or New Securities for less
than fair market value, and the General Partner is expressly authorized to cause
the Partnership to issue to STAG REIT corresponding Partnership Interests, so
long as (x) the General Partner concludes in good faith that such issuance is in
the interests of STAG REIT and the Partnership (for example, and not by way of
limitation, the issuance of REIT Shares and corresponding OP Units in connection
with an issuance of REIT Shares under the Plan or another long-term incentive
plan of STAG REIT or pursuant to an employee share purchase plan providing for
employee purchases of REIT Shares at a discount from fair market value or
employee share options that have an exercise price that is less than the fair
market value of the REIT Shares, either at the time of issuance or at the time
of exercise, or in order to comply with the REIT share ownership requirements
set forth in Section 856(a)(5) of the Code); and (y) the General Partner
contributes all proceeds from such issuance and exercise to the Partnership.

 

Section 4.3             Contribution of Proceeds of Issuance of Securities by
STAG REIT.

 

On the Closing Date, STAG REIT shall contribute to the Partnership the proceeds
of the Initial Public Offering and the Initial REIT Capitalization received from
STAG REIT in exchange for OP Units; and, in connection with any subsequent
closings of the Initial Public Offering, any other REIT Share Offering and any
other issuance of REIT Shares, other securities or New Securities pursuant to
Section 4.2, STAG REIT shall contribute to the Partnership any proceeds (or a
portion thereof) raised in connection with such issuance and received by STAG
REIT in exchange for Partnership Interests or rights, options, warrants or
convertible or exchangeable securities of the Partnership having designations,
preferences and other rights, all such that the economic interests are
comparable to those of the REIT Shares or other securities or New Securities
contributed to the Partnership; provided, that, in each case, if the proceeds
actually received by STAG REIT are less than the gross proceeds of such issuance
as a result of any underwriter’s discount or other expenses paid or incurred in
connection with such issuance, then STAG REIT shall be deemed to have made a
Capital Contribution to the Partnership in the amount equal to the sum of the
net proceeds of such issuance plus the amount of such underwriter’s discount and
other expenses paid by STAG REIT and/or the General Partner (which discount and
expense shall be treated as an expense for the benefit of the Partnership in
accordance with Section 7.4). In the case of employee purchases of New
Securities at a discount from fair market value, the amount of such discount
representing compensation to the employee, as determined by the General Partner,
shall be treated as an expense of the issuance of such New Securities.

 

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Section 4.4             Additional Funds.

 

(a)           The General Partner may, at any time and from time to time,
determine that the Partnership requires additional funds (“Additional Funds”)
for the acquisition of additional assets, for the redemption of OP Units or for
such other purposes as the General Partner may determine in its sole and
absolute discretion.  Additional Funds may be obtained by the Partnership, at
the election of the General Partner, in any manner provided in, and in
accordance with, the terms of this Section 4.4 without the approval of any
Limited Partners.

 

(b)           The General Partner, on behalf of the Partnership, may obtain any
Additional Funds by accepting Capital Contributions from any Partners or other
Persons.  In connection with any such Capital Contribution, the General Partner
is hereby authorized to cause the Partnership from time to time to issue
additional OP Units (as set forth in Section 4.2 above) in consideration
therefor, and the Percentage Interests of the Partners shall be adjusted to
reflect the issuance of such additional OP Units.

 

(c)           The General Partner, on behalf of the Partnership, may obtain any
Additional Funds by causing the Partnership to incur Debt to any Person (other
than the General Partner (but, for this purpose, disregarding any Debt that may
be deemed incurred to the General Partner by virtue of clause (iii) of the
definition of Debt)) upon such terms as the General Partner determines
appropriate, including making such Debt convertible, redeemable or exchangeable
for OP Units; provided, however, that the Partnership shall not incur any such
Debt if (i) a breach, violation or default of such indebtedness would be deemed
to occur by virtue of the transfer of any Partnership Interest; or (ii) such
Debt is recourse to any Partner (unless the Partner otherwise agrees).

 

(d)           The General Partner, on behalf of the Partnership, may obtain any
Additional Funds by causing the Partnership to incur Debt to STAG REIT if
(i) such Debt is, to the extent permitted by law, on substantially the same
terms and conditions (including interest rate, repayment schedule, and
conversion, redemption, repurchase and exchange rights) as Funding Debt incurred
by STAG REIT, the net proceeds of which are loaned to the Partnership to provide
such Additional Funds; or (ii) such Debt is on terms and conditions no less
favorable to the Partnership than would be available to the Partnership from any
third party; provided, however, that the Partnership shall not incur any such
Debt if (A) a breach, violation or default of such Debt would be deemed to occur
by virtue of the transfer of any Partnership Interest; or (B) such Debt is
recourse to any Partner (unless the Partner otherwise agrees).

 

Section 4.5             Preemptive Rights.

 

No Person shall have any preemptive, preferential or other similar right with
respect to (i) additional Capital Contributions or loans to the Partnership; or
(ii) the issuance or sale of any OP Units or other Partnership Interests.

 

Section 4.6             LTIP Units.

 

(a)           The General Partner, on behalf of the Partnership, may from time
to time issue LTIP Units to Persons who provide services to the Partnership, the
General Partner or STAG REIT, including any Person who performs services as an
employee of the Management

 

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Company, or any Affiliate of either of them, for such consideration as the
General Partner may determine to be appropriate for services rendered by such
Persons to the Partnership, the General Partner or STAG REIT in its capacity as
a Partner or in anticipation of becoming a Partner, and admit such Persons as
Limited Partners.  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 OP 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 OP Units.  The General Partner may, on behalf of the
Partnership, grant LTIP Units to any Person at any time, in its sole and
absolute discretion.  In particular, except as otherwise specifically provided
in this Agreement, the Partnership shall maintain at all times a one-to-one
correspondence between LTIP Units and OP Units for conversion, distribution and
other purposes, including without limitation complying with the following
procedures:

 

(i)            If an Adjustment Event occurs, the General Partner shall make a
corresponding adjustment to the LTIP Units to maintain a one-for-one conversion
and economic equivalence ratio between OP Units and LTIP Units.  If the
Partnership takes an action affecting the OP Units other than actions
specifically defined herein as “Adjustment Events” and in the opinion of the
General Partner such action would require an adjustment to the LTIP Units to
maintain the one-to-one correspondence described above, the General Partner
shall have the right to make such adjustment to the LTIP Units, to the extent
permitted by law and by the Plan, in such manner and at such time as the General
Partner, in its sole discretion, may determine to be appropriate under the
circumstances. If an adjustment is made to the LTIP Units as herein provided,
the Partnership shall promptly file in the books and records of the Partnership
an officer’s certificate setting forth such adjustment and a brief statement of
the facts requiring such adjustment, which certificate shall be conclusive
evidence of the correctness of such adjustment absent manifest error.  Promptly
after the filing of such certificate, the Partnership shall mail a notice to
each LTIP Unitholder setting forth the adjustment to his or her LTIP Units and
the effective date of such adjustment; and

 

(ii)           The LTIP Unitholders shall, in respect of each Distribution
Payment Date, when, as and if authorized and declared by the General Partner out
of assets legally available for that purpose, be entitled to receive
distributions in an amount per LTIP Unit equal to the distributions per OP Unit
paid to holders of record on the same record date established by the General
Partner with respect to such Distribution Payment Date; provided, however, that
no distributions shall be made in respect of any LTIP Unit that would cause the
Economic Capital Account Balance of the holder of such LTIP Unit to have a
negative balance that is greater than the negative balance of the Economic
Capital Account Balance of each OP Unit generally. During any distribution
period, so long as any LTIP Units are outstanding, no distributions (whether in
cash or in kind) shall be authorized, declared or paid on OP Units, unless equal
distributions have been or contemporaneously are authorized, declared and paid
on the LTIP Units for such distribution period, except in the circumstances
described in the proviso to the preceding sentence.  Except to the extent
required by the aforementioned proviso, the LTIP Units shall rank pari passu
with the OP Units as to the payment of regular and special periodic or other
distributions and distribution of assets upon liquidation, dissolution or
winding up.  As to the payment of distributions and as to distribution of assets
upon liquidation, dissolution or winding up, any class or series of OP Units or
Partnership Interests which by its

 

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terms specifies that it shall rank junior to, on a parity with, or senior to the
OP Units shall also rank junior to, or pari passu with, or senior to, as the
case may be, the entitlement of the LTIP Units to such distribution.  Subject to
the terms of any LTIP Unit Agreement, an LTIP Unitholder shall be entitled to
transfer his or her LTIP Units to the same extent and subject to the same
restrictions as holders of OP Units are entitled to transfer their OP Units
pursuant to Article 11.

 

(b)           LTIP Units shall be subject to the following special provisions:

 

(i)            LTIP Unit Agreements.  LTIP Units may, in the sole discretion of
the Compensation Committee, be issued subject to vesting, forfeiture and
additional restrictions on transfer pursuant to the terms of an LTIP Unit
Agreement.  The terms of any LTIP Unit Agreement may be modified by the
Compensation Committee from time to time in its sole discretion, subject to any
restrictions on amendment imposed by the relevant LTIP Unit Agreement or by the
Plan, if applicable.  LTIP Units that are no longer subject to forfeiture under
the terms of the LTIP Unit Agreement are referred to herein as “Vested LTIP
Units;” all other LTIP Units shall be treated as “Unvested LTIP Units.”

 

(ii)           Forfeiture.  Unless otherwise specified in the applicable LTIP
Unit Agreement, upon the occurrence of any event specified in an LTIP Unit
Agreement as resulting in either the right of the Partnership or the General
Partner to repurchase LTIP Units at a specified purchase price or some other
forfeiture of any LTIP Units, if the Partnership or the General Partner
exercises such right to repurchase or some other forfeiture occurs in accordance
with the applicable LTIP Unit Agreement, then the relevant LTIP Units shall
immediately, and without any further action, be treated as cancelled and no
longer outstanding for any purpose. Unless otherwise specified in the applicable
LTIP Unit Agreement, no consideration or other payment shall be due with respect
to any LTIP Units that have been forfeited, other than any distributions
declared with respect to a Partnership Record Date prior to the effective date
of the forfeiture.  In connection with any repurchase or forfeiture of LTIP
Units, the balance of the portion of the Capital Account of the LTIP Unitholder
that is attributable to all of his or her LTIP Units shall be reduced by the
amount, if any, by which it exceeds the target balance contemplated by
Section 6.1(c), calculated with respect to the LTIP Unitholder’s remaining LTIP
Units, if any.

 

(iii)          Allocations.  LTIP Units shall generally be treated as OP Units
for purposes of Article 6, but shall receive certain special allocations of gain
under Section 6.1(c).

 

(iv)          Redemption.  The Redemption Right provided to Limited Partners
under Section 8.6 shall not apply with respect to LTIP Units unless and until
they are converted to OP Units as provided in clause (vi) below and Section 8.7.

 

(v)           Legend.  Any certificate evidencing an LTIP Unit shall bear an
appropriate legend indicating that additional terms, conditions and restrictions
on transfer, including without limitation any LTIP Unit Agreement, apply to the
LTIP Unit.

 

(vi)          Conversion to OP Units.  Vested LTIP Units are eligible to be
converted into OP Units under Section 8.7.

 

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(vii)         Voting.  LTIP Units shall have the voting rights provided in
Section 8.8.

 

(viii)        Tax Classification.  The Partners intend that the LTIP Units shall
be classified as “profits interests” within the meaning of IRS Revenue Procedure
93-27, 1993-2 C.B. 343, as clarified by IRS Revenue Procedure 2001-43, 2001-2
C.B. 191, and the provisions of this Agreement shall be interpreted in a manner
consistent with this intent.

 

(c)           Code Section 83 Safe Harbor Election.

 

(i)            By executing this Agreement, each Partner authorizes and directs
the Partnership to elect to have the “Safe Harbor” described in the proposed
Revenue Procedure set forth in IRS Notice 2005-43 (the “Notice”) apply to the
LTIP Units and any other interest in the Partnership transferred to a service
provider by the Partnership on or after the effective date of such Revenue
Procedure in connection with services provided to the Partnership.  For purposes
of making such Safe Harbor election, the General Partner is hereby designated as
the “partner who has responsibility for federal income tax reporting” by the
Partnership and, accordingly, execution of such Safe Harbor election by the
General Partner constitutes execution of a “Safe Harbor Election” in accordance
with Section 3.03(1) of the Notice.  The Partnership and each Partner hereby
agree to comply with all requirements of the Safe Harbor described in the
Notice, including, without limitation, the requirement that each Partner shall
prepare and file all federal income tax returns reporting the income tax effects
of each interest in the Partnership issued by the Partnership covered by the
Safe Harbor in a manner consistent with the requirements of the Notice.

 

(ii)           Each Partner authorizes the General Partner to amend
Section 4.6(c) to the extent necessary to achieve substantially the same tax
treatment with respect to LTIP Units and any other interest in the Partnership
transferred to a service provider by the Company in connection with services
provided to the Partnership as set forth in Section 4 of the Notice (e.g., to
reflect changes from the rules set forth in the Notice in subsequent IRS
guidance), provided that such amendment is not adverse to such Partner (as
compared with the after-tax consequences that would result to such Partner if
the provisions of the Notice applied to all interests in the Partnership
transferred to a service provider by the Partnership in connection with services
provided to the Partnership).

 

ARTICLE 5
DISTRIBUTIONS

 

Section 5.1             Requirement and Characterization of Distributions.

 

The General Partner shall distribute at least quarterly all or such portion as
the General Partner may in its sole discretion determine of Available Cash
generated by the Partnership during such quarter or shorter period to the
Partners that are Partners on the Partnership Record Date with respect to such
quarter or shorter period in the following priority:

 

(a)           First, to the Partners in accordance with their Percentage
Interests in arrears with respect to the immediately preceding calendar quarter
in an amount equal to (i) the sum of (A) the General Partner’s reasonable
estimate of the Net Income allocable to the Partners

 

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in accordance with their Percentage Interests under Section 6.l(a) with respect
to such immediately preceding calendar quarter and (B) the General Partner’s
determination of the Net Income so allocated in prior calendar quarters in the
same calendar year, reduced by (ii) the sum of (A) all distributions previously
made under this subsection or under subsection (b) with respect to all calendar
quarters during the same calendar year and (B) any Net Loss allocable to the
Partners in accordance with their Percentage Interests in such calendar quarter
or any preceding calendar quarter of the same calendar year under
Section 6.1(b).

 

(b)           Second, to the Partners in accordance with their Percentage
Interests; provided, that in no event may a Partner receive a distribution of
Available Cash with respect to an OP Unit if such Partner is entitled to receive
a distribution out of such Available Cash with respect to a REIT Share for which
such OP Unit has been exchanged, and any such distribution shall be made to the
General Partner; and provided, further, that no LTIP Unitholder shall receive
any distribution of Available Cash if and to the extent the balance of such LTIP
Unitholder’s Adjusted Capital Account would be equal to or less than zero after
such distribution is made unless the balances of the Adjusted Capital Accounts
of all Partners in the Partnership would also be equal to or less than zero
after such distribution is made.

 

The General Partner shall take such reasonable efforts, as determined by it in
its sole and absolute discretion and consistent with STAG REIT’s qualification
as a REIT, to distribute Available Cash to the Limited Partners so as to
preclude any such distribution or portion thereof from being treated as part of
a sale of property to the Partnership by a Limited Partner under Section 707 of
the Code or the Regulations thereunder; provided, that the General Partner and
the Partnership shall not have liability to a Limited Partner under any
circumstances as a result of any distribution to a Limited Partner being so
treated.

 

Section 5.2             Amounts Withheld.

 

To the extent provided in Section 10.5, all amounts withheld pursuant to the
Code or any provisions of any state or local tax law and Section 10.5 hereof
with respect to any allocation, payment or distribution to the Partners or
Assignees shall be treated as amounts distributed to the Partners or Assignees
pursuant to Section 5.1 for all purposes under this Agreement.

 

Section 5.3             Distributions upon Liquidation.

 

Notwithstanding the other provisions of this Article 5, net proceeds from a
Terminating Capital Transaction and any other cash received or reductions in
reserves made after commencement of the liquidation of the Partnership shall be
distributed to the Partners in accordance with Section 13.2.

 

Section 5.4             Restricted Distributions.

 

Notwithstanding any provision to the contrary contained in this Agreement, the
Partnership, and the General Partner on behalf of the Partnership, shall not
make a distribution to any Partner on account of its interest in the Partnership
if such distribution would violate Section 17-607 of the Act or other applicable
law.

 

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ARTICLE 6
ALLOCATIONS

 

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
pursuant to the last sentence of Section 6.1(b), 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 the last sentence of Section 6.1(b), over
(B) all prior allocations of Net Income to such Partner under this
Section 6.1(a)(i); and

 

(ii)           Second, 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 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 (per
Unit) at the end of any taxable year in excess of the Adjusted Capital Account
Deficit (per Unit) of any other Limited Partner.  All such Net Losses shall be
allocated to the other Partners.

 

(c)           Notwithstanding the provisions of Sections 6.1(a) and (b) above,
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 OP Units and computed on a
hypothetical basis after taking into account all allocations through the date on
which any allocation is made under this

 

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Section 6.1(c), divided by (ii) the number of STAG REIT’s OP 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 OP Units if the Carrying Value of the
Partnership’s property has been adjusted in accordance with Exhibit B in a
corresponding amount.

 

(d)           Subject to Section 6.1(e), if and to the extent any payment or
reimbursement to the General Partner or STAG REIT made pursuant to Section 7.7
or otherwise (other than distributions under Article 5 or Section 13.2) is
determined for U.S. federal income tax purposes not to constitute a payment of
expenses to the Partnership, the amount so determined shall constitute a
guaranteed payment with respect to capital within the meaning of
Section 707(c) of the Code, shall be treated consistently therewith by the
Partnership and all Partners and shall not be treated as a distribution for
purposes of computing the Partners’ Capital Accounts.

 

(e)           Notwithstanding any provision in this Agreement to the contrary,
if the Partnership pays or reimburses (directly or indirectly, including by
reason of giving the General Partner or the STAG REIT or any direct or indirect
Subsidiary of the STAG REIT Capital Account credit in excess of actual Capital
Contributions made by the General Partner or the STAG REIT or any direct or
indirect Subsidiary of the STAG REIT) fees, expenses or other costs pursuant to
Section 4.2, Section 4.3, Section 7.4 and/or Section 7.7 or otherwise, and if
failure to treat all or part of such payment or reimbursement as a distribution
to the General Partner, the STAG REIT or any Subsidiary of the STAG REIT (as
appropriate), or the receipt of Capital Account credit in excess of actual
capital contributions, would cause the STAG REIT to recognize income that would
cause the STAG REIT to fail to qualify as a REIT, then such payment or
reimbursement (or portion thereof) shall be treated as a distribution to the
General Partner, the STAG REIT or direct or indirect Subsidiary of the STAG REIT
(as appropriate) for purposes of this Agreement, or the Capital Account credit
in excess of actual capital contributions shall be reduced, in each case to the
extent necessary to preserve the STAG REIT’s status as a REIT.  The Capital
Account of the General Partner, the STAG REIT or any direct or indirect
Subsidiary of the STAG REIT (as appropriate) shall be reduced by such direct or
indirect payment or reimbursement (or a portion thereof) in the same manner as
an actual distribution to the General Partner, the STAG REIT, or any direct or
indirect Subsidiary of the STAG REIT (as appropriate).  To the extent treated as
distributions, such fees, expenses or other costs shall not be taken into
account as Partnership fees, expenses or costs for the purposes of this
Agreement.  In the event that amounts are recharacterized as distributions or
Capital Accounts are reduced pursuant to this Section 6.1(e), allocations under
Section 6.1(a), (b) and (c) for the current and subsequent periods shall be
adjusted, as reasonably determined by the General Partner, so that to the extent
possible the Partners have the same Capital Account balances they would have had
if this Section 6.1(e) had not applied.  This Section 6.1(e) is intended to
prevent direct or indirect reimbursements or payments under this Agreement from
giving rise to a violation of the STAG REIT’s REIT requirements while at the
same time preserving to the extent possible the parties’ intended economic
arrangement and shall be interpreted and applied consistent with such intent.

 

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ARTICLE 7
MANAGEMENT AND OPERATIONS OF BUSINESS

 

Section 7.1             Management.

 

(a)           Except as otherwise expressly provided in this Agreement, all
management powers over the business and affairs of the Partnership are and shall
be exclusively vested in the General Partner, and no Limited Partner shall have
any right to participate in or exercise control or management power over the
business and affairs of the Partnership.  The General Partner may not be removed
by the Limited Partners, with or without cause, except with the consent of the
General Partner.  In addition to the powers now or hereafter granted to a
general partner of a limited partnership under applicable law or which are
granted to the General Partner under any other provision of this Agreement, the
General Partner, subject to Section 7.3 hereof, shall have full power and
authority to do all things deemed necessary, desirable or convenient by it to
conduct the business of the Partnership, to exercise all powers set forth in
Section 3.2 hereof and to effectuate the purposes set forth in Section 3.1
hereof, including, without limitation:

 

(i)            the making of any expenditures, the lending or borrowing of money
(including, without limitation, making prepayments on loans and borrowing money
to permit the Partnership to make distributions to its Partners in such amounts
as will permit STAG REIT (so long as STAG REIT desires to maintain its
qualification as a REIT) to avoid the payment of any federal income tax
(including, for this purpose, any excise tax pursuant to Section 4981 of the
Code) and to make distributions to its stockholders in amounts sufficient to
permit STAG REIT to maintain its qualification as a REIT), the assumption or
guarantee of, or other contracting for, indebtedness and other liabilities, the
issuance of evidence of indebtedness (including the securing of the same by
deed, mortgage, deed of trust or other lien or encumbrance on the Partnership’s
assets) and the incurring of any obligations it deems necessary for the conduct
of the activities of the Partnership;

 

(ii)           the making of tax, regulatory and other filings or elections, or
rendering of periodic or other reports to governmental or other agencies having
jurisdiction over the business or assets of the Partnership;

 

(iii)          the acquisition, sale, lease, transfer, exchange or other
disposition of any assets of the Partnership (including the exercise or grant of
any conversion, option, privilege, or subscription right or other right
available in connection with any assets at any time held by the Partnership) or
the merger or other combination of the Partnership with or into another entity
(all of the foregoing subject to any prior approval only to the extent required
by Section 7.3 or 8.9 hereof);

 

(iv)          the mortgage, pledge, encumbrance or hypothecation of any assets
of the Partnership, the use of the assets of the Partnership (including, without
limitation, cash on hand) for any purpose consistent with the terms of this
Agreement and on any terms that it sees fit, including, without limitation, the
financing of the conduct of the operations of the Partnership, the General
Partner, STAG REIT or any of the Partnership’s, the General Partner’s or STAG
REIT’s Subsidiaries, the lending of funds to other Persons (including, without

 

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limitation, the Subsidiaries of the Partnership, the General Partner and/or STAG
REIT) and the repayment of obligations of the Partnership and its Subsidiaries
and any other Person in which it has an equity investment, and the making of
capital contributions to its Subsidiaries;

 

(v)           the negotiation, execution, delivery and performance of any
contracts, conveyances or other instruments that the General Partner considers
useful or necessary or convenient to the conduct of the Partnership’s operations
or the implementation of the General Partner’s powers under this Agreement,
including, without limitation, contracting with consultants, accountants, legal
counsel, other professional advisors and other agents and the payment of their
expenses and compensation out of the Partnership’s assets;

 

(vi)          the distribution of Partnership cash or other Partnership assets
in accordance with this Agreement;

 

(vii)         holding, managing, investing and reinvesting cash and other assets
of the Partnership;

 

(viii)        the collection and receipt of revenues and income of the
Partnership;

 

(ix)           the establishment of one or more divisions of the Partnership,
the selection and dismissal of employees of the Partnership (including, without
limitation, employees who may be designated as officers with titles such as
“president,” “vice president,” “secretary” and “treasurer” of the Partnership),
and agents, outside attorneys, accountants, consultants and contractors of the
Partnership, and the determination of their compensation and other terms of
employment or hiring;

 

(x)            the maintenance of such insurance for the benefit of the
Partnership and the Partners as it deems necessary or appropriate;

 

(xi)           the formation of, or acquisition of an interest in, and the
contribution of property to, any further limited or general partnerships,
limited liability companies, real estate investment trusts, corporations,
entities that are treated as REITs, “taxable REIT subsidiaries” or foreign
corporations for federal income tax purposes, joint ventures or other
relationships that it deems desirable (including, without limitation, the
acquisition of interests in, and the contributions of property or the making of
loans to, its, STAG REIT’s or the General Partner’s Subsidiaries and any other
Person in which it has an equity investment from time to time or the incurrence
of indebtedness on behalf of such Persons or the guarantee of obligations of
such Persons and the making of any tax, regulatory or other filing or election
with respect to any of the foregoing Persons); provided, that as long as STAG
REIT has determined to continue to qualify as a REIT, the Partnership may not
engage in any such formation, acquisition or contribution that would cause STAG
REIT to fail to qualify as a REIT;

 

(xii)          the control of any matters affecting the rights and obligations
of the Partnership, including the settlement, compromise, submission to
arbitration or any other form of dispute resolution, or abandonment of, any
claim, cause of action, liability, debt or damages, due or owing to or from the
Partnership, the commencement or defense of suits, legal proceedings,
administrative proceedings, arbitrations or other forms of dispute resolution,
and

 

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the representation of the Partnership in all suits or legal proceedings,
administrative proceedings, arbitrations or other forms of dispute resolution,
the incurrence of legal expense, and the indemnification of any Person against
liabilities and contingencies to the extent permitted by law;

 

(xiii)         the undertaking of any action in connection with the
Partnership’s direct or indirect investment in any Subsidiary or any other
Person (including, without limitation, the contribution or loan of funds by the
Partnership to such Persons);

 

(xiv)        except as otherwise specifically set forth in this Agreement, the
determination of the fair market value of any Partnership property distributed
in kind using such reasonable method of valuation as the General Partner may
adopt;

 

(xv)         the enforcement of any rights against any Partner pursuant to
representations, warranties, covenants and indemnities relating to such
Partner’s contribution of property or assets to the Partnership;

 

(xvi)        the exercise, directly or indirectly, through any attorney-in-fact
acting under a general or limited power of attorney, of any right, including the
right to vote, appurtenant to any asset or investment held by the Partnership;

 

(xvii)       the exercise of any of the powers of the General Partner enumerated
in this Agreement on behalf of or in connection with any Subsidiary of the
Partnership or any other Person in which the Partnership has a direct or
indirect interest, or jointly with any such Subsidiary or other Person;

 

(xviii)      the exercise of any of the powers of the General Partner enumerated
in this Agreement on behalf of any Person in which the Partnership does not have
an interest pursuant to contractual or other arrangements with such Person;

 

(xix)         the making, execution, delivery and performance of any and all
deeds, leases, notes, mortgages, deeds of trust, security agreements,
conveyances, contracts, guarantees, warranties, indemnities, waivers, releases
or legal instruments or agreements in writing necessary, appropriate or
convenient, in the judgment of the General Partner, for the accomplishment of
any of the powers of the General Partner enumerated in this Agreement;

 

(xx)          the issuance of additional OP Units and other partnership
interests, as appropriate, in connection with Capital Contributions by
Additional Limited Partners and additional Capital Contributions by Partners
pursuant to Article 4 hereof;

 

(xxi)         the taking of any action necessary or appropriate to enable STAG
REIT to qualify as a REIT;

 

(xxii)        the management, operation, leasing, landscaping, repair,
alteration, demolition, replacement or improvement of any Property;

 

(xxiii)       an election to dissolve the Partnership pursuant to
Section 13.1(c) hereof;

 

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(xxiv)                    the amendment and restatement of Exhibit A hereto to
reflect accurately at all times the Capital Contributions and Percentage
Interests of the Partners as the same are adjusted from time to time to the
extent necessary to reflect redemptions, Capital Contributions, the issuance of
OP Units, the admission of any Additional Limited Partner or any Substituted
Limited Partner or otherwise;

 

(xxv)                       the registration of any class of securities of the
Partnership under the Securities Act or the Exchange Act, and the listing of any
debt securities of the Partnership on any exchange; and

 

(xxvi)                    the taking of any and all acts necessary or prudent to
ensure that the Partnership will not be classified as a “publicly traded
partnership” under Code Section 7704.

 

(b)                                 Each of the Limited Partners agrees that the
General Partner is authorized to execute, deliver and perform the
above-mentioned agreements and transactions on behalf of the Partnership without
any further act, approval or vote of the Partners, notwithstanding any other
provision of this Agreement (except as provided in Section 7.3), the Act or any
applicable law, rule or regulation, to the fullest extent permitted under the
Act or other applicable law, rule or regulation.  The execution, delivery or
performance by the General Partner or the Partnership of any agreement
authorized or permitted under this Agreement shall not constitute a breach by
the General Partner of any duty that the General Partner may owe the Partnership
or the Limited Partners or any other Persons under this Agreement or of any duty
stated or implied by law or equity.

 

(c)                                  At all times from and after the date
hereof, the General Partner may cause the Partnership to establish and maintain
working capital accounts and other cash or similar balances in such amounts as
the General Partner, in its sole and absolute discretion, deems appropriate and
reasonable from time to time.

 

(d)                                 In exercising its authority under this
Agreement, the General Partner may, but shall be under no obligation to, take
into account the tax consequences to any Partner of any action taken by it.  The
General Partner and the Partnership shall not be liable to a Limited Partner
under any circumstances as a result of an income tax liability incurred by such
Limited Partner as a result of an action (or inaction) by the General Partner
taken pursuant to its authority under this Agreement and in accordance with the
terms of Section 7.3.

 

Section 7.2                                      Certificate of Limited
Partnership.

 

The General Partner has filed the Certificate with the Secretary of State of the
State of Delaware as required by the Act.  The General Partner shall use all
reasonable efforts to cause to be filed such other certificates or documents as
may be reasonable and necessary or appropriate for the formation, continuation,
qualification and operation of a limited partnership (or a partnership in which
the limited partners have limited liability) in the State of Delaware and any
other state, or the District of Columbia, in which the Partnership may elect to
do business or own property.  To the extent that such action is determined by
the General Partner to be reasonable and necessary or appropriate or convenient,
the General Partner shall file amendments to and restatements of the Certificate
and do all of the things to maintain the Partnership as a limited

 

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partnership (or a partnership in which the limited partners have limited
liability) under the laws of the State of Delaware and each other state, or the
District of Columbia, in which the Partnership may elect to do business or own
property. Subject to the terms of Section 8.5(a)(iv) hereof, the General Partner
shall not be required, before or after filing, to deliver or mail a copy of the
Certificate or any amendment thereto or restatement thereof to any Limited
Partner.

 

Section 7.3                                      Restrictions on General Partner
Authority.

 

The General Partner may not take any action in contravention of an express
prohibition or limitation of this Agreement without the written Consent of the
Limited Partners, or such other percentage of the Limited Partners as may be
specifically provided for under a provision of this Agreement.

 

Section 7.4                                      Reimbursement of the General
Partner.

 

(a)                                  Except as provided in this Section 7.4 and
elsewhere in this Agreement (including the provisions of Articles 5 and 6
regarding distributions, payments, and allocations to which it may be entitled),
the General Partner shall not be compensated for its services as general partner
of the Partnership.

 

(b)                                 The General Partner and its Affiliates shall
be reimbursed on a monthly basis, or such other basis as the General Partner may
determine in its sole and absolute discretion, for all expenditures that each
incurs relating to the ownership and operation of, or for the benefit of, the
Partnership; provided, that the amount of any such reimbursement shall be
reduced by any interest earned by the General Partner with respect to bank
accounts or other instruments or accounts held by it on behalf of the
Partnership; and provided, further, that the General Partner and its Affiliates
shall not be reimbursed for any (i) directors’ fees; (ii) income tax liabilities
or (iii) filing or similar fees in connection with maintaining the General
Partner’s or any such Affiliate’s continued existence that are incurred by the
General Partner or an Affiliate, but the Partners acknowledge that all other
expenses of the General Partner and its Affiliates are deemed to be for the
benefit of the Partnership. Such reimbursement shall be in addition to any
reimbursement made as a result of indemnification pursuant to Section 7.7
hereof.  Included among the expenditures for which the General Partner shall be
entitled to reimbursement hereunder shall be any payments of debt service made
by the General Partner, in its capacity as General Partner, as guarantor or
otherwise, with respect to indebtedness encumbering any property held by the
Partnership.

 

(c)                                  As set forth in Section 4.3, STAG REIT
shall be treated as having made a Capital Contribution in the amount of all
expenses that it incurs and pays relating to the Initial Public Offering, any
other REIT Share Offering and any other issuance of REIT Shares, other
securities or New Securities pursuant to Section 4.2, the proceeds from the
issuance of which are contributed to the Partnership.

 

(d)                                 In the event that STAG REIT shall elect to
purchase from its stockholders REIT Shares for the purpose of delivering such
REIT Shares to satisfy an obligation under any distribution reinvestment program
adopted by STAG REIT, any employee share purchase plan adopted by STAG REIT or
Management Company, or any similar obligation or arrangement

 

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undertaken by STAG REIT in the future, the purchase price paid by STAG REIT for
such REIT Shares and any other expenses incurred by STAG REIT in connection with
such purchase shall be considered expenses of the Partnership and shall be
reimbursed to the General Partner, subject to the condition that: (i) if such
REIT Shares subsequently are sold by STAG REIT, the General Partner shall pay to
the Partnership any proceeds received by STAG REIT for such REIT Shares (which
sales proceeds shall include the amount of distributions reinvested under any
distribution reinvestment or similar program; provided, that a transfer of REIT
Shares for OP Units pursuant to Section 8.6 would not be considered a sale for
such purposes); and (ii) if such REIT Shares are not retransferred by STAG REIT
within thirty (30) days after the purchase thereof, the General Partner shall
cause the Partnership to cancel a number of OP Units held by STAG REIT equal to
the product obtained by multiplying the Conversion Factor by the number of such
REIT Shares (in which case such reimbursement shall be treated as a distribution
in redemption of OP Units held by the General Partner).

 

Section 7.5                                      Outside Activities of the
General Partner.

 

Neither the General Partner nor STAG REIT shall directly or indirectly enter
into or conduct any business, other than in connection with, (a) the ownership,
acquisition and disposition of Partnership Interests, (b)  the management of the
business and affairs of the Partnership, (c) the operation of STAG REIT as a
reporting company with a class (or classes) of securities registered under the
Exchange Act, (d) the operations of STAG REIT as a REIT, (e) the offering, sale,
syndication, private placement or public offering of stock, bonds, securities or
other interests of STAG REIT or the Partnership, (f) financing or refinancing of
any type related to the Partnership or its assets or activities, and (g) such
activities as are incidental thereto; provided, however, that the General
Partner or STAG REIT may, in its sole and absolute discretion, from time to time
hold or acquire assets in its own name or otherwise other than through the
Partnership so long as the General Partner or STAG REIT, as applicable, takes
commercially reasonable measures to ensure that the economic benefits and
burdens of such Property are otherwise vested in the Partnership, through
assignment, mortgage loan or otherwise. Nothing contained herein shall be deemed
to prohibit the General Partner or STAG REIT from executing guarantees of
Partnership debt.

 

Section 7.6                                      Contracts with Affiliates.

 

(a)                                  The Partnership may lend or contribute
funds or other assets to its, the General Partner’s or STAG REIT’s Subsidiaries
or other Persons in which it, the General Partner or STAG REIT has an equity
investment and such Persons may borrow funds from the Partnership, on terms and
conditions established in the sole and absolute discretion of the General
Partner.  The foregoing authority shall not create any right or benefit in favor
of any Subsidiary or any other Person.

 

(b)                                 The Partnership may transfer assets to joint
ventures, other partnerships, limited liability companies, real estate
investment trusts, corporations or other business entities in which it is or
thereby becomes a participant upon such terms and subject to such conditions
consistent with this Agreement and applicable law as the General Partner, in its
sole and absolute discretion, believes are advisable.

 

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(c)                                  Except as expressly permitted by this
Agreement, neither the General Partner nor any of its Affiliates shall sell,
transfer or convey any property to, or purchase any property from, the
Partnership, directly or indirectly, except pursuant to transactions that are
determined by the General Partner in good faith to be fair and reasonable.

 

(d)                                 The General Partner, in its sole and
absolute discretion, and without the approval of the Limited Partners, may
propose and adopt, on behalf of the Partnership, employee benefit plans, share
option plans, and similar plans (including without limitation plans that
contemplate the issuance of LTIP Units) funded by the Partnership for the
benefit of employees of Management Company, STAG REIT, the General Partner, the
Partnership, Subsidiaries of the Partnership or any Affiliate of any of them in
respect of services performed, directly or indirectly, for the benefit of the
Partnership, the General Partner, STAG REIT or any Subsidiaries of the
Partnership.

 

(e)                                  The General Partner is expressly authorized
to enter into, in the name and on behalf of the Partnership, and without the
approval of the Limited Partners, a right of first opportunity arrangement and
other conflict avoidance agreements with the General Partner, STAG REIT, the
Management Company and various Affiliates of the Partnership, the General
Partner, STAG REIT, the Management Company, on such terms as the General
Partner, in its sole and absolute discretion, believes are advisable, including
but not limited to, a co-investment and allocation agreement.

 

(f)                                    The General Partner is expressly
authorized to enter into, in the name and on behalf of the Partnership, any
services agreement with Affiliates of any of the Partnership, the General
Partner, STAG REIT, on such terms as the General Partner, in its sole and
absolute discretion, believes are advisable.

 

Section 7.7                                      Indemnification.

 

(a)                                  To the fullest extent permitted by Delaware
law, the Partnership shall indemnify each Indemnitee from and against any and
all losses, claims, damages, liabilities, joint or several, expenses (including,
without limitation, attorneys’ fees and other legal fees and expenses),
judgments, fines, settlements, and other amounts arising from any and all
claims, demands, actions, suits or proceedings, civil, criminal, administrative
or investigative, that relate to the operations of the Partnership or the
General Partner as set forth in this Agreement, in which such Indemnitee may be
involved, or is threatened to be involved, as a party or otherwise, except to
the extent such Indemnitee acted in bad faith, or with gross negligence or
willful misconduct. Without limitation, the foregoing indemnity shall extend to
any liability of any Indemnitee, pursuant to a loan guaranty or otherwise for
any indebtedness of the Partnership or any Subsidiary of the Partnership
(including without limitation, any indebtedness which the Partnership or any
Subsidiary of the Partnership has assumed or taken subject to), and the General
Partner is hereby authorized and empowered, on behalf of the Partnership, to
enter into one or more indemnity agreements consistent with the provisions of
this Section 7.7 in favor of any Indemnitee having or potentially having
liability for any such indebtedness. Any indemnification pursuant to this
Section 7.7 shall be made only out of the assets of the Partnership, and neither
the General Partner nor any Limited Partner shall have any obligation to

 

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contribute to the capital of the Partnership, or otherwise provide funds, to
enable the Partnership to fund its obligations under this Section 7.7.

 

(b)                                 Reasonable expenses incurred by an
Indemnitee who is a party to a proceeding shall be paid or reimbursed by the
Partnership in advance of the final disposition of the proceeding, upon receipt
by the Partnership of (i) a written affirmation by the Indemnitee of the
Indemnitee’s good faith belief that the standard of conduct necessary for
indemnification by the Partnership as authorized in Section 7.7(a) has been met,
and (ii) an undertaking by or on behalf of the Indemnitee to repay such amount
if it shall be determined that the Indemnitee is not entitled to be indemnified
as authorized in Section 7.7(a).

 

(c)                                  The indemnification provided by this
Section 7.7 shall be in addition to any other rights to which an Indemnitee or
any other Person may be entitled under any agreement, pursuant to any vote of
the Partners, as a matter of law or otherwise, and shall continue as to an
Indemnitee who has ceased to serve in such capacity and shall inure to the
benefit of the heirs, successors, assigns and administrators of the Indemnitee
unless otherwise provided in a written agreement with such Indemnitee or in the
writing pursuant to which such Indemnitee is indemnified.

 

(d)                                 The Partnership may, but shall not be
obligated to, purchase and maintain insurance, on behalf of the Indemnitees and
such other Persons as the General Partner shall determine, against any liability
that may be asserted against or expenses that may be incurred by such Person in
connection with the Partnership’s activities, regardless of whether the
Partnership would have the power to indemnify such Person against such liability
under the provisions of this Agreement.

 

(e)                                  Any liabilities which an Indemnitee incurs
as a result of acting on behalf of the Partnership, the General Partner or STAG
REIT (whether as a fiduciary or otherwise) in connection with the operation,
administration or maintenance of an employee benefit plan or any related trust
or funding mechanism (whether such liabilities are in the form of excise taxes
assessed by the IRS, penalties assessed by the Department of Labor, restitutions
to such a plan or trust or other funding mechanism or to a participant or
beneficiary of such plan, trust or other funding mechanism, or otherwise) shall
be treated as liabilities or judgments or fines under this Section 7.7, unless
such liabilities arise as a result of (i) such Indemnitee’s intentional
misconduct or knowing violation of the law; (ii) any transaction in which such
Indemnitee received a personal benefit in violation or breach of any provision
of this Agreement or applicable law; or (iii) in the case of any criminal
proceeding, the Indemnitee had reasonable cause to believe that the act or
omission was unlawful.

 

(f)                                    In no event may an Indemnitee subject any
of the Partners to personal liability by reason of the indemnification
provisions set forth in this Agreement.

 

(g)                                 An Indemnitee shall not be denied
indemnification in whole or in part under this Section 7.7 because the
Indemnitee had an interest in the transaction with respect to which the
indemnification applies if the transaction was otherwise permitted by the terms
of this Agreement.

 

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(h)                                 The provisions of this Section 7.7 are for
the benefit of the Indemnitees, their heirs, successors, assigns and
administrators and shall not be deemed to create any rights for the benefit of
any other Persons.  Any amendment, modification or repeal of this Section 7.7 or
any provision hereof shall be prospective only and shall not in any way affect
the Partnership’s liability to any Indemnitee under this Section 7.7, as in
effect immediately prior to such amendment, modification, or repeal with respect
to claims arising from or relating to matters occurring, in whole or in part,
prior to such amendment, modification or repeal, regardless of when such claims
may arise or be asserted.

 

Section 7.8                                      Liability of the General
Partner.

 

(a)                                  Notwithstanding anything to the contrary
set forth in this Agreement, none of the General Partner, its Affiliates, or any
of their respective officers, trustees, directors, stockholders, partners,
members, employees, representatives or agents or any officer, employee,
representative or agent of the Partnership and its Affiliates (individually, a
“Covered Person” and collectively, the “Covered Persons”) shall be liable for
monetary damages to the Partnership, any Partners or any Assignees for losses
sustained or liabilities incurred as a result of errors in judgment or of any
act or omission if the Covered Person’s conduct did not constitute bad faith,
gross negligence or willful misconduct.

 

(b)                                 The Limited Partners expressly acknowledge
that the General Partner is acting on behalf of the Partnership and the
stockholders of STAG REIT collectively, that the General Partner is under no
obligation to consider the separate interests of the Limited Partners (except as
otherwise provided herein) in deciding whether to cause the Partnership to take
(or decline to take) any actions, and that the General Partner shall not be
liable for monetary damages for losses sustained, liabilities incurred, or
benefits not derived by Limited Partners in connection with such decisions;
provided, that the General Partner has acted in good faith.

 

(c)                                  The General Partner may exercise any of the
powers granted to it by this Agreement and perform any of the duties imposed
upon it hereunder either directly or by or through its employees and agents. 
The General Partner shall not be responsible for any misconduct or negligence on
the part of any such employee or agent appointed by the General Partner in good
faith.

 

(d)                                 Any amendment, modification or repeal of
this Section 7.8 or any provision hereof shall be prospective only and shall not
in any way affect the limitations on the Covered Person’s liability to the
Partnership and the Limited Partners under this Section 7.8 as in effect
immediately prior to such amendment, modification or repeal with respect to
claims arising from or relating to matters occurring, in whole or in part, prior
to such amendment, modification or repeal, regardless of when such claims may
arise or be asserted.

 

(e)                                  To the extent that, at law or in equity, a
Covered Person has duties (including fiduciary duties) and liabilities relating
thereto to the Partnership or to the Partners, any Covered Person acting under
this Agreement or otherwise shall not be liable to the Partnership or to any
Partner for its good faith reliance on the provisions of this Agreement.  The
provisions of this Agreement, to the extent that they restrict the duties and
liabilities of a

 

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Covered Person otherwise existing at law or in equity, are agreed by the
Partners to replace such other duties and liabilities of such Covered Person.

 

(f)                                    Whenever in this Agreement the General
Partner is permitted or required to make a decision (i) in its “sole discretion”
or “discretion,” or under a similar grant of authority or latitude, the General
Partner shall be entitled to consider such interests and factors as it desires
and may consider its own interests and the interests of STAG REIT, and shall
have no duty or obligation to give any consideration to any interest of or
factors affecting the Partnership or the Limited Partners; or (ii) in its “good
faith” or under another express standard, the General Partner shall act under
such express standard and shall not be subject to any other or different
standards imposed by this Agreement or by law or in equity or any other
agreement contemplated herein or otherwise.

 

Section 7.9                                      Other Matters Concerning the
General Partner.

 

(a)                                  The General Partner may rely and shall be
protected in acting, or refraining from acting, upon any resolution,
certificate, statement, instrument, opinion, report, notice, request, consent,
order, bond, debenture, or other paper or document believed by it in good faith
to be genuine and to have been signed or presented by the proper party or
parties.

 

(b)                                 The General Partner may consult with legal
counsel, accountants, appraisers, management consultants, investment bankers,
architects, engineers, environmental consultants and other consultants and
advisers selected by it, and any act taken or omitted to be taken in reliance
upon the opinion of such Persons as to matters which the General Partner
reasonably believes to be within such Person’s professional or expert competence
shall be conclusively presumed to have been done or omitted in good faith and in
accordance with such opinion.

 

(c)                                  The General Partner shall have the right,
in respect of any of its powers or obligations hereunder, to act through any of
its duly authorized officers and duly appointed attorneys-in-fact.  Each such
attorney shall, to the extent provided by the General Partner in the power of
attorney, have full power and authority to do and perform each and every act and
duty which is permitted or required to be done by the General Partner hereunder.

 

(d)                                 Notwithstanding any other provisions of this
Agreement or the Act, any action of the General Partner on behalf of the
Partnership or any decision of the General Partner to refrain from acting on
behalf of the Partnership, undertaken in the good faith belief that such action
or omission is necessary or advisable in order (i) to protect the ability of
STAG REIT to continue to qualify as a REIT or (ii) to avoid STAG REIT incurring
any taxes under Section 337(d), 857, 1374 or 4981 of the Code, is expressly
authorized under this Agreement and is deemed approved by all of the Limited
Partners.

 

Section 7.10                                Title to Partnership Assets.

 

Title to Partnership assets, whether real, personal or mixed and whether
tangible or intangible, shall be deemed to be owned by the Partnership as an
entity, and no Partner, individually or collectively, shall have any ownership
interest in such Partnership assets or any portion thereof.  Title to any or all
of the Partnership assets may be held in the name of the

 

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Partnership, the General Partner or one or more nominees, as the General Partner
may determine in its sole and absolute discretion, including Affiliates of the
General Partner.  The General Partner hereby declares and warrants that any
Partnership assets for which legal title is held in the name of the General
Partner or any nominee or Affiliate of the General Partner shall be held by the
General Partner for the use and benefit of the Partnership in accordance with
the provisions of this Agreement; provided, however, that the General Partner
shall use its best efforts to cause beneficial and record title to such assets
to be vested in the Partnership as soon as reasonably practicable. All
Partnership assets shall be recorded as the property of the Partnership in its
books and records, irrespective of the name in which legal title to such
Partnership assets is held.

 

Section 7.11                                Reliance by Third Parties.

 

Notwithstanding anything to the contrary in this Agreement, any Person dealing
with the Partnership shall be entitled to assume that the General Partner has
full power and authority, without consent or approval of any other Partner or
Person, to encumber, sell or otherwise use in any manner any and all assets of
the Partnership and to enter into any contracts on behalf of the Partnership,
and take any and all actions on behalf of the Partnership and such Person shall
be entitled to deal with the General Partner as if the General Partner were the
Partnership’s sole party in interest, both legally and beneficially.  Each
Limited Partner hereby waives any and all defenses or other remedies which may
be available against such Person to contest, negate or disaffirm any action of
the General Partner in connection with any such dealing. In no event shall any
Person dealing with the General Partner or its representatives be obligated to
ascertain that the terms of this Agreement have been complied with or to inquire
into the necessity or expedience of any act or action of the General Partner or
its representatives.  Each and every certificate, document or other instrument
executed on behalf of the Partnership by the General Partner or its
representatives shall be conclusive evidence in favor of any and every Person
relying thereon or claiming thereunder that (i) at the time of the execution and
delivery of such certificate, document or instrument, this Agreement was in full
force and effect; (ii) the Person executing and delivering such certificate,
document or instrument was duly authorized and empowered to do so for and on
behalf of the Partnership; and (iii) such certificate, document or instrument
was duly executed and delivered in accordance with the terms and provisions of
this Agreement and is binding upon the Partnership.

 

ARTICLE 8

RIGHTS AND OBLIGATIONS OF LIMITED PARTNERS

 

Section 8.1                                      Limitation of Liability.

 

The Limited Partners shall have no liability under this Agreement (other than
for breach thereof) except as expressly provided in this Agreement, including
Section 10.5 hereof, or under the Act.

 

Section 8.2                                      Management of Business.

 

No Limited Partner or Assignee (other than the General Partner, any of its
Affiliates or any officer, trustee, director, member, employee or agent of the
General Partner, the Partnership

 

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or any of their Affiliates, in their capacity as such) shall take part in the
operation, management or control (within the meaning of the Act) of the
Partnership’s business, transact any business in the Partnership’s name or have
the power to sign documents for or otherwise bind the Partnership.  The
transaction of any such business by the General Partner, any of its Affiliates
or any officer, trustee, director, member, employee or agent of the General
Partner, the Partnership or any of their Affiliates, in their capacity as such,
shall not affect, impair or eliminate the limitations on the liability of the
Limited Partners or Assignees under this Agreement.

 

Section 8.3                                      Outside Activities of Limited
Partners.

 

Subject to any agreements entered into pursuant to Section 7.6(e) hereof and any
other agreements entered into by a Limited Partner or its Affiliates with the
General Partner, the Partnership or any of its Subsidiaries or any Affiliate
thereof, any Limited Partner and any officer, trustee, director, member,
employee, agent, Affiliate or stockholder of any Limited Partner shall be
entitled to and may have business interests and engage in business activities in
addition to those relating to the Partnership, including business interests and
activities that are in direct competition with the Partnership or that are
enhanced by the activities of the Partnership. Neither the Partnership nor any
Partners shall have any rights by virtue of this Agreement in any business
ventures of any Limited Partner or Assignee.  None of the Limited Partners nor
any other Person shall have any rights by virtue of this Agreement or the
Partnership relationship established hereby in any business ventures of any
other Person (other than the General Partner, to the extent expressly provided
herein) and such Person shall have no obligation pursuant to this Agreement,
subject to the provisions of any other written agreements entered into by a
Limited Partner or its Affiliates with the General Partner, the Partnership or a
Subsidiary, to offer any interest in any such business ventures to the
Partnership, any Limited Partner, the General Partner or any such other Person,
even if such opportunity is of a character which, if presented to the
Partnership, any Limited Partner, the General Partner or such other Person,
could be taken by such Person.

 

Section 8.4                                      Return of Capital.

 

Except pursuant to the right of redemption set forth in Section 8.6, no Limited
Partner shall be entitled to the withdrawal or return of its Capital
Contribution, except to the extent of distributions made pursuant to this
Agreement or upon termination of the Partnership as provided herein.  Except to
the extent provided by Exhibit C hereof or as otherwise expressly provided in
this Agreement, no Limited Partner or Assignee shall have priority over any
other Limited Partner or Assignee, either as to the return of Capital
Contributions or as to profits, losses or distributions.

 

Section 8.5                                      Rights of Limited Partners
Relating to the Partnership.

 

(a)                                  In addition to the other rights provided by
this Agreement or by the Act, and except as limited by Section 8.5(c) hereof,
each Limited Partner shall have the right, for a purpose reasonably related to
such Limited Partner’s interest as a limited partner in the Partnership, upon
written demand with a statement of the purpose of such demand and at such
Limited Partner’s own expense (including such copying and administrative charges
as the General Partner may establish from time to time):

 

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(i)                                     to obtain a copy of the most recent
annual and quarterly reports prepared by STAG REIT and distributed to its
stockholders, including annual and quarterly reports filed with the Securities
and Exchange Commission by STAG REIT pursuant to the Exchange Act;

 

(ii)                                  to obtain a copy of the Partnership’s
federal, state and local income tax returns for each Partnership Year;

 

(iii)                               to obtain a current list of the name and
last known business, residence or mailing address of each Partner; and

 

(iv)                              to obtain a copy of this Agreement and the
Certificate and all amendments thereto, together with executed copies of all
powers of attorney pursuant to which this Agreement, the Certificate and all
amendments thereto have been executed.

 

(b)                                 The Partnership shall notify the requesting
Limited Partner, upon the written request of such Limited Partner, of the then
current Conversion Factor.

 

(c)                                  Notwithstanding any other provision of this
Section 8.5, the General Partner may keep confidential from the Limited
Partners, for such period of time as the General Partner determines in its sole
and absolute discretion to be reasonable, any information that (i) the General
Partner reasonably believes to be in the nature of trade secrets or other
information, the disclosure of which the General Partner in good faith believes
is not in the best interests of the Partnership or could damage the Partnership
or its business; or (ii) the Partnership is required by law or by agreements
with an unaffiliated third party to keep confidential.

 

Section 8.6                                      Redemption Right.

 

(a)                                  On or after the date that is one year from
the date of the issuance of an OP Unit or Units to a Limited Partner, subject to
Sections 8.6(b) and 8.6(c) hereof and any separate agreement entered into
between the Partnership and a Limited Partner, such Limited Partner shall have
the right (the “Redemption Right”) to require the Partnership to redeem on a
Specified Redemption Date all or a portion of the OP Units (provided, that such
OP Units constitute Common Units) held by such Limited Partner at a redemption
price per OP Unit equal to and in the form of the Cash Amount to be paid by the
Partnership; provided that the foregoing limitation shall not affect the Limited
Partner’s rights under Section 11.2(b) hereof.  The Redemption Right shall be
exercised pursuant to a Notice of Redemption delivered to the Partnership (with
a copy to the General Partner) by the Limited Partner who is exercising the
redemption right (the “Redeeming Partner”); provided, however, that the
Partnership shall not be obligated to satisfy such Redemption Right if the STAG
REIT elects to purchase the OP Units subject to the Notice of Redemption
pursuant to Section 8.6(b).  A Limited Partner may not exercise the Redemption
Right for less than one thousand (1,000) OP Units at any one time or, if such
Limited Partner holds less than one thousand (1,000) OP Units, all of the OP
Units held by such Partner.  The Redeeming Partner shall have no right, with
respect to any OP Units so redeemed, to receive any distributions with a
Partnership Record Date on or after the Specified Redemption Date.  The Assignee
of any Limited Partner may exercise the rights of such Limited Partner pursuant
to this Section 8.6, and such Limited Partner shall be deemed to have assigned

 

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such rights to such Assignee and shall be bound by the exercise of such rights
by such Assignee.  In connection with any exercise of such rights by an Assignee
on behalf of a Limited Partner, the Cash Amount shall be paid by the Partnership
directly to such Assignee and not to such Limited Partner.  Any OP Units
redeemed by the Partnership pursuant to this Section 8.6(a) shall be cancelled
upon such redemption.

 

(b)                                 Notwithstanding the provisions of
Section 8.6(a), a Limited Partner that exercises the Redemption Right shall be
deemed to have offered to sell the OP Units described in the Notice of
Redemption to STAG REIT, and STAG REIT may, in its sole and absolute discretion,
elect to purchase directly and acquire such OP Units by paying to the Redeeming
Partner the REIT Shares Amount on the Specified Redemption Date, whereupon STAG
REIT shall acquire the OP Units offered for redemption by the Redeeming Partner
and shall be treated for all purposes of this Agreement as the owner of such OP
Units.  If STAG REIT shall elect to exercise its right to purchase OP Units
under this Section 8.6(b) with respect to a Notice of Redemption, it shall so
notify the Redeeming Partner within five (5) Business Days after the receipt by
it of such Notice of Redemption.  Unless STAG REIT (in its sole and absolute
discretion) shall exercise its right to purchase OP Units from the Redeeming
Partner pursuant to this Section 8.6(b), STAG REIT shall not have any obligation
to the Redeeming Partner or the Partnership with respect to the Redeeming
Partner’s exercise of the Redemption Right.  In the event STAG REIT shall
exercise its right to purchase OP Units with respect to the exercise of a
Redemption Right in the manner described in the first sentence of this
Section 8.6(b), the Partnership shall have no obligation to pay any amount to
the Redeeming Partner with respect to such Redeeming Partner’s exercise of such
Redemption Right, and each of the Redeeming Partner, the Partnership, the
General Partner, and STAG REIT shall treat the transaction between STAG REIT and
the Redeeming Partner, for federal income tax purposes, as a sale of the
Redeeming Partner’s OP Units to STAG REIT. Each Redeeming Partner agrees to
execute such documents as the General Partner may reasonably require in
connection with the issuance of REIT Shares upon exercise of the Redemption
Right, including, if STAG REIT is relying upon the exemption from registration
under the Securities Act provided by Regulation D promulgated under the
Securities Act, or any successor rule, a document pursuant to which the
Redeeming Partner makes a representation that it is an accredited investor;
provided, however, that if the Redeeming Partner cannot make such
representation, then the Redeeming Partner shall have no right to exercise its
Redemption Right.  In case of any reclassification of the REIT Shares
(including, but not limited to, any reclassification upon a consolidation or
merger in which STAG REIT is the continuing corporation) into securities other
than REIT Shares, for purposes of this Section 8.6(b), STAG REIT may thereafter
exercise its right to purchase OP Units for the kind and amount of shares of
such securities receivable upon such reclassification by a holder of the number
of REIT Shares for which such OP Units could be purchased pursuant to this
Section immediately prior to such reclassification.  Any REIT Shares issued to a
Redeeming Partner upon the exercise by STAG REIT of its right to purchase OP
Units under this Section 8.6(b), shall not be required to be registered under
the Securities Act, unless subject to a separate agreement between STAG REIT and
the Redeeming Partner.

 

(c)                                  Notwithstanding the provisions of
Section 8.6(a) and Section 8.6(b), a Partner shall not be entitled, except as
otherwise provided in a written agreement between the Partner and the
Partnership, to exercise the Redemption Right pursuant to Section 8.6(a) to the
extent that the delivery of REIT Shares to such Partner on the Specified
Redemption Date by

 

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STAG REIT pursuant to Section 8.6(b) (regardless of whether or not STAG REIT
would in fact exercise its rights under Section 8.6(b)) would (i) be prohibited
under the Charter; (ii) require registration under the Securities Act;
(iii) cause STAG REIT to no longer qualify as a REIT under the Code; or
(iv) otherwise violate any applicable laws or regulations.

 

Section 8.7                                      Conversion of LTIP Units.

 

(a)                                  An LTIP Unitholder shall have the right
(the “Conversion Right”), at his or her option, at any time to convert all or a
portion of his or her Vested LTIP Units into OP Units; provided, however, that a
holder may not exercise the Conversion Right for less than one hundred (100)
Vested LTIP Units or, if such holder holds less than one hundred (100) Vested
LTIP Units, all of the Vested LTIP Units held by such holder.  Notwithstanding
the foregoing, in no event may a holder of Vested LTIP Units convert a number of
Vested LTIP Units that exceeds (x) the Economic Capital Account Balance of such
Limited Partner, to the extent attributable to its ownership of LTIP Units,
divided by (y) the OP Unit Economic Balance, in each case as determined as of
the effective date of conversion (the “Capital Account Limitation”).  LTIP
Unitholders shall not have the right to convert Unvested LTIP Units into OP
Units until they become Vested LTIP Units; provided, however, that when an LTIP
Unitholder is notified of the expected occurrence of an event that will cause
his or her Unvested LTIP Units to become Vested LTIP Units, such LTIP Unitholder
may give the Partnership a Conversion Notice conditioned upon and effective as
of the time of vesting and such Conversion Notice, unless subsequently revoked
by the LTIP Unitholder, shall be accepted by the Partnership subject to such
condition.  Subject to Section 8.7(c), the General Partner shall have the right
at any time to cause a conversion of Vested LTIP Units into OP Units.  In all
cases, the conversion of any LTIP Units into OP Units shall be subject to the
conditions and procedures set forth in this Section 8.7.

 

(b)                                 Subject to the Capital Account Limitation, a
holder of Vested LTIP Units may convert such Units into an equal number of fully
paid and non-assessable OP Units, giving effect to all adjustments (if any) made
pursuant to Section 4.6(a).  In order to exercise his or her Conversion Right,
an LTIP Unitholder shall deliver a notice (a “Conversion Notice”) in the form
attached as Exhibit F to the Partnership (with a copy to the General Partner)
not less than ten (10) nor more than sixty (60) days prior to a date (the
“Conversion Date”) specified in such Conversion Notice; provided, however, that
if the General Partner has not given the LTIP Unitholders notice of a proposed
or upcoming Transaction at least thirty (30) days prior to the effective date of
such Transaction, then LTIP Unitholders shall have the right to deliver a
Conversion Notice until the earlier of (x) the tenth (10th) day after such
notice from the General Partner of a Transaction or (y) the third (3rd) Business
Day immediately preceding the effective date of such Transaction. A Conversion
Notice shall be provided in the manner provided in Section 15.1.  Each LTIP
Unitholder covenants and agrees with the Partnership that all Vested LTIP Units
to be converted pursuant to this Section 8.7(b) shall be free and clear of all
liens.  Notwithstanding anything herein to the contrary, a holder of LTIP Units
may deliver a Redemption Notice pursuant to Section 8.6(a) hereof relating to
those OP Units that will be issued to such holder upon conversion of such LTIP
Units into OP Units in advance of the Conversion Date; provided, however, that
the redemption of such OP Units by the Partnership shall in no event take place
until after the Conversion Date.  For clarity, it is noted that the objective of
this paragraph is to put an LTIP Unitholder in a position where, if he or she so
wishes, the OP Units into which his or her Vested LTIP Units will be converted
can be redeemed

 

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by the Partnership simultaneously with such conversion, with the further
consequence that, if the STAG REIT elects to assume the Partnership’s redemption
obligation with respect to such OP Units under Section 8.6(b) hereof by
delivering to such holder REIT Shares rather than cash, then such holder can
have such REIT Shares issued to him or her simultaneously with the conversion of
his or her Vested LTIP Units into OP Units. The General Partner shall cooperate
with an LTIP Unitholder to coordinate the timing of the different events
described in the foregoing sentence.

 

(c)                                  The Partnership, at any time at the
election of the General Partner, may cause any number of Vested LTIP Units held
by an LTIP Unitholder to be converted (a “Forced Conversion”) into an equal
number of OP Units, giving effect to all adjustments (if any) made pursuant to
Section 4.6(a); provided, however, that the Partnership may not cause a Forced
Conversion of any LTIP Units that would not at the time be eligible for
conversion at the option of such LTIP Unitholder pursuant to Section 8.7(b).

 

(d)                                 In order to exercise its right of Forced
Conversion, the Partnership shall deliver a notice (a “Forced Conversion
Notice”) in the form attached as Exhibit G to the applicable LTIP Unitholder not
less than ten (10) nor more than sixty (60) days prior to the Conversion Date
specified in such Forced Conversion Notice.  A Forced Conversion Notice shall be
provided in the manner provided in Section 15.1.

 

(e)                                  A conversion of Vested LTIP Units for which
the holder thereof has given a Conversion Notice or the Partnership has given a
Forced Conversion Notice shall occur automatically after the close of business
on the applicable Conversion Date without any action on the part of such LTIP
Unitholder, as of which time such LTIP Unitholder shall be credited on the books
and records of the Partnership with the issuance as of the opening of business
on the next day of the number of OP Units issuable upon such conversion. After
the conversion of LTIP Units as aforesaid, the Partnership shall deliver to such
LTIP Unitholder, upon his or her written request, a certificate of the General
Partner certifying the number of OP Units and remaining LTIP Units, if any, held
by such LTIP Unitholder immediately after such conversion.  The Assignee of any
Limited Partner pursuant to Article 11 hereof may exercise the rights of such
Limited Partner pursuant to this Section 8.7 and such Limited Partner shall be
bound by the exercise of such rights by the Assignee.

 

(f)                                    For purposes of making future allocations
under Section 6.1(c) and applying the Capital Account Limitation, the portion of
the Economic Capital Account Balance of the applicable LTIP Unitholder that is
treated as attributable to his or her LTIP Units shall be reduced, as of the
date of conversion, by the product of the number of LTIP Units converted and the
OP Unit Economic Balance.

 

(g)                                 If the Partnership, the General Partner or
STAG REIT shall be a party to any transaction (including without limitation a
merger, consolidation, unit exchange, self tender offer for all or substantially
all OP Units or other business combination or reorganization, or sale of all or
substantially all of the Partnership’s assets, but excluding any transaction
which constitutes an Adjustment Event) in each case as a result of which OP
Units shall be exchanged for or converted into the right, or the holders of such
OP Units shall otherwise be entitled, to receive cash, securities or other
property or any combination thereof (each of the foregoing being

 

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referred to herein as a “Transaction”), then the General Partner shall,
immediately prior to the Transaction, exercise its right to cause a Forced
Conversion with respect to the maximum number of LTIP Units then eligible for
conversion, taking into account any allocations that occur in connection with
the Transaction or that would occur in connection with the Transaction if the
assets of the Partnership were sold at the Transaction price or, if applicable,
at a value determined by the General Partner in good faith using the value
attributed to the OP Units in the context of the Transaction (in which case the
Conversion Date shall be the effective date of the Transaction). In anticipation
of such Forced Conversion and the consummation of the Transaction, the
Partnership shall use commercially reasonable efforts to cause each LTIP
Unitholder to be afforded the right to receive in connection with such
Transaction in consideration for the OP Units into which his or her LTIP Units
will be converted the same kind and amount of cash, securities and other
property (or any combination thereof) receivable upon the consummation of such
Transaction by a holder of the same number of OP Units, assuming such holder of
OP Units is not a Person with which the Partnership consolidated or into which
the Partnership merged or which merged into the Partnership or to which such
sale or transfer was made, as the case may be (a “Constituent Person”), or an
Affiliate of a Constituent Person. In the event that holders of OP Units have
the opportunity to elect the form or type of consideration to be received upon
consummation of a Transaction, prior to such Transaction the General Partner
shall give prompt written notice to each LTIP Unitholder of such election, and
shall use commercially reasonable efforts to afford the LTIP Unitholders the
right to elect, by written notice to the General Partner, the form or type of
consideration to be received upon conversion of each LTIP Unit held by such
holder into OP Units in connection with such Transaction. If an LTIP Unitholder
fails to make such an election, such holder (and any of its transferees) shall
receive upon conversion of each LTIP Unit held by him or her (or by any of his
or her transferees) the same kind and amount of consideration that a holder of
an OP Unit would receive if such OP Unit holder failed to make such an
election.  Subject to the rights of the Partnership and the General Partner
under any LTIP Unit Agreement and the Plan, the Partnership shall use
commercially reasonable efforts to cause the terms of any Transaction to be
consistent with the provisions of this Section 8.7(g) and to enter into an
agreement with the successor or purchasing entity, as the case may be, for the
benefit of any LTIP Unitholders whose LTIP Units will not be converted into OP
Units in connection with the Transaction that will (i) contain provisions
enabling the holders of LTIP Units that remain outstanding after such
Transaction to convert their LTIP Units into securities as comparable as
reasonably possible under the circumstances to the OP Units; and (ii) preserve
as far as reasonably possible under the circumstances the distribution, special
allocation, conversion, and other rights set forth in this Agreement for the
benefit of the LTIP Unitholders.

 

Section 8.8                                      Voting Rights of LTIP Units.

 

LTIP Unitholders shall have (a) those voting rights required from time to time
by applicable law, if any, (b) the same voting rights as a holder of OP Units,
with the LTIP Units voting as a single class with the OP Units and having one
vote per LTIP Unit; and (c) the additional voting rights that are expressly set
forth below.  So long as any LTIP Units remain outstanding, the Partnership
shall not, without the affirmative vote of the holders of at least a majority of
the LTIP Units outstanding at the time, given in person or by proxy, either in
writing or at a meeting (voting separately as a class), amend, alter or repeal,
whether by merger, consolidation or otherwise, the provisions of this Agreement
applicable to LTIP Units so as to

 

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materially and adversely affect any right, privilege or voting power of the LTIP
Units or the LTIP Unitholders as such, unless such amendment, alteration, or
repeal affects equally, ratably and proportionately the rights, privileges and
voting powers of the holders of OP Units; but subject, in any event, to the
following provisions: (i) with respect to any Transaction, so long as the LTIP
Units are treated in accordance with Section 8.7(g) hereof, the consummation of
such Transaction shall not be deemed to materially and adversely affect such
rights, preferences, privileges or voting powers of the LTIP Units or the LTIP
Unitholders as such; and (ii) any creation or issuance of any OP Units or of any
class or series of Partnership Interest, including, without limitation,
additional OP Units or LTIP Units, whether ranking senior to, junior to, or on a
parity with the LTIP Units with respect to distributions and the distribution of
assets upon liquidation, dissolution or winding up, shall not be deemed to
materially and adversely affect such rights, preferences, privileges or voting
powers of the LTIP Units or the LTIP Unitholders as such. The foregoing voting
provisions will not apply if, at or prior to the time when the act with respect
to which such vote would otherwise be required will be effected, all outstanding
LTIP Units shall have been converted into OP Units.

 

ARTICLE 9

BOOKS, RECORDS, ACCOUNTING AND REPORTS

 

Section 9.1                                      Records and Accounting.

 

The General Partner shall keep or cause to be kept at the principal office of
the Partnership those records and documents required to be maintained by the Act
and other books and records deemed by the General Partner to be appropriate with
respect to the Partnership’s business, including, without limitation, all books
and records necessary to provide to the Limited Partners any information, lists
and copies of documents required to be provided pursuant to Section 9.3 hereof. 
Any records maintained by or on behalf of the Partnership in the regular course
of its business may be kept on, or be in the form of, punch cards, magnetic
tape, photographs, micrographics or any other information storage device;
provided, that the records so maintained are convertible into clearly legible
written form within a reasonable period of time.  The books of the Partnership
shall be maintained, for financial and tax reporting purposes, on an accrual
basis in accordance with GAAP, or such other basis as the General Partner
determines to be necessary or appropriate.

 

Section 9.2                                      Fiscal Year.

 

The fiscal year of the Partnership shall be the calendar year.

 

Section 9.3                                      Reports.

 

(a)                                  As soon as practicable, but in no event
later than the date on which STAG REIT mails its annual report to its
stockholders, the General Partner shall cause to be mailed to each Limited
Partner as of the close of the Partnership Year, an annual report containing
financial statements of the Partnership, or of STAG REIT if such statements are
prepared solely on a consolidated basis with STAG REIT, for such Partnership
Year, presented in accordance with GAAP, such statements to be audited by a
nationally recognized firm of independent public accountants selected by the
General Partner.

 

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(b)                                 As soon as practicable, but in no event
later than the date on which STAG REIT mails its quarterly report to its
stockholders, the General Partner shall cause to be mailed to each Limited
Partner as of the last day of the calendar quarter (except the last calendar
quarter of each year), a report containing unaudited financial statements of the
Partnership, or of STAG REIT if such statements are prepared solely on a
consolidated basis with STAG REIT, and such other information as may be required
by applicable law or regulation, or as the General Partner determines to be
appropriate.

 

(c)                                  The Partnership shall also cause to be
prepared such reports and/or information as are necessary for STAG REIT to
determine its qualification as a REIT and its compliance with the requirements
for REITs pursuant to the Code and Regulations.

 

ARTICLE 10
TAX MATTERS

 

Section 10.1                                Preparation of Tax Returns.

 

The General Partner shall arrange for the preparation and timely filing of all
returns of Partnership income, gains, deductions, losses and other items
required of the Partnership for federal and state income tax purposes and shall
use all reasonable efforts to furnish, within one hundred eighty (180) days of
the close of each taxable year, the tax information reasonably required by
Limited Partners for federal and state income tax reporting purposes.

 

Section 10.2                                Tax Elections.

 

Except as otherwise provided herein, the General Partner shall, in its sole and
absolute discretion, determine whether to make any available election pursuant
to the Code.  Notwithstanding the above, in making any such tax election the
General Partner may, but shall be under no obligation to, take into account the
tax consequences to the Limited Partners resulting from any such election.

 

The General Partner shall make such tax elections on behalf of the Partnership
as the Limited Partners holding a majority of the Percentage Interests of the
Limited Partners request; provided, that the General Partner believes that such
election is not adverse to the interests of STAG REIT, including its interest in
preserving its qualification as a REIT under the Code.  The General Partner can
elect to use any method permitted by Code Section 704(c) and the Regulations
thereunder to take into account any variation between the adjusted basis of any
property of the Partnership (including any property contributed to the
Partnership by any Partner after the date hereof) and such property’s Carrying
Value.  The General Partner shall have the right to seek to revoke any tax
election it makes (including, without limitation, an election under Section 754
of the Code) upon the General Partner’s determination, in its sole and absolute
discretion, that such revocation is in the best interests of the Partners.

 

Section 10.3                                Tax Matters Partner.

 

(a)                                  The General Partner shall be the “tax
matters partner” of the Partnership for federal income tax purposes.  Pursuant
to Section 6230(e) of the Code, upon receipt of notice from the IRS of the
beginning of an administrative proceeding with respect to the Partnership,

 

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the tax matters partner shall furnish the IRS with the name, address, taxpayer
identification number, and profit interest of each of the Limited Partners and
the Assignees; provided, however, that such information is provided to the
Partnership by the Limited Partners and the Assignees.

 

(b)                                 The tax matters partner is authorized, but
not required:

 

(i)                                     to enter into any settlement with the
IRS with respect to any administrative or judicial proceedings for the
adjustment of Partnership items required to be taken into account by a Partner
for income tax purposes (such administrative proceedings being referred to as a
“tax audit” and such judicial proceedings being referred to as “judicial
review”), and in the settlement agreement the tax matters partner may expressly
state that such agreement shall bind all Partners, except that such settlement
agreement shall not bind any Partner (i) who (within the time prescribed
pursuant to the Code and Regulations) files a statement with the IRS providing
that the tax matters partner shall not have the authority to enter into a
settlement agreement on behalf of such Partner; or (ii) who is a “notice
partner” (as defined in Section 6231(a)(8) of the Code) or a member of a “notice
group” (as defined in Section 6223(b)(2) of the Code);

 

(ii)                                  in the event that a notice of a final
administrative adjustment at the Partnership level of any item required to be
taken into account by a Partner for tax purposes (a “final adjustment”) is
mailed to the tax matters partner, to seek judicial review of such final
adjustment, including the filing of a petition for readjustment with the Tax
Court or the filing of a complaint for refund with the United States Claims
Court or the District Court of the United States for the district in which the
Partnership’s principal place of business is located;

 

(iii)                               to intervene in any action brought by any
other Partner for judicial review of a final adjustment;

 

(iv)                              to file a request for an administrative
adjustment with the IRS and, if any part of such request is not allowed by the
IRS, to file an appropriate pleading (petition or complaint) for judicial review
with respect to such request;

 

(v)                                 to enter into an agreement with the IRS to
extend the period for assessing any tax which is attributable to any item
required to be taken account of by a Partner for tax purposes, or an item
affected by such item; and

 

(vi)                              to take any other action on behalf of the
Partners or the Partnership in connection with any tax audit or judicial review
proceeding to the extent permitted by applicable law or regulations.

 

The taking of any action and the incurring of any expense by the tax matters
partner in connection with any such proceeding, except to the extent required by
law, is a matter in the sole and absolute discretion of the tax matters partner,
and the provisions relating to indemnification or liability of the General
Partner set forth in Section 7.7 and Section 7.8, respectively, of this
Agreement shall be fully applicable to the tax matters partner in its capacity
as such.

 

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(c)                                  The tax matters partner shall receive no
compensation for its services.  All third party costs and expenses incurred by
the tax matters partner in performing its duties as such (including legal and
accounting fees and expenses) shall be borne by the Partnership.  Nothing herein
shall be construed to restrict the Partnership from engaging an accounting
and/or law firm to assist the tax matters partner in discharging its duties
hereunder, so long as the compensation paid by the Partnership for such services
is reasonable.

 

Section 10.4                                Organizational Expenses.

 

The Partnership shall elect to deduct expenses, if any, incurred by it in
forming the Partnership ratably over a one-hundred eighty (180) month period as
provided in Section 709 of the Code.

 

Section 10.5                                Withholding.

 

Each Limited Partner hereby authorizes the Partnership to withhold from, or pay
on behalf of or with respect to, such Limited Partner any amount of federal,
state, local or foreign taxes that the General Partner determines that the
Partnership is required to withhold or pay with respect to any amount
distributable or allocable to such Limited Partner pursuant to this Agreement,
including, without limitation, any taxes required to be withheld or paid by the
Partnership pursuant to Section 1441, 1442, 1445, or 1446 of the Code. Any
amount paid on behalf of or with respect to a Limited Partner shall constitute a
loan by the Partnership to such Limited Partner, which loan shall be repaid by
such Limited Partner within fifteen (15) days after notice from the General
Partner that such payment must be made unless (i) the Partnership withholds such
payment from a distribution which would otherwise be made to the Limited
Partner, (ii) the General Partner determines, in its sole and absolute
discretion, that such payment may be satisfied out of the available funds of the
Partnership which would, but for such payment, be distributed to the Limited
Partner or (iii) treatment as a loan would jeopardize the STAG REIT’s status as
a REIT (in which case such Limited Partner shall pay such amount to the
Partnership on or before the date the Partnership pays such amount on behalf of
such Limited Partner). Any amounts withheld pursuant to the foregoing clause
(i) or (ii) shall be treated as having been distributed to such Limited Partner
unless, in the case of amounts governed by clause (iii), the Limited Partner
timely pays the amount withheld to the Partnership.  Each Limited Partner hereby
unconditionally and irrevocably grants to the Partnership a security interest in
such Limited Partner’s obligation to pay to the Partnership any amounts required
to be paid pursuant to this Section 10.5.  In the event that a Limited Partner
fails to pay any amounts owed to the Partnership pursuant to this Section 10.5
when due, the General Partner may, in its sole and absolute discretion, elect to
make the payment to the Partnership on behalf of such defaulting Limited
Partner, and in such event shall be deemed to have loaned such amount to such
defaulting Limited Partner and shall succeed to all rights and remedies of the
Partnership as against such defaulting Limited Partner.  Without limitation, in
such event the General Partner shall have the right to receive distributions
that would otherwise be distributable to such defaulting Limited Partner until
such time as such loan, together with all interest thereon, has been paid in
full, and any such distributions so received by the General Partner shall be
treated as having been distributed to the defaulting Limited Partner and
immediately paid by the defaulting Limited Partner to the General Partner in
repayment of such loan. Any amounts payable by a Limited Partner hereunder shall
bear interest at the lesser of (A) the base rate on corporate loans

 

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at large United States money center commercial banks, as published from time to
time in The Wall Street Journal, plus four (4) percentage points, or (B) the
maximum lawful rate of interest on such obligation, such interest to accrue from
the date such amount is due (i.e., fifteen (15) days after demand) until such
amount is paid in full.  Each Limited Partner shall take such actions as the
Partnership or the General Partner shall request in order to (i) perfect or
enforce the security interest created hereunder and (ii) cause any loan arising
hereunder to be treated as a real estate asset for purposes of
Section 856(c)(4)(A) of the Code.  Upon a Limited Partner’s complete withdrawal
from the Partnership, such Limited Partner shall be required to restore funds to
the Partnership to the extent that the cumulative amount of taxes withheld from
or paid on behalf of, or with respect to, such Limited Partner exceeds the sum
of such amounts (i) repaid to the Partnership by such Limited Partner;
(ii) withheld from distributions to such Limited Partner; and (iii) paid by the
General Partner on behalf of such Limited Partner.

 

ARTICLE 11
TRANSFERS AND WITHDRAWALS

 

Section 11.1                                Transfer.

 

(a)                                  The term “transfer,” when used in this
Article 11 with respect to an OP Unit, shall be deemed to refer to a transaction
by which the General Partner purports to assign all or any part of its General
Partner Interest to another Person or by which a Limited Partner purports to
assign all or any part of its Limited Partner Interest to another Person, and
includes a sale, assignment, gift, pledge, encumbrance, hypothecation, mortgage,
exchange or any other disposition by law or otherwise.  The term “transfer” when
used in this Article 11 does not include (i) any redemption of Partnership
Interests by the Partnership from a Limited Partner; (ii) any acquisition of OP
Units from a Limited Partner by the General Partner pursuant to Section 8.6(b);
or (iii) any distribution of OP Units by a Limited Partner to its beneficial
owners.

 

(b)                                 No Partnership Interest shall be
transferred, in whole or in part, except in accordance with the terms and
conditions set forth in this Article 11.  Any transfer or purported transfer of
a Partnership Interest not made in accordance with this Article 11 shall be null
and void.

 

(c)                                  Notwithstanding the other provisions of
this Article 11, the General Partner may transfer all of its Partnership
Interests at any time to any Person that is, at the time of such transfer, an
Affiliate of the General Partner, including any “qualified REIT subsidiary”
(within the meaning of Code Section 856(i)(2)), without the Consent of any
Limited Partners. The provisions of Sections 11.2(c), 11.3, 11.4(a) and 11.5
hereof shall not apply to any transfer permitted by this Section 11.1(c).

 

(d)                                 No part of the interest of a Partner shall
be subject to the claims of any creditor, to any spouse for alimony or support,
or to legal process, and may not be voluntarily or involuntarily alienated or
encumbered except as may be specifically provided for in this Agreement.

 

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Section 11.2                                Transfer of General Partner’s
Partnership Interest.

 

(a)                                  The General Partner may not transfer any of
its General Partner Interest or withdraw as General Partner, except as provided
in Sections 11.l(c) or 11.2(b) hereof.

 

(b)                                 The General Partner and STAG REIT may, with
the Consent of the Limited Partners (excluding the Percentage Interests held
directly or indirectly by STAG REIT), engage in, or transfer all of their
respective Partnership Interest in connection with, (i) a merger, consolidation
or other combination of their assets with another entity, (ii) a sale of all or
substantially all of their assets, whether or not in the ordinary course, or
(iii) a reclassification, recapitalization or change of any outstanding shares
of STAG REIT’s stock or other outstanding equity interests (each, a “Termination
Transaction”).  In addition, the General Partner and STAG REIT may, without the
Consent of the Limited Partners, engage in, or transfer all of their respective
Partnership Interest in connection with, a Termination Transaction if:

 

(i)                                     in connection with such Termination
Transaction, all of the Limited Partners will receive, or will have the right to
elect to receive, for each Common Unit an amount of cash, securities or other
property equal to the product of the Conversion Factor and the greatest amount
of cash, securities or other property paid to a holder of one REIT Share in
consideration of one REIT Share pursuant to the terms of such Termination
Transaction; provided, that if, in connection with such Termination Transaction,
a purchase, tender or exchange offer shall have been made to and accepted by the
holders of the outstanding REIT Shares, each holder of Common Units shall
receive, or shall have the right to elect to receive, the greatest amount of
cash, securities or other property which such holder of Common Units would have
received had it exercised its right to Redemption pursuant to Section 8.6 hereof
and received REIT Shares in exchange for its Common Units immediately prior to
the expiration of such purchase, tender or exchange offer and had thereupon
accepted such purchase, tender or exchange offer and then such Termination
Transaction shall have been consummated; or

 

(ii)                                  all of the following conditions are met: 
(A) substantially all of the assets directly or indirectly owned by the
surviving entity are owned directly or indirectly by the Partnership or another
limited partnership or limited liability company which is the survivor of a
merger, consolidation or combination of assets with the Partnership (in each
case, the “Surviving Partnership”); (B) the Persons who were Limited Partners
immediately prior to the consummation of such Termination Transaction own a
percentage interest of the Surviving Partnership based on the relative fair
market value of the net assets of the Partnership and the other net assets of
the Surviving Partnership immediately prior to the consummation of such
transaction; (C) the rights, preferences and privileges in the Surviving
Partnership of such Limited Partners are at least as favorable in all material
respects as those in effect immediately prior to the consummation of such
transaction and as those applicable to any other limited partners or
non-managing members of the Surviving Partnership; and (D) the rights of such
Limited Partners include at least one of the following: (1) the right to redeem
their interests in the Surviving Partnership for the consideration available to
such Persons pursuant to Section 11.2(b)(i) or (2) the right to redeem their
interests in the Surviving Partnership for cash on terms substantially
equivalent to those in effect with respect to their OP Units immediately prior
to the consummation of such transaction, or, if the ultimate controlling Person
of the Surviving Partnership has publicly traded common equity securities, such
common equity securities, with an exchange ratio based on the determination of
relative fair market value of such securities and the REIT Shares.

 

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(c)                                  Except as set forth in Section 11.1(c) or
11.2(b), the General Partner shall not withdraw from the Partnership and shall
not transfer all or any portion of its Partnership Interest (whether by sale,
disposition, statutory merger or consolidation, liquidation or otherwise).  Upon
any transfer of the General Partner’s Partnership Interest in accordance with
the provisions of this Article 11, the transferee shall become a successor
General Partner for all purposes herein, and shall be vested with the powers and
rights of the transferor General Partner, and shall be liable for all
obligations and responsible for all duties of the General Partner, once such
transferee has executed such instruments as may be necessary to effectuate such
admission and to confirm the agreement of such transferee to be bound by all the
terms and provisions of this Agreement with respect to the Partnership Interest
so acquired. It is a condition to any transfer by the General Partner otherwise
permitted hereunder that the transferee assumes, by operation of law or express
agreement, all of the obligations of the transferor General Partner under this
Agreement with respect to such transferred Partnership Interest, and such
transfer shall relieve the transferor General Partner of its obligations under
this Agreement.  In the event that the General Partner withdraws from the
Partnership, in violation of this Agreement or otherwise, or otherwise dissolves
or terminates, or upon an Event of Bankruptcy of the General Partner, as
described in Section 13.1(g) hereof, the remaining Partners may agree in writing
to continue the business of the Partnership by selecting a successor General
Partner in accordance with the Act.

 

Section 11.3                                Transfer of Limited Partners’
Partnership Interests.

 

(a)                                  Except as provided in Section 11.3(b), no
Limited Partner shall transfer all or any portion of its Partnership Interest to
any transferee without the written consent of the General Partner, which consent
may be withheld in its sole and absolute discretion; provided, however, that if
a Limited Partner is subject to Incapacity, such Incapacitated Limited Partner
may transfer all or any portion of its Partnership Interest.

 

(b)                                 Notwithstanding any other provision of this
Article 11 (but in all cases subject to the other provisions of this
Section 11.3), a Limited Partner may transfer all or any portion of its
Partnership Interest to any of its Affiliates and such transferee shall be
admitted as a Substituted Limited Partner, all without obtaining the consent of
the General Partner.

 

(c)                                  If a Limited Partner is subject to
Incapacity, the executor, administrator, trustee, committee, guardian,
conservator or receiver of such Limited Partner’s estate shall have all of the
rights of a Limited Partner, but not more rights than those enjoyed by other
Limited Partners, for the purpose of settling or managing the estate and such
power as the Incapacitated Limited Partner possessed to transfer all or any part
of his or its interest in the Partnership.  The Incapacity of a Limited Partner,
in and of itself, shall not dissolve or terminate the Partnership.

 

(d)                                 Without limiting the generality of
Section 11.3(a) hereof, the General Partner may prohibit any transfer by a
Limited Partner of its Partnership Interest if, in the opinion of legal counsel
to the Partnership, such transfer would require filing of a registration
statement under the Securities Act or would otherwise violate any federal or
state securities laws or regulations applicable to the Partnership or the OP
Units.

 

(e)                                  No transfer by a Limited Partner of its OP
Units may be made to any Person if (i) in the opinion of legal counsel for the
Partnership, it could reasonably be expected to

 

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cause the Partnership to be treated as an association taxable as a corporation
or a publicly traded partnership within the meaning of either Code
Section 469(k)(2) or 7704(b) or to fail to qualify for any safe harbor from
treatment as a publicly traded partnership; (ii) such transfer is effectuated
through an “established securities market” or a “secondary market” (or the
substantial equivalent thereof) within the meaning of Section 7704 of the Code;
(iii) such transfer would cause the Partnership to become, with respect to any
employee benefit plan subject to Title I of ERISA or to Section 4975 of the
Code, a “party-in-interest” (as defined in Section 3(14) of ERISA) or a
“disqualified person” (as defined in Section 4975(e)(2) of the Code); (iv) such
transfer would, in the opinion of legal counsel for the Partnership, cause any
portion of the assets of the Partnership to constitute assets of any employee
benefit plan pursuant to Department of Labor Regulations Section 2510.3-101;
(v) such transfer would subject the Partnership to be regulated under the
Investment Company Act of 1940, as amended, the Investment Advisers Act of 1940,
as amended, or the fiduciary responsibility provisions of ERISA; or (vi) such
transfer would cause the Partnership to be terminated for federal income tax
purposes pursuant to Code Section 708.

 

(f)                                    No transfer of any OP Units may be made
to a lender to the Partnership or any Person who is related (within the meaning
of Section 1.752-4(b) of the Regulations) to any lender to the Partnership whose
loan constitutes a Nonrecourse Liability, without the consent of the General
Partner, in its sole and absolute discretion.

 

(g)                                 The General Partner shall keep a register
for the Partnership on which the transfer, pledge or release of OP Units shall
be shown and pursuant to which entries shall be made to effect all transfers,
pledges or releases as required by the applicable sections of Article 8 of the
Uniform Commercial Code, as amended, in effect in the Commonwealth of
Massachusetts and the State of Delaware; provided, however, that if there is any
conflict between such requirements, the provisions of the Delaware Uniform
Commercial Code shall govern. The General Partner shall (i) place proper entries
in such register clearly showing each transfer and each pledge and grant of
security interest and the transfer and assignment pursuant thereto, such entries
to be endorsed by the General Partner; and (ii) maintain the register and make
the register available for inspection by all of the Partners and their pledgees
at all times during the term of this Agreement.  Nothing herein shall be deemed
a consent to any pledge or transfer otherwise prohibited under this Agreement.

 

Section 11.4                                Substituted Limited Partners.

 

(a)                                  A transferee of the interest of a Limited
Partner pursuant to a transfer consented to by the General Partner pursuant to
Section 11.3(a) may be admitted as a Substituted Limited Partner only with the
consent of the General Partner, which consent may be given or withheld by the
General Partner in its sole and absolute discretion.  The General Partner’s
failure or refusal to permit a transferee of any such interests to become a
Substituted Limited Partner shall not give rise to any cause of action against
the Partnership or the General Partner.  A Person shall be admitted to the
Partnership as a Substituted Limited Partner only upon the aforementioned
consent of the General Partner and the furnishing to the General Partner of
(i) evidence of acceptance, in form and substance satisfactory to the General
Partner, of all of the terms and conditions of this Agreement, including,
without limitation, the power of attorney granted in Section 2.4 hereof; (ii) a
counterpart signature page to this Agreement executed by such Person; and
(iii) such other documents and instruments as may be required or advisable, in

 

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the sole and absolute discretion of the General Partner, to effect such Person’s
admission as a Substituted Limited Partner. The admission of any Person as a
Substituted Limited Partner shall become effective on the date upon which the
name of such Person is recorded on the books and records of the Partnership,
following the consent of the General Partner to such admission.

 

(b)                                 A transferee who has been admitted as a
Substituted Limited Partner in accordance with this Article 11 shall have all
the rights and powers and be subject to all the restrictions and liabilities of
a Limited Partner under this Agreement.

 

(c)                                  Concurrently with, and as evidence of, the
admission of a Substituted Limited Partner, the General Partner shall amend
Exhibit A to reflect the name, address, number of OP Units and Percentage
Interest (as applicable) of such Substituted Limited Partner and to eliminate or
adjust, if necessary, the name, address and interest of the predecessor of such
Substituted Limited Partner.

 

Section 11.5                                Assignees.

 

If the General Partner, in its sole and absolute discretion, does not consent to
the admission of any permitted transferee as a Substituted Limited Partner, as
described in Section 11.4, such transferee shall be considered an Assignee for
purposes of this Agreement.  An Assignee shall be entitled to all the rights of
an assignee of a limited partnership interest under the Act, including the right
to receive distributions from the Partnership and the share of Net Income, Net
Losses, Recapture Income and any other items of gain, loss, deduction and credit
of the Partnership attributable to the Partnership Interest assigned to such
transferee, but shall not be deemed to be a holder of a Partnership Interest for
any other purpose under this Agreement, and shall not be entitled to request a
redemption of its interest or to vote such Partnership Interest in any matter
presented to the Limited Partners for a vote (such right to vote fully remaining
with the transferor Limited Partner). In the event any such transferee desires
to make a further assignment of any such Partnership Interest, such transferee
shall be subject to all of the provisions of this Article 11 to the same extent
and in the same manner as any Limited Partner desiring to make an assignment of
his or its Partnership Interest.

 

Section 11.6                                General Provisions.

 

(a)                                  No Limited Partner may withdraw from the
Partnership other than as a result of a permitted transfer of all of such
Limited Partner’s Partnership Interest in accordance with this Article 11 or
pursuant to redemption of all of its OP Units, or the acquisition thereof by the
General Partner, under Section 8.6.

 

(b)                                 Any Limited Partner who shall transfer all
of its Partnership Interest in a transfer permitted pursuant to this Article 11
shall cease to be a Limited Partner upon the admission of all Assignees of such
Partnership Interest as Substituted Limited Partners.  Similarly, any Limited
Partner who shall transfer all of its OP Units pursuant to a redemption of all
of its OP Units, or the acquisition thereof by the General Partner, under
Section 8.6 shall cease to be a Limited Partner.

 

(c)                                  If any Partnership Interest is transferred
or assigned in compliance with the provisions of this Article 11 or redeemed or
transferred pursuant to Section 8.6 on any day

 

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other than the first day of a Partnership Year, then Net Income, Net Losses,
each item thereof and all other items attributable to such interest for such
Partnership Year shall be divided and allocated between the transferor Partner
and the transferee Partner by taking into account their varying interests during
the Partnership Year in accordance with Section 706(d) of the Code, using the
interim closing of the books method or another permissible method selected by
the General Partner in its sole and absolute discretion.  Solely for purposes of
making such allocations, unless the General Partner decides in its sole and
absolute discretion to use another method permitted under the Code, each of such
items for the calendar month in which a Transfer occurs shall be allocated to
the transferee Partner and none of such items for the calendar month in which a
Transfer or a Redemption occurs shall be allocated to the transferor Partner, or
the Tendering Party (as the case may be) if such Transfer occurs on or before
the fifteenth (15th) day of the month, otherwise such items shall be allocated
to the transferor.  All distributions of Available Cash attributable to such
Partnership Interest with respect to which the Partnership Record Date is before
the date of such transfer, assignment, or redemption shall be made to the
transferor Partner or the Redeeming Partner, as the case may be, and in the case
of a transfer or assignment other than a redemption, all distributions of
Available Cash thereafter attributable to such Partnership Interest shall be
made to the transferee Partner.

 

ARTICLE 12
ADMISSION OF PARTNERS

 

Section 12.1                                Admission of Successor General
Partner.

 

A successor to all of the General Partner Interest pursuant to
Section 11.1(c) or 11.2 hereof who is proposed to be admitted as a successor
General Partner shall be admitted to the Partnership as the General Partner,
effective immediately upon such transfer.  Upon any such Transfer and the
admission of any such transferee as a successor General Partner in accordance
with this Section 12.1, the transferor General Partner shall be relieved of its
obligations under this Agreement and shall cease to be a general partner of the
Partnership without any separate Consent of the Limited Partners or the consent
or approval of any other Partners.  Any such transferee shall carry on the
business of the Partnership without dissolution.  In each case, the admission
shall be subject to the successor General Partner executing and delivering to
the Partnership an acceptance of all of the terms and conditions of this
Agreement and such other documents or instruments as may be required to effect
the admission.  Concurrently with, and as evidence of, the admission of a
successor General Partner, the General Partner shall amend Exhibit A and the
books and records of the Partnership to reflect the name, address and number and
classes and/or series of Partnership Units of such successor General Partner. 
In the case of such admission on any day other than the first day of a
Partnership Year, all items attributable to the General Partner Interest for
such Partnership Year shall be allocated between the transferring General
Partner and such successor as provided in Section 11.6(c) hereof.

 

Section 12.2                                Admission of Additional Limited
Partners.

 

(a)                                  A Person who makes a Capital Contribution
to the Partnership in accordance with this Agreement shall be admitted to the
Partnership as an Additional Limited Partner only upon furnishing to the General
Partner (i) evidence of acceptance, in form and substance satisfactory to the
General Partner, of all of the terms and conditions of this

 

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Agreement, including, without limitation, the power of attorney granted in
Section 2.4 hereof; (ii) a counterpart signature page to this Agreement executed
by such Person; and (iii) such other documents or instruments as may be required
in the discretion of the General Partner in order to effect such Person’s
admission as an Additional Limited Partner.  Concurrently with, and as evidence
of, the admission of an Additional Limited Partner, the General Partner shall
amend Exhibit A and the books and records of the Partnership to reflect the
name, address and number and classes and/or series of Partnership Units of such
Additional Limited Partner.

 

(b)                                 Notwithstanding anything to the contrary in
this Section 12.2, no Person shall be admitted as an Additional Limited Partner
without the consent of the General Partner, which consent may be given or
withheld in the General Partner’s sole and absolute discretion.  The admission
of any Person as an Additional Limited Partner shall become effective on the
date upon which the name of such Person is recorded on the books and records of
the Partnership, following the consent of the General Partner to such admission.

 

(c)                                  If any Additional Limited Partner is
admitted to the Partnership on any day other than the first day of a Partnership
Year, then Net Income, Net Losses, each item thereof and all other items
allocable among Partners and Assignees for such Partnership Year shall be
allocated among such Additional Limited Partner and all other Partners and
Assignees by taking into account their varying interests during the Partnership
Year in accordance with Section 706(d) of the Code, using the interim closing of
the books method. All distributions of Available Cash with respect to which the
Partnership Record Date is before the date of such admission shall be made
solely to Partners and Assignees, other than such Additional Limited Partner,
and all distributions of Available Cash thereafter shall be made to all of the
Partners and Assignees, including such Additional Limited Partner.

 

Section 12.3                                Amendment of Agreement and
Certificate of Limited Partnership.

 

For the admission to the Partnership of any Partner, the General Partner shall
take all steps necessary and appropriate under the Act to amend the records of
the Partnership and, if necessary, to prepare as soon as practical an amendment
of this Agreement (including an amendment of Exhibit A) and, if required by law,
shall prepare and file an amendment to the Certificate and may for this purpose
exercise the power of attorney granted pursuant to Section 2.4 hereof.

 

Section 12.4                                Limit on Number of Partners.  Unless
otherwise permitted by the General Partner in its sole and absolute discretion,
no Person shall be admitted to the Partnership as an Additional Limited Partner
if the effect of such admission would be to cause the Partnership to have a
number of Partners that would cause the Partnership to become a reporting
company under the Exchange Act.

 

ARTICLE 13
DISSOLUTION, LIQUIDATION AND TERMINATION

 

Section 13.1                                Dissolution.

 

The Partnership shall not be dissolved by the admission of Substituted Limited
Partners or Additional Limited Partners or by the admission of a successor
General Partner in accordance

 

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with the terms of this Agreement.  Upon the withdrawal of the General Partner,
any successor General Partner shall continue the business of the Partnership
without dissolution.  The Partnership shall dissolve, and its affairs shall be
wound up, only upon the first to occur of any of the following (“Liquidating
Events”):

 

(a)                                  the redemption (or acquisition by the
General Partner) of all OP Units other than OP Units held by the General
Partner;

 

(b)                                 an event of withdrawal of the General
Partner, as defined in the Act, other than an event of bankruptcy as defined in
the Act, unless; (i) at the time of the occurrence of such event there is at
least one remaining general partner of the Partnership who is hereby authorized
to and does carry on the business of the Partnership; or (ii) within ninety (90)
days after such event of withdrawal not less than a majority of the Percentage
Interests of the remaining Partners (or such greater Percentage Interest as may
be required by the Act and determined in accordance with the Act), determined,
in case the withdrawing General Partner continues as a Limited Partner, by both
excluding and including Limited Partner Interests continuing to be held by the
withdrawing General Partner, agrees in writing to continue the business of the
Partnership and to the appointment, effective as of the date of withdrawal, of a
successor General Partner;

 

(c)                                  an election to dissolve the Partnership
made by the General Partner in its sole and absolute discretion;

 

(d)                                 entry of a decree of judicial dissolution of
the Partnership pursuant to the provisions of the Act;

 

(e)                                  the occurrence of a Terminating Capital
Transaction; or

 

(f)                                    a final and non-appealable judgment is
entered by a court of competent jurisdiction ruling that the General Partner is
bankrupt or insolvent, or a final and non-appealable order for relief is entered
by a court with appropriate jurisdiction against the General Partner, in each
case under any federal or state bankruptcy or insolvency laws as now or
hereafter in effect (hereinafter referred to as an “Event of Bankruptcy,” and
such term as used herein is intended and shall be deemed to supersede and
replace the events of withdrawal described in Section 17-402(a)(4) and (5) of
the Act), unless prior to the entry of such order or judgment a majority of the
remaining Partners by Percentage Interest agree in writing to continue the
business of the Partnership and to the appointment, effective as of a date prior
to the date of such order or judgment, of a substitute General Partner.

 

Section 13.2                                Winding Up.

 

(a)                                  Upon the occurrence of a Liquidating Event,
the Partnership shall continue solely for the purposes of winding up its affairs
in an orderly manner, liquidating its assets, and satisfying the claims of its
creditors and Partners.  No Partner shall take any action that is inconsistent
with, or not necessary to or appropriate for, the winding up of the
Partnership’s business and affairs.  The General Partner, or, in the event there
is no remaining General Partner, any Person elected by a majority of the
Percentage Interests of the Limited Partners (the General Partner or such other
Person being referred to herein as the “Liquidator”), shall be responsible for
overseeing the winding up and dissolution of the Partnership and shall take full
account of the

 

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Partnership’s liabilities and property and the Partnership property shall be
liquidated as promptly as is consistent with obtaining the fair value thereof,
and the proceeds therefrom (which may, to the extent determined by the General
Partner, include REIT Shares) shall be applied and distributed in the following
order:

 

(i)                                     First, in satisfaction of all of the
Partnership’s debts and liabilities to creditors other than the Partners
(whether by payment or the making of reasonable provision for payment thereof);

 

(ii)                                  Second, to the payment and discharge of
all of the Partnership’s debts and liabilities to the General Partner;

 

(iii)                               Third, to the payment and discharge of all
of the Partnership’s debts and liabilities to the other Partners; and

 

(iv)                              The balance, if any, to the General Partner
and Limited Partners in accordance with their Capital Accounts, after giving
effect to all contributions, distributions, and allocations for all periods.

 

The General Partner shall not receive any additional compensation for any
services performed pursuant to this Article 13.

 

(b)                                 Notwithstanding the provisions of
Section 13.2(a) hereof which require liquidation of the assets of the
Partnership, but subject to the order of priorities set forth therein, if prior
to or upon dissolution of the Partnership the Liquidator determines that an
immediate sale of part or all of the Partnership’s assets would be impractical
or would cause undue loss to the Partners, the Liquidator may, in its sole and
absolute discretion, defer for a reasonable time the liquidation of any assets
except those necessary to satisfy liabilities of the Partnership (including to
those Partners as creditors) and/or distribute to the Partners, in lieu of cash,
as tenants in common and in accordance with the provisions of
Section 13.2(a) hereof, undivided interests in such Partnership assets as the
Liquidator deems not suitable for liquidation. Any such distributions in kind
shall be made only if, in the good faith judgment of the Liquidator, such
distributions in kind are in the best interest of the Partners, and shall be
subject to such conditions relating to the disposition and management of such
properties as the Liquidator deems reasonable and equitable and to any
agreements governing the operation of such properties at such time.  The
Liquidator shall determine the fair market value of any property distributed in
kind using such reasonable method of valuation as it may adopt.

 

(c)                                  In the discretion of the Liquidator, a pro
rata 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

 

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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 manner and order
of priority set forth in Section 13.2(a) as soon as practicable.

 

Section 13.3                                Compliance with Timing Requirements
of Regulations.

 

In the event the Partnership is “liquidated” within the meaning of Regulations
Section 1.704-l(b)(2)(ii)(g), distributions shall be made pursuant to this
Article 13 to the General Partner and Limited Partners who have positive Capital
Accounts in compliance with Regulations Section 1.704-l(b)(2)(ii)(b)(2).  If any
Partner has a deficit balance in his or its Capital Account (after giving effect
to all contributions, distributions and allocations for all taxable years,
including the year during which such liquidation occurs), such Partner shall
have no obligation to make any contribution to the capital of the Partnership
with respect to such deficit, and such deficit shall not be considered a debt
owed to the Partnership or to any other Person for any purpose whatsoever.

 

Section 13.4                                Deemed Contribution and
Distribution.

 

Notwithstanding any other provision of this Article 13, in the event the
Partnership is “liquidated” within the meaning of Regulations
Section 1.704-1(b)(2)(ii)(g), but no Liquidating Event has occurred, the
Partnership’s property shall not be liquidated, the Partnership’s liabilities
shall not be paid or discharged, and the Partnership’s affairs shall not be
wound up.  Instead, for federal income tax purposes and for purposes of
maintaining Capital Accounts pursuant to Exhibit B hereto, the Partnership shall
be deemed to have contributed all Partnership property and liabilities to a new
limited partnership in exchange for an interest in such new limited partnership
and, immediately thereafter, the Partnership will be deemed to liquidate by
distributing interests in the new limited partnership to the Partners.

 

Section 13.5                                Rights of Limited Partners.

 

Except as otherwise provided in this Agreement, each Limited Partner shall look
solely to the assets of the Partnership for the return of its Capital
Contributions and shall have no right or power to demand or receive property
other than cash from the Partnership.  Except as otherwise provided in this
Agreement, no Limited Partner shall have priority over any other Partner as to
the return of its Capital Contributions, distributions, or allocations.

 

Section 13.6                                Notice of Dissolution.

 

In the event a Liquidating Event occurs or an event occurs that would, but for
the provisions of an election by one or more Partners pursuant to Section 13.1,
result in a dissolution of the Partnership, the General Partner shall, within
thirty (30) days thereafter, provide written notice thereof to each of the
Partners.

 

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Section 13.7                                Termination of Partnership and
Cancellation of Certificate of Limited Partnership.

 

Upon the completion of the winding up of the Partnership and liquidation of its
assets, as provided in Section 13.2 hereof, the Partnership shall be terminated
by filing a certificate of cancellation with the Secretary of State of the State
of Delaware, canceling all qualifications of the Partnership as a foreign
limited partnership in jurisdictions other than the State of Delaware and taking
such other actions as may be necessary to terminate the Partnership.

 

Section 13.8                                Reasonable Time for Winding Up.

 

A reasonable time shall be allowed for the orderly winding-up of the business
and affairs of the Partnership and the liquidation of its assets pursuant to
Section 13.2 hereof, in order to minimize any losses otherwise attendant upon
such winding up, and the provisions of this Agreement shall remain in effect
among the Partners during the period of liquidation.

 

Section 13.9                                Waiver of Partition.

 

Each Partner hereby waives any right to partition of the Partnership property.

 

ARTICLE 14
AMENDMENT OF PARTNERSHIP AGREEMENT; MEETINGS

 

Section 14.1                                Amendment of Partnership Agreement.

 

(a)                                  Amendments to this Agreement may be
proposed by the General Partner or by Limited Partners holding twenty-five
percent (25%) or more of the Partnership Interests.  Following such proposal,
the General Partner shall submit any proposed amendment to the Limited
Partners.  The General Partner shall seek the written vote of the Partners on
the proposed amendment or shall call a meeting to vote thereon and to transact
any other business that it may deem appropriate.  For purposes of obtaining a
written vote, the General Partner may require a response within a reasonable
specified time, but not less than fifteen (15) days, and failure to respond in
such time period shall constitute a vote which is consistent with the General
Partner’s recommendation with respect to the proposal.  Except as otherwise
provided in this Agreement, a proposed amendment shall be adopted and be
effective as an amendment hereto if it is approved by the General Partner and it
receives the Consent of the Partners holding a majority of the Percentage
Interests of the Partners.

 

(b)                                 Notwithstanding Section 14.1(a), the General
Partner shall have the power, without the consent of the Limited Partners, to
amend this Agreement as may be required to facilitate or implement any of the
following purposes:

 

(i)                                     to add to the obligations of the General
Partner or surrender any right or power granted to the General Partner or any
Affiliate of the General Partner for the benefit of the Limited Partners;

 

(ii)                                  to reflect the admission, substitution,
termination, or withdrawal of Partners in accordance with this Agreement;

 

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(iii)                               to set forth the designations, rights
(including redemption rights that differ from those specified in Section 8.6),
powers, duties, and preferences of OP Units or other Partnership Interests
issued pursuant to Section 4.2(a) hereof;

 

(iv)                              to reflect a change that does not adversely
affect the rights of the Limited Partners hereunder in any material respect, or
to cure any ambiguity, correct or supplement any provision in this Agreement not
inconsistent with law or with other provisions, or make other changes with
respect to matters arising under this Agreement that will not be inconsistent
with law or with the provisions of this Agreement;

 

(v)                                 to modify the manner in which capital
accounts are computed;

 

(vi)                              to include provisions referenced in future
federal income tax guidance relating to compensatory partnership interests that
the General Partner believes are reasonably necessary in respect of such
guidance, including as provided in Section 4.6(c); and

 

(vii)                           to satisfy any requirements, conditions, or
guidelines contained in any order, directive, opinion, ruling or regulation of a
federal or state agency or contained in federal or state law.

 

The General Partner shall provide notice to the Limited Partners when any action
under this Section 14.1(b) is taken.

 

(c)                                  Notwithstanding Section 14.1(a) and
14.1(b) hereof, this Agreement shall not be amended without the consent of each
Partner (or Assignee who is a bona fide financial institution that loans money
or otherwise extends credit to a Limited Partner) whose rights hereunder are
adversely affected if such amendment would (i) convert a Limited Partner’s
interest in the Partnership into a General Partner Interest; (ii) modify the
limited liability of a Limited Partner; (iii) alter rights of such Partner to
receive distributions pursuant to Article 5 or Article 13, or the allocations
specified in Article 6 (except as permitted pursuant to Section 4.2 and
Section 14.1(b)(iii) hereof) in a manner adverse to such Partner;
(iv) materially alter or modify the Redemption Right and REIT Shares Amount as
set forth in Section 8.6, and the related definitions; (v) amend this
Section 14.1(c).

 

(d)                                 Notwithstanding Section 14.1(a) or
Section 14.1(b) hereof, the General Partner shall not amend Sections 4.2, 4.3,
7.3, 7.5, 7.6, 7.8, 8.5, 11.2 or 14.2 without the Consent of the Limited
Partners (excluding the Percentage Interests held directly or indirectly by STAG
REIT).

 

Section 14.2                                Meetings of the Partners.

 

(a)                                  Meetings of the Partners may be called by
the General Partner and shall be called upon the receipt by the General Partner
of a written request by Limited Partners holding twenty percent (20%) or more of
the Partnership Interests.  The request shall state the nature of the business
to be transacted.  Notice of any such meeting shall be given to all Partners not
less than seven (7) days nor more than thirty (30) days prior to the date of
such meeting.  Partners may vote in person or by proxy at such meeting. 
Whenever the vote or “Consent of the Limited Partners” is permitted or required
under this Agreement, such vote or Consent may be given at a

 

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meeting of the Partners or may be given in accordance with the procedure
prescribed in Section 14.2(b) hereof.  Except as otherwise expressly provided in
this Agreement, the Consent of holders of a majority of the Percentage Interests
held by Limited Partners shall be deemed “Consent” and “Consent of the Limited
Partners”.

 

(b)                                 Any action required or permitted to be taken
at a meeting of the Partners may be taken without a meeting if a written consent
setting forth the action so taken is signed by a majority of the Percentage
Interests of the Partners (or such other percentage as is expressly required by
this Agreement).  Such consent may be in one instrument or in several
instruments, and shall have the same force and effect as a vote of a majority of
the Percentage Interests of the Partners (or such other percentage as is
expressly required by this Agreement).  Such consent shall be filed with the
General Partner.  An action so taken shall be deemed to have been taken at a
meeting held on the effective date so certified.

 

(c)                                  Each Limited Partner may authorize any
Person or Persons to act for him by proxy on all matters in which a Limited
Partner is entitled to participate, including waiving notice of any meeting, or
voting or participating at a meeting.  Every proxy must be signed by the Limited
Partner or his or its attorney-in-fact.  No proxy shall be valid after the
expiration of eleven (11) months from the date thereof unless otherwise provided
in the proxy.  Every proxy shall be revocable at the pleasure of the Limited
Partner executing it, such revocation to be effective upon the Partnership’s
receipt of written notice of such revocation from the Limited Partner executing
such proxy.

 

(d)                                 The General Partner may set, in advance, a
record date for the purpose of determining the Partners (i) entitled to consent
to any action, (ii) entitled to receive notice of or vote at any meeting of the
Partners or (iii) in order to make a determination of Partners for any other
proper purpose.  Such date, in any case, shall not be prior to the close of
business on the day the record date is fixed and shall be not more than ninety
(90) days and, in the case of a meeting of the Partners, not less than five
(5) days, before the date on which the meeting is to be held.  If no record date
is fixed, the record date for the determination of Partners entitled to notice
of or to vote at a meeting of the Partners shall be at the close of business on
the day on which the notice of the meeting is sent, and the record date for any
other determination of Partners shall be the effective date of such Partner
action, distribution or other event.  When a determination of the Partners
entitled to vote at any meeting of the Partners has been made as provided in
this section, such determination shall apply to any adjournment thereof.

 

(e)                                  Each meeting of the Partners shall be
conducted by the General Partner or such other Person as the General Partner may
appoint pursuant to such rules for the conduct of the meeting as the General
Partner or such other Person deems appropriate.  Without limitation, meetings of
Partners may be conducted in the same manner as meetings of the stockholders of
STAG REIT and may be held at the same time, and as part of, meetings of the
stockholders of STAG REIT.

 

(f)                                    On matters on which Limited Partners are
entitled to vote, each Limited Partner holding OP Units shall have a vote equal
to the number of OP Units held.

 

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ARTICLE 15
GENERAL PROVISIONS

 

Section 15.1                                Addresses and Notice.

 

Any notice, demand, request or report required or permitted to be given or made
to a Partner or Assignee under this Agreement shall be in writing and shall be
deemed given or made when delivered in person or when sent by first class United
States mail or by other means of written or electronic communication (including
by telecopy, facsimile, electronic mail or commercial courier service) to such
Partner or Assignee at the address set forth in Exhibit A or such other address
of which such Partner shall notify the General Partner in writing.

 

Section 15.2                                Titles and Captions.

 

All article or section titles or captions in this Agreement are for convenience
only.  They shall not be deemed part of this Agreement and in no way define,
limit, extend or describe the scope or intent of any provisions hereof.  Except
as specifically provided otherwise, references to “Articles” and “Sections” are
to Articles and Sections of this Agreement.

 

Section 15.3                                Pronouns and Plurals.

 

Whenever the context may require, any pronoun used in this Agreement shall
include the corresponding masculine, feminine or neuter forms, and the singular
form of nouns, pronouns and verbs shall include the plural and vice versa.

 

Section 15.4                                Further Action.

 

The parties shall execute and deliver all documents, provide all information and
take or refrain from taking action as may be necessary or appropriate to achieve
the purposes of this Agreement.

 

Section 15.5                                Binding Effect.

 

This Agreement shall be binding upon and inure to the benefit of the parties
hereto and their heirs, executors, administrators, successors, legal
representatives and permitted assigns.

 

Section 15.6                                Creditors.

 

Other than as expressly set forth herein with respect to the Indemnitees, none
of the provisions of this Agreement shall be for the benefit of, or shall be
enforceable by, any creditor of the Partnership.

 

Section 15.7                                Waiver.

 

(a)                                  No failure by any party to insist upon the
strict performance of any covenant, duty, agreement or condition of this
Agreement or to exercise any right or remedy consequent upon a breach thereof
shall constitute a waiver of any such breach or any other covenant, duty,
agreement or condition.

 

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(b)                                 The restrictions, conditions and other
limitations on the rights and benefits of the Limited Partners contained in this
Agreement, and the duties, covenants and other requirements of performance or
notice by the Limited Partners, are for the benefit of the Partnership and,
except for an obligation to pay money to the Partnership, may be waived or
relinquished by the General Partner, in its sole and absolute discretion, on
behalf of the Partnership in one or more instances from time to time and at any
time; provided, however, that any such waiver or relinquishment may not be made
if it would have the effect of (i) creating liability for any other Limited
Partner, (ii) causing the Partnership to cease to qualify as a limited
partnership, (iii) reducing the amount of cash otherwise distributable to the
Limited Partners (other than any such reduction that affects all of the Limited
Partners holding the same class or series of Partnership Units on a uniform or
pro rata basis, if approved by a majority of the Limited Partners holding such
class or series of OP Units), (iv) resulting in the classification of the
Partnership as an association or publicly traded partnership taxable as a
corporation or causing the Partnership to fail to qualify for a safe harbor
necessary for the Partnership to avoid being treated as a publicly traded
partnership taxable as a corporation or (v) violating the Securities Act, the
Exchange Act or any state “blue sky” or other securities laws; and provided,
further, that any waiver relating to compliance with the ownership limits or
other restrictions in the Charter shall be made and shall be effective only as
provided in the Charter.

 

Section 15.8                                Counterparts.

 

This Agreement may be executed in counterparts, all of which together shall
constitute one agreement binding on all of the parties hereto, notwithstanding
that all such parties are not signatories to the original or the same
counterpart.  Each party shall become bound by this Agreement immediately upon
affixing his or its signature hereto.

 

Section 15.9                                Applicable Law.

 

This Agreement shall be construed and enforced in accordance with and governed
by the laws of the State of Delaware, without regard to the principles of
conflict of laws.

 

Section 15.10                          Invalidity of Provisions.

 

If any provision of this Agreement is or becomes invalid, illegal or
unenforceable in any respect, the validity, legality and enforceability of the
remaining provisions contained herein shall not be affected thereby.

 

Section 15.11                          Entire Agreement.

 

This Agreement contains the entire understanding and agreement among the
Partners with respect to the subject matter hereof and supersedes the Original
Agreement and any other prior written or oral understandings or agreements among
them with respect thereto.

 

Section 15.12                          No Rights as Stockholders of STAG REIT.

 

Nothing contained in this Agreement shall be construed as conferring upon the
holders of OP Units any rights whatsoever as stockholders of STAG REIT,
including, without limitation, any right to receive dividends or other
distributions made to stockholders of STAG REIT or to

 

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vote or to consent or receive notice as stockholders in respect of any meeting
of the stockholders of STAG REIT for the election of directors or any other
matter.

 

[signature page follows]

 

64

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

 

 

GENERAL PARTNER:

 

 

 

STAG Industrial GP, LLC, a Delaware limited liability company

 

 

 

By:

STAG Industrial, Inc., its member

 

 

 

 

 

 

 

By:

/s/ Benjamin S. Butcher

 

 

Name:

Benjamin S. Butcher

 

 

Title:

President

 

 

 

 

 

 

INITIAL LIMITED PARTNERS:

 

 

 

STAG Industrial, Inc., a Maryland corporation

 

 

 

 

 

 

By:

/s/ Benjamin S. Butcher

 

 

Name:

Benjamin S. Butcher

 

 

Title:

President

 

 

 

 

 

 

STAG Investments III, LLC, a Delaware limited liability company

 

 

 

 

By:

STAG Manager III, LLC, its manager

 

 

 

 

 

 

 

By:

/s/ Benjamin S. Butcher

 

 

Name:

Benjamin S. Butcher

 

 

Title:

President

 

Amended and Restated Agreement of Limited Partnership of

STAG Industrial Operating Partnership, L.P.

 

--------------------------------------------------------------------------------

 

STAG INDUSTRIAL OPERATING PARTNERSHIP, L.P.

 

Limited Partner Signature Page

 

The undersigned, desiring to become a Limited Partner of STAG Industrial
Operating Partnership, L.P., a Delaware limited partnership (the “Partnership”),
hereby becomes a party to the Amended and Restated Agreement of Limited
Partnership, as amended and in effect from time to time (the “Partnership
Agreement”), to which STAG Industrial GP, LLC, a Delaware limited liability
company, is a party as the general partner and to which STAG Industrial, Inc., a
Maryland corporation, and STAG Investments III, LLC, a Delaware limited
liability company, are parties as limited partners.  The undersigned hereby
agrees to all of the provisions of the Partnership Agreement and agrees that
this signature page may be attached to any counterpart copy of the Partnership
Agreement.

 

 

 

STAG GI Investments, LLC, a Delaware limited liability company

 

 

 

By:

STAG Capital Partners, LLC, its manager

 

 

 

 

 

 

 

By:

/s/ Benjamin S. Butcher

 

 

Name: Benjamin S. Butcher

 

 

Title: Executive Manager

 

 

 

Date: April 20, 2011

 

 

 

Amended and Restated Agreement of Limited Partnership of

STAG Industrial Operating Partnership, L.P.

 

--------------------------------------------------------------------------------

 

STAG INDUSTRIAL OPERATING PARTNERSHIP, L.P.

 

Limited Partner Signature Page

 

The undersigned, desiring to become a Limited Partner of STAG Industrial
Operating Partnership, L.P., a Delaware limited partnership (the “Partnership”),
hereby becomes a party to the Amended and Restated Agreement of Limited
Partnership, as amended and in effect from time to time (the “Partnership
Agreement”), to which STAG Industrial GP, LLC, a Delaware limited liability
company, is a party as the general partner and to which STAG Industrial, Inc., a
Maryland corporation, and STAG Investments III, LLC, a Delaware limited
liability company, are parties as limited partners.  The undersigned hereby
agrees to all of the provisions of the Partnership Agreement and agrees that
this signature page may be attached to any counterpart copy of the Partnership
Agreement.

 

 

STAG Investments IV, LLC, a Delaware limited liability company

 

 

 

 

By:

STAG Manager, LLC, its manager

 

 

 

 

 

 

 

By:

/s/ Benjamin S. Butcher

 

 

Name: Benjamin S. Butcher

 

 

Title: President

 

 

 

Date: April 20, 2011

 

 

 

Amended and Restated Agreement of Limited Partnership of

STAG Industrial Operating Partnership, L.P.

 

--------------------------------------------------------------------------------

 

STAG INDUSTRIAL OPERATING PARTNERSHIP, L.P.

 

Limited Partner Signature Page

 

The undersigned, desiring to become a Limited Partner of STAG Industrial
Operating Partnership, L.P., a Delaware limited partnership (the “Partnership”),
hereby becomes a party to the Amended and Restated Agreement of Limited
Partnership, as amended and in effect from time to time (the “Partnership
Agreement”), to which STAG Industrial GP, LLC, a Delaware limited liability
company, is a party as the general partner and to which STAG Industrial, Inc., a
Maryland corporation, and STAG Investments III, LLC, a Delaware limited
liability company, are parties as limited partners.  The undersigned hereby
agrees to all of the provisions of the Partnership Agreement and agrees that
this signature page may be attached to any counterpart copy of the Partnership
Agreement.

 

 

Net Lease Aggregation Funds, LLC, a Massachusetts limited liability company

 

 

 

 

 

 

 

By:

/s/ Benjamin S. Butcher

 

 

Name:

Benjamin S. Butcher

 

 

Title:

Manager

 

 

 

 

Date: April 20, 2011

 

 

 

 

Amended and Restated Agreement of Limited Partnership of

STAG Industrial Operating Partnership, L.P.

 

--------------------------------------------------------------------------------

 

STAG INDUSTRIAL OPERATING PARTNERSHIP, L.P.

 

Limited Partner Signature Page

 

The undersigned, desiring to become a Limited Partner of STAG Industrial
Operating Partnership, L.P., a Delaware limited partnership (the “Partnership”),
hereby becomes a party to the Amended and Restated Agreement of Limited
Partnership, as amended and in effect from time to time (the “Partnership
Agreement”), to which STAG Industrial GP, LLC, a Delaware limited liability
company, is a party as the general partner and to which STAG Industrial, Inc., a
Maryland corporation, and STAG Investments III, LLC, a Delaware limited
liability company, are parties as limited partners.  The undersigned hereby
agrees to all of the provisions of the Partnership Agreement and agrees that
this signature page may be attached to any counterpart copy of the Partnership
Agreement.

 

 

BSB STAG III, LLC, a Delaware limited liability company

 

 

 

 

 

 

By:

/s/ Benjamin S. Butcher

 

 

Name:  Benjamin S. Butcher

 

 

Title:  Manager

 

 

 

Date: April 20, 2011

 

 

 

Amended and Restated Agreement of Limited Partnership of

STAG Industrial Operating Partnership, L.P.

 

--------------------------------------------------------------------------------

 

STAG INDUSTRIAL OPERATING PARTNERSHIP, L.P.

 

Limited Partner Signature Page

 

The undersigned, desiring to become a Limited Partner of STAG Industrial
Operating Partnership, L.P., a Delaware limited partnership (the “Partnership”),
hereby becomes a party to the Amended and Restated Agreement of Limited
Partnership, as amended and in effect from time to time (the “Partnership
Agreement”), to which STAG Industrial GP, LLC, a Delaware limited liability
company, is a party as the general partner and to which STAG Industrial, Inc., a
Maryland corporation, and STAG Investments III, LLC, a Delaware limited
liability company, are parties as limited partners.  The undersigned hereby
agrees to all of the provisions of the Partnership Agreement and agrees that
this signature page may be attached to any counterpart copy of the Partnership
Agreement.

 

 

STAG III Employees, LLC, a Delaware limited liability company

 

 

 

By:

BSB STAG III, LLC, its Manager

 

 

 

 

 

 

 

 

By:

/s/ Benjamin S. Butcher

 

 

 

Name: Benjamin S. Butcher

 

 

 

Title: Manager

 

 

 

Date: April 20, 2011

 

 

 

Amended and Restated Agreement of Limited Partnership of

STAG Industrial Operating Partnership, L.P.

 

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STAG INDUSTRIAL OPERATING PARTNERSHIP, L.P.

 

Limited Partner Signature Page

 

The undersigned, desiring to become a Limited Partner of STAG Industrial
Operating Partnership, L.P., a Delaware limited partnership (the “Partnership”),
hereby becomes a party to the Amended and Restated Agreement of Limited
Partnership, as amended and in effect from time to time (the “Partnership
Agreement”), to which STAG Industrial GP, LLC, a Delaware limited liability
company, is a party as the general partner and to which STAG Industrial, Inc., a
Maryland corporation, and STAG Investments III, LLC, a Delaware limited
liability company, are parties as limited partners.  The undersigned hereby
agrees to all of the provisions of the Partnership Agreement and agrees that
this signature page may be attached to any counterpart copy of the Partnership
Agreement.

 

 

 

/s/ Benjamin S. Butcher

 

Benjamin S. Butcher

 

 

Date: April 20, 2011

 

 

Amended and Restated Agreement of Limited Partnership of

STAG Industrial Operating Partnership, L.P.

 

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STAG INDUSTRIAL OPERATING PARTNERSHIP, L.P.

 

Limited Partner Signature Page

 

The undersigned, desiring to become a Limited Partner of STAG Industrial
Operating Partnership, L.P., a Delaware limited partnership (the “Partnership”),
hereby becomes a party to the Amended and Restated Agreement of Limited
Partnership, as amended and in effect from time to time (the “Partnership
Agreement”), to which STAG Industrial GP, LLC, a Delaware limited liability
company, is a party as the general partner and to which STAG Industrial, Inc., a
Maryland corporation, and STAG Investments III, LLC, a Delaware limited
liability company, are parties as limited partners.  The undersigned hereby
agrees to all of the provisions of the Partnership Agreement and agrees that
this signature page may be attached to any counterpart copy of the Partnership
Agreement.

 

 

Innovative Promotions, LLC, a Delaware limited liability company

 

 

 

 

 

By:

/s/ Steven S. Fischman

 

 

Name:

Steven S. Fischman

 

 

Title:

Manager

 

 

Date: April 20, 2011

 

 

Amended and Restated Agreement of Limited Partnership of

STAG Industrial Operating Partnership, L.P.

 

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STAG INDUSTRIAL OPERATING PARTNERSHIP, L.P.

 

Limited Partner Signature Page

 

The undersigned, desiring to become a Limited Partner of STAG Industrial
Operating Partnership, L.P., a Delaware limited partnership (the “Partnership”),
hereby becomes a party to the Amended and Restated Agreement of Limited
Partnership, as amended and in effect from time to time (the “Partnership
Agreement”), to which STAG Industrial GP, LLC, a Delaware limited liability
company, is a party as the general partner and to which STAG Industrial, Inc., a
Maryland corporation, and STAG Investments III, LLC, a Delaware limited
liability company, are parties as limited partners.  The undersigned hereby
agrees to all of the provisions of the Partnership Agreement and agrees that
this signature page may be attached to any counterpart copy of the Partnership
Agreement.

 

 

NED STAG III Residual LLC, a Delaware limited liability company

 

 

 

 

 

By:

/s/ Stephen R. Karp

 

 

Name: Stephen R. Karp

 

 

Title: Manager

 

 

 

 

 

 

 

By:

/s/ Steven S. Fischman

 

 

Name: Steven S. Fischman

 

 

Title: Manager

 

 

 

Date: April 20, 2011

 

 

 

Amended and Restated Agreement of Limited Partnership of

STAG Industrial Operating Partnership, L.P.

 

--------------------------------------------------------------------------------

 

STAG INDUSTRIAL OPERATING PARTNERSHIP, L.P.

 

Limited Partner Signature Page

 

The undersigned, desiring to become a Limited Partner of STAG Industrial
Operating Partnership, L.P., a Delaware limited partnership (the “Partnership”),
hereby becomes a party to the Amended and Restated Agreement of Limited
Partnership, as amended and in effect from time to time (the “Partnership
Agreement”), to which STAG Industrial GP, LLC, a Delaware limited liability
company, is a party as the general partner and to which STAG Industrial, Inc., a
Maryland corporation, and STAG Investments III, LLC, a Delaware limited
liability company, are parties as limited partners.  The undersigned hereby
agrees to all of the provisions of the Partnership Agreement and agrees that
this signature page may be attached to any counterpart copy of the Partnership
Agreement.

 

 

Roseview Capital Partners, LLC, a Massachusetts limited liability company

 

 

 

 

 

By:

/s/ Vincent J. Costantini

 

 

Name:

Vincent J. Costantini

 

 

Title:

Manager, Member

 

 

Date: April 20, 2011

 

 

Amended and Restated Agreement of Limited Partnership of

STAG Industrial Operating Partnership, L.P.

 

--------------------------------------------------------------------------------

 

STAG INDUSTRIAL OPERATING PARTNERSHIP, L.P.

 

Limited Partner Signature Page

 

The undersigned, desiring to become a Limited Partner of STAG Industrial
Operating Partnership, L.P., a Delaware limited partnership (the “Partnership”),
hereby becomes a party to the Amended and Restated Agreement of Limited
Partnership, as amended and in effect from time to time (the “Partnership
Agreement”), to which STAG Industrial GP, LLC, a Delaware limited liability
company, is a party as the general partner and to which STAG Industrial, Inc., a
Maryland corporation, and STAG Investments III, LLC, a Delaware limited
liability company, are parties as limited partners.  The undersigned hereby
agrees to all of the provisions of the Partnership Agreement and agrees that
this signature page may be attached to any counterpart copy of the Partnership
Agreement.

 

 

 

/s/ Gregory W. Sullivan

 

Gregory W. Sullivan

 

 

Date: April 20, 2011

 

 

Amended and Restated Agreement of Limited Partnership of

STAG Industrial Operating Partnership, L.P.

 

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Exhibit A

 

PARTNERS’ CONTRIBUTIONS AND PARTNERSHIP INTERESTS

 

[to be attached]

 

A-1

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Exhibit B

 

CAPITAL ACCOUNT MAINTENANCE

 

1.                                       Capital Accounts of the Partners

 

(a)                                  The Partnership shall maintain for each
Partner a separate Capital Account in accordance with the rules of Regulations
Section 1.704-l(b)(2)(iv).  Such Capital Account shall be increased by (i) the
amount of all Capital Contributions and any other deemed contributions made by
such Partner to the Partnership pursuant to this Agreement; and (ii) all items
of Partnership income and gain (including income and gain exempt from tax)
computed in accordance with Section l(b) herein and allocated to such Partner
pursuant to Section 6.1 of the Agreement and Exhibit C hereof, and decreased by
(x) the amount of cash or Agreed Value of all actual and deemed distributions of
cash or property made to such Partner pursuant to the Agreement, and (y) all
items of Partnership deduction and loss computed in accordance with
Section l(b) herein and allocated to such Partner pursuant to Section 6.1 of the
Agreement and Exhibit C hereof.

 

(b)                                 For purposes of computing the amount of any
item of income, gain, deduction or loss to be reflected in the Partners’ Capital
Accounts, unless otherwise specified in the Agreement, the determination,
recognition and classification of any such item shall be the same as its
determination, recognition and classification for federal income tax purposes
determined in accordance with Section 703(a) of the Code (for this purpose all
items of income, gain, loss or deduction required to be stated separately
pursuant to Section 703(a)(1) of the Code shall be included in taxable income or
loss), with the following adjustments:

 

(i)                                     Except as otherwise provided in
Regulations Section 1.704-l(b)(2)(iv)(m), the computation of all items of
income, gain, loss and deduction shall be made without regard to any election
under Section 754 of the Code which may be made by the Partnership; provided,
that the amounts of any adjustments to the adjusted bases of the assets of the
Partnership made pursuant to Section 734 of the Code as a result of the
distribution of property by the Partnership to a Partner (to the extent that
such adjustments have not previously been reflected in the Partners’ Capital
Accounts) shall be reflected in the Capital Accounts of the Partners in the
manner and subject to the limitations prescribed in Regulations
Section 1.704-l(b)(2)(iv)(m)(4).

 

(ii)                                  The computation of all items of income,
gain, and deduction shall be made without regard to the fact that items
described in Section 705(a)(1)(B) or 705(a)(2)(B) of the Code are not includable
in gross income or are neither currently deductible nor capitalized for federal
income tax purposes.

 

(iii)                               Any income, gain or loss attributable to the
taxable disposition of any Partnership property shall be determined as if the
adjusted basis of such property as of such date of disposition were equal in
amount to the Partnership’s Carrying Value with respect to such property as of
such date.

 

B-1

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(iv)                              In lieu of the depreciation, amortization, and
other cost recovery deductions taken into account in computing such taxable
income or loss, there shall be taken into account Depreciation for such fiscal
year.

 

(v)                                 In the event the Carrying Value of any
Partnership asset is adjusted pursuant to Section 1(d) herein, the amount of any
such adjustment shall be taken into account as gain or loss from the disposition
of such asset.

 

(vi)                              Notwithstanding any other provision of this
Section 1(b), any items that are specially allocated pursuant to Exhibit C or
Section 6.1(c) of the Agreement shall not be taken into account for purposes of
computing Net Income or Net Loss.

 

The amounts of the items of Partnership income, gain, loss or deduction
available to be specially allocated pursuant to Exhibit C or Section 6.1(c) of
the Agreement shall be determined by applying rules analogous to those set forth
in Sections l(b)(i) through l(b)(v) above.

 

(c)                                  Generally, a transferee (including an
Assignee) of an OP Unit shall succeed to a pro rata portion of the Capital
Account of the transferor.

 

(d)                                 (i)                                    
Consistent with the provisions of Regulations Section 1.704-l(b)(2)(iv)(f), and
as provided in Section l(d)(ii), the Carrying Value of all Partnership assets
shall be adjusted upward or downward to reflect any Unrealized Gain or
Unrealized Loss attributable to such Partnership property, as of the times of
the adjustments provided in Section 1 (d)(ii), as if such Unrealized Gain or
Unrealized Loss had been recognized on an actual sale of each such property and
allocated pursuant to Section 6.1 of the Agreement.

 

(ii)                                  Such adjustments shall be made as of the
following times: (A) immediately prior to the acquisition of an additional
interest in the Partnership by any new or existing Partner in exchange for more
than a de minimis Capital Contribution; (B) immediately prior to the
distribution by the Partnership to a Partner of more than a de minimis amount of
property as consideration for an interest in the Partnership; (C) in connection
with the grant of an interest (including LTIP Units) in the Partnership (other
than a de minimis interest), as consideration for the provision of services to
or for the benefit of the Partnership by an existing Partner acting in a partner
capacity or by a new partner acting in a partner capacity or in anticipation of
being a partner; and (D) immediately prior to the liquidation of the Partnership
within the meaning of Regulations Section 1.704-l(b)(2)(ii)(g); provided,
however, that adjustments pursuant to clauses (A), (B) and (C) above shall be
made only if the General Partner determines that such adjustments are necessary
or appropriate to reflect the relative economic interests of the Partners in the
Partnership.

 

(iii)                               In accordance with Regulations
Section 1.704-l(b)(2)(iv)(e), the Carrying Value of Partnership assets
distributed in kind shall be adjusted upward or downward to reflect any
Unrealized Gain or Unrealized Loss attributable to such Partnership property, as
of the time any such asset is distributed.

 

(iv)                              The Carrying Value of Partnership assets shall
be increased (or decreased) to reflect any adjustments to the adjusted basis of
such assets pursuant to Code Section 734(b) or Code Section 743(b), but only to
the extent that such adjustments are taken

 

B-2

--------------------------------------------------------------------------------

 

into account in determining Capital Accounts pursuant to Regulations
Section 1.704-1(b)(2)(iv)(m) and Section l(b)(i) hereof or Section l(f) of
Exhibit C: provided, however, that Carrying Values shall not be adjusted
pursuant to this Section 1(d)(iv) to the extent that an adjustment pursuant to
Section 1(d)(ii) is required in connection with a transaction that would
otherwise result in an adjustment pursuant to this Section 1(d)(iv).

 

(v)                                 In determining Unrealized Gain or Unrealized
Loss for purposes of this Exhibit B, the aggregate cash amount and fair market
value of all Partnership assets (including cash or cash equivalents) shall be
determined by the General Partner using such reasonable method of valuation as
it may adopt, or in the case of a liquidating distribution pursuant to
Article 13 of the Agreement, shall be determined and allocated by the Liquidator
using such reasonable method of valuation as it may adopt.  The General Partner,
or the Liquidator, as the case may be, shall allocate such aggregate value among
the assets of the Partnership (in such manner as it determines in its sole and
absolute discretion to arrive at a fair market value for individual properties).

 

If the Carrying Value of an asset has been determined or adjusted pursuant to
Section l(b)(ii) or Section l(b)(iv), such Carrying Value shall thereafter be
adjusted by the Depreciation taken into account with respect to such asset, for
purposes of computing Net Income and Net Loss.

 

(e)                                  The provisions of the Agreement (including
this Exhibit B and other Exhibits to the Agreement) relating to the maintenance
of Capital Accounts are intended to comply with Regulations Section 1.704-1(b),
and shall be interpreted and applied in a manner consistent with such
Regulations.  In the event the General Partner shall determine that it is
prudent to modify (i) the manner in which the Capital Accounts or any debits or
credits thereto (including, without limitation, debits or credits relating to
liabilities which are secured by contributed or distributed property or which
are assumed by the Partnership, the General Partner, or the Limited Partners)
are computed; or (ii) the manner in which items are allocated among the Partners
for federal income tax purposes, in order to comply with such Regulations or to
comply with Section 704(c) of the Code, the General Partner may make such
modification without regard to Article 14 of the Agreement; provided, that it is
not likely to have a material effect on the amounts distributable to any Person
pursuant to Article 13 of the Agreement upon the dissolution of the
Partnership.  The General Partner also shall (i) make any adjustments that are
necessary or appropriate to maintain equality between the Capital Accounts of
the Partners and the amount of Partnership capital reflected on the
Partnership’s balance sheet, as computed for book purposes, in accordance with
Regulations Section 1.704-l(b)(2)(iv)(q); and (ii) make any appropriate
modifications in the event unanticipated events might otherwise cause the
Agreement not to comply with Regulations Section 1.704-l(b).  In addition, the
General Partner may adopt and employ such methods and procedures for (i) the
maintenance of book and tax capital accounts; (ii) the determination and
allocation of adjustments under Sections 704(c), 734 and 743 of the Code;
(iii) the determination of Net Income, Net Loss, taxable income, taxable loss
and items thereof under the Agreement and pursuant to the Code; (iv) the
adoption of reasonable conventions and methods for the valuation of assets and
the determination of tax basis; (v) the allocation of asset value and tax basis;
and (vi) conventions for the determination of cost recovery, depreciation and
amortization deductions, as it determines in its sole discretion are

 

B-3

--------------------------------------------------------------------------------

 

necessary or appropriate to execute the provisions of the Agreement, to comply
with federal and state tax laws, and are in the best interest of the Partners.

 

2.                                       No Interest

 

No interest shall be paid by the Partnership on Capital Contributions or on
balances in Partners’ Capital Accounts.

 

3.                                       No Withdrawal

 

No Partner shall be entitled to withdraw any part of his or its Capital
Contribution or his or its Capital Account or to receive any distribution from
the Partnership, except as provided in Articles 4, 5 and 13 of the Agreement.

 

B-4

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Exhibit C

 

SPECIAL ALLOCATION RULES

 

1.                                       Special Allocation Rules

 

Notwithstanding any other provision of the Agreement or this Exhibit C, the
following special allocations shall be made in the following order:

 

(a)                                  Minimum Gain Chargeback.  Notwithstanding
the provisions of Section 6.1 of the Agreement or any other provisions of this
Exhibit C, if there is a net decrease in Partnership Minimum Gain during any
Partnership taxable year, then, subject to the exceptions set forth in
Regulations Sections 1.704-2(f)(2)-(5), each Partner shall be specially
allocated items of Partnership income and gain for such year (and, if necessary,
subsequent years) in an amount equal to such Partner’s share of the net decrease
in Partnership Minimum Gain, as determined under Regulations Section 1.704-2(g).
Allocations pursuant to the previous sentence shall be made in proportion to the
respective amounts required to be allocated to each Partner pursuant thereto. 
The items to be so allocated shall be determined in accordance with Regulations
Section 1.704-2(f)(6).  This Section l(a) is intended to comply with the minimum
gain chargeback requirements in Regulations Section 1.704-2(f) and shall be
interpreted consistently therewith.  Solely for purposes of this Section 1(a),
each Partner’s Adjusted Capital Account Deficit shall be determined prior to any
other allocations pursuant to Section 6.1 of the Agreement of Partner Minimum
Gain during such Partnership taxable year.

 

(b)                                 Partner Minimum Gain Chargeback. 
Notwithstanding any other provision of Section 6.1 of the Agreement or any other
provisions of this Exhibit C (except Section 1(a) hereof), if there is a net
decrease in Partner Minimum Gain attributable to a Partner Nonrecourse Debt
during any Partnership taxable year, then, subject to the exceptions referred to
in Regulations Section 1.704-2(i)(4), each Partner who has a share of the
Partner Minimum Gain attributable to such Partner Nonrecourse Debt, determined
in accordance with Regulations Section 1.704-2(i)(5), shall be specially
allocated items of Partnership income and gain for such year (and, if necessary,
subsequent years) in an amount equal to such Partner’s share of the net decrease
in Partner Minimum Gain attributable to such Partner Nonrecourse Debt,
determined in accordance with Regulations Section 1.704-2(i)(5). Allocations
pursuant to the previous sentence shall be made in proportion to the respective
amounts required to be allocated to each Partner pursuant thereto.  The items to
be so allocated shall be determined in accordance with Regulations
Section 1.704-2(i)(4).  This Section 1(b) is intended to comply with the minimum
gain chargeback requirement in such Section of the Regulations and shall be
interpreted consistently therewith.  Solely for purposes of this Section 1(b),
each Partner’s Adjusted Capital Account Deficit shall be determined prior to any
other allocations pursuant to Section 6.1 of the Agreement or this Exhibit with
respect to such Partnership taxable year, other than allocations pursuant to
Section 1(a) hereof.

 

(c)                                  Qualified Income Offset.  In the event any
Partner unexpectedly receives any adjustments, allocations or distributions
described in Regulations Section 1.704-l(b)(2)(ii)(d)(4), 1.704-1
(b)(2)(ii)(d)(5), or 1.704-l(b)(2)(ii)(d)(6), and after giving effect to the

 

C-1

--------------------------------------------------------------------------------

 

allocations required under Sections 1(a) and 1(b) hereof, such Partner has an
Adjusted Capital Account Deficit, items of Partnership income and gain
(consisting of a pro rata portion of each item of Partnership income, including
gross income and gain for the Partnership taxable year) shall be specially
allocated to such Partner in an amount and manner sufficient to eliminate, to
the extent required by the Regulations, its Adjusted Capital Account Deficit
created by such adjustments, allocations or distributions as quickly as
possible. This Section l(c) is intended to constitute a qualified income offset
under Regulations Section 1.704-1(b)(2)(ii)(d) and shall be interpreted
consistently therewith.

 

(d)                                 Nonrecourse Deductions.  Nonrecourse
Deductions for any Partnership taxable year shall be allocated to the Partners
in accordance with their respective Percentage Interests.  If the General
Partner determines in its good faith discretion that the Partnership’s
Nonrecourse Deductions must be allocated in a different ratio to satisfy the
safe harbor requirements of the Regulations promulgated under Section 704(b) of
the Code, the General Partner is authorized, upon notice to the Limited
Partners, to revise the prescribed ratio to the numerically closest ratio for
such Partnership taxable year which would satisfy such requirements.

 

(e)                                  Partner Nonrecourse Deductions.  Any
Partner Nonrecourse Deductions for any Partnership taxable year shall be
specially allocated to the Partner who bears the economic risk of loss with
respect to the Partner Nonrecourse Debt to which such Partner Nonrecourse
Deductions are attributable in accordance with Regulations Section 1.704-2(i).

 

(f)                                    Code Section 754 Adjustments.  To the
extent an adjustment to the adjusted tax basis of any Partnership asset pursuant
to Section 734(b) or 743(b) of the Code is required, pursuant to Regulations
Section 1.704-l(b)(2)(iv)(m), to be taken into account in determining Capital
Accounts, the amount of such adjustment to the Capital Accounts shall be treated
as an item of gain (if the adjustment increases the basis of the asset) or loss
(if the adjustment decreases such basis), and such item of gain or loss shall be
specially allocated to the Partners in a manner consistent with the manner in
which their Capital Accounts are required to be adjusted pursuant to such
Section of the Regulations.

 

(g)                                 Curative Allocations.  The allocations set
forth in Section 1(a) through l(f) of this Exhibit C (the “Regulatory
Allocations”) are intended to comply with certain requirements of the
Regulations under Section 704(b) of the Code.  The Regulatory Allocations may
not be consistent with the manner in which the Partners intend to divide
Partnership distributions.  Accordingly, the General Partner is hereby
authorized to divide other allocations of income, gain, deduction and loss among
the Partners so as to prevent the Regulatory Allocations from distorting the
manner in which Partnership distributions will be divided among the Partners. 
In general, the Partners anticipate that, if necessary, this will be
accomplished by specially allocating other items of income, gain, loss and
deduction among the Partners so that the net amount of the Regulatory
Allocations and such special allocations to each person is zero.  However, the
General Partner will have discretion to accomplish this result in any reasonable
manner; provided, however, that no allocation pursuant to this
Section l(g) shall cause the Partnership to fail to comply with the requirements
of Regulations Section 1.704-l(b)(2)(ii)(d), -2(e) or -2(i).

 

C-2

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2.                                       Allocations for Tax Purposes

 

(h)                                 Except as otherwise provided in this
Section 2, for federal income tax purposes, each item of income, gain, loss and
deduction shall be allocated among the Partners in the same manner as its
correlative item of “book” income, gain, loss or deduction is allocated pursuant
to Section 6.1 of the Agreement and Section 1 of this Exhibit C.

 

(i)                                     In an attempt to eliminate Book-Tax
Disparities attributable to a Contributed Property or Adjusted Property, items
of income, gain, loss, and deduction shall be allocated for federal income tax
purposes among the Partners as follows:

 

(i)                                                
(A)                              In the case of a Contributed Property, such
items attributable thereto shall be allocated among the Partners, consistent
with the principles of Section 704(c) of the Code and the Regulations
thereunder, and with the procedures and methods described in Section 10.2 of the
Agreement, to take into account the variation between the 704(c) Value of such
property and its adjusted basis at the time of contribution; and

 

(B)                                any item of Residual Gain or Residual Loss
attributable to a Contributed Property shall be allocated among the Partners in
the same manner as its correlative item of “book” gain or loss is allocated
pursuant to Section 6.1 of the Agreement and Section 1 of this Exhibit C.

 

(ii)                                  (A)                              In the
case of an Adjusted Property, such items shall:

 

(I)                                    first, be allocated among the Partners in
a manner consistent with the principles of Section 704(c) of the Code and the
Regulations thereunder to take into account the Unrealized Gain or Unrealized
Loss attributable to such property and the allocations thereof pursuant to
Exhibit B; and

 

(II)                                second, in the event such property was
originally a Contributed Property, be allocated among the Partners in a manner
consistent with Section 2(b)(i) of this Exhibit C; and

 

(B)                                any item of Residual Gain or Residual Loss
attributable to an Adjusted Property shall be allocated among the Partners in
the same manner as its correlative item of “book” gain or loss is allocated
pursuant to Section 6.1 of the Agreement and Section 1 of this Exhibit C.

 

(j)                                     To the extent that the Treasury
Regulations promulgated pursuant to Section 704(c) of the Code permit the
Partnership to utilize alternative methods to eliminate the disparities between
the Carrying Value of property and its adjusted basis, the General Partner shall
have the authority to elect the method to be used by the Partnership and such
election shall be binding on all Partners.

 

C-3

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3.                                       No Withdrawal

 

No Partner shall be entitled to withdraw any part of its Capital Contribution or
its Capital Account or to receive any distribution from the Partnership, except
as provided in Articles 4, 5 and 13 of the Agreement.

 

C-4

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Exhibit D

 

NOTICE OF REDEMPTION

 

The undersigned Limited Partner hereby irrevocably requests STAG Industrial
Operating Partnership, L.P., a Delaware limited partnership (the “Partnership”),
to redeem                    OP Units in the Partnership in accordance with the
terms of the Amended and Restated Agreement of Limited Partnership of the
Partnership (the “Agreement”) and the Redemption Right referred to therein; and
the undersigned Limited Partner irrevocably (i) surrenders such OP Units and all
right, title and interest therein; and (ii) directs that the Cash Amount or REIT
Shares Amount (as determined by the General Partner) deliverable upon exercise
of the Redemption Right be delivered to the address specified below, and if REIT
Shares are to be delivered, such REIT Shares be registered or placed in the
name(s) and at the address(es) specified below. The undersigned hereby
represents, warrants, and certifies that the undersigned (a) has marketable and
unencumbered title to such OP Units, free and clear of the rights or interests
of any other Person; (b) has the full right, power, and authority to request
such redemption and surrender such OP Units as provided herein; and (c) has
obtained the consent or approval of all Persons, if any, having the right to
consent or approve such redemption and surrender of such OP Units.  The
undersigned Limited Partner further agrees that, in the event that any state or
local property tax is payable as a result of the transfer of its OP Units to the
Partnership or STAG REIT, the undersigned Limited Partner shall assume and pay
such transfer tax.

 

All capitalized terms used herein and not otherwise defined shall have the
respective meanings ascribed to them in the Agreement.

 

Dated:

 

 

 

 

 

(Please Print Name of Limited Partner)

 

 

 

 

 

 

 

 

(Signature of Limited Partner)

 

 

 

 

 

 

 

 

(Street Address)

 

 

 

 

 

 

 

 

(City) (State) (Zip Code)

 

 

 

 

 

Signature Guaranteed by:

 

 

 

 

 

 

If REIT Shares are to be issued, issue to:

 

 

 

 

 

Name:

 

 

 

Address:

 

 

 

 

 

 

 

Social security or identifying number:

 

 

 

 

 

 

D-1

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Exhibit E

 

CONSTRUCTIVE OWNERSHIP DEFINITION

 

The term “Constructively Owns” means ownership determined through the
application of the constructive ownership rules of Section 318 of the Code, as
modified by Section 856(d)(5) of the Code.  Generally, as of the date of the
Agreement, these rules provide the following:

 

a.                                       an individual is considered as owning
the Ownership Interest that is owned, actually or constructively, by or for his
spouse, his children, his grandchildren, and his parents;

 

b.                                      an Ownership Interest that is owned,
actually or constructively, by or for a partnership, limited liability company
or estate is considered as owned proportionately by its partners or
beneficiaries;

 

c.                                       an Ownership Interest that is owned,
actually or constructively, by or for a trust is considered as owned by its
beneficiaries in proportion to the actuarial interest of such beneficiaries
(provided, however, that in the case of a “grantor trust” the Ownership Interest
will be considered as owned by the grantors);

 

d.                                      if ten percent (10%) or more in value of
the stock in a corporation is owned, actually or constructively, by or for any
Person, such Person shall be considered as owning the Ownership Interest that is
owned, actually or constructively, by or for such corporation in that proportion
which the value of the stock which such Person so owns bears to the value of all
the stock in such corporation;

 

e.                                       an Ownership Interest that is owned,
actually or constructively, by or for a partner or member which actually or
constructively owns a 25% or greater capital interest or profits interest in a
partnership or limited liability company, or by or to or for a beneficiary of an
estate or trust shall be considered as owned by the partnership, limited
liability company, estate, or trust (or, in the case of a grantor trust, the
grantors);

 

f.                                         if ten percent (10%) or more in value
of the stock in a corporation is owned, actually or constructively, by or for
any Person, such corporation shall be considered as owning the Ownership
Interest that is owned, actually or constructively, by or for such Person;

 

g.                                      if any Person has an option to acquire
an Ownership Interest (including an option to acquire an option or any one of a
series of such options), such Ownership Interest shall be considered as owned by
such Person;

 

h.                                      an Ownership Interest that is
constructively owned by a Person by reason of the application of the rules
described in paragraphs (a) through (g) above shall, for purposes of applying
paragraphs (a) through (g), be considered as actually owned by such Person;
provided, however, that (i) an Ownership Interest constructively owned by an
individual by reason of paragraph (a) shall not be considered as owned by him
for purposes of again applying paragraph (a) in order to make another Person the
constructive owner of such Ownership Interest; (ii) an Ownership Interest
constructively owned by a partnership, estate, trust, or corporation by reason

 

E-1

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of the application of paragraphs (e) or (f) shall not be considered as owned by
it for purposes of applying paragraphs (b), (c), or (d) in order to make another
Person the constructive owner of such Ownership Interest; (iii) if an Ownership
Interest may be considered as owned by an individual under paragraph (a) or (g),
it shall be considered as owned by him under paragraph (g), and (iv) for
purposes of the above described rules, an S corporation shall be treated as a
partnership and any stockholder of the S corporation shall be treated as a
partner of such partnership except that this rule shall not apply for purposes
of determining whether stock in the S corporation is constructively owned by any
Person.

 

i.                                          For purposes of the above summary of
the constructive ownership rules, the term “Ownership Interest” means the
ownership of stock with respect to a corporation and, with respect to any other
type of entity, the ownership of an interest in either its assets or net
profits.

 

E-2

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Exhibit F

 

NOTICE OF CONVERSION

 

The undersigned LTIP Unitholder hereby irrevocably (i) elects to convert the
number of LTIP Units in STAG Industrial Operating Partnership, L.P. (the
“Partnership”) set forth below into OP Units in accordance with the terms of the
Amended and Restated Agreement of Limited Partnership of the Partnership, as it
may be amended, supplemented or restated from time to time; and (ii) directs
that any cash in lieu of OP Units that may be deliverable upon such conversion
be delivered to the address specified below. The undersigned hereby represents,
warrants, and certifies that the undersigned (a) has title to such LTIP Units,
free and clear of the rights or interests of any other person or entity other
than the Partnership; (b) has the full right, power, and authority to cause the
conversion of such LTIP Units as provided herein; and (c) has obtained the
consent or approval of all persons or entities, if any, having the right to
consent or approve such conversion.

 

Name of LTIP Unitholder:

 

 

 

(Please Print Exact Name as Registered with Partnership)

 

 

 

Number of LTIP Units to be Converted:

 

 

 

 

Date of this Notice:

 

 

 

 

 

 

 

 

(Signature of Limited Partner: Sign Exact Name as Registered with Partnership)

 

 

 

 

 

(Street Address)

(City) (State) (Zip Code)

 

 

 

 

 

 

 

Signature Guaranteed by:

 

 

 

F-1

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Exhibit G

 

NOTICE OF FORCED CONVERSION

 

STAG Industrial Operating Partnership, L.P. (the “Partnership”) hereby
irrevocably elects to cause the number of LTIP Units held by the LTIP Unitholder
set forth below to be converted into OP Units in accordance with the terms of
the Amended and Restated Agreement of Limited Partnership of the Partnership, as
it may be amended, supplemented and restated from time to time.

 

Name of LTIP Unitholder:

 

 

 

 

 

Number of LTIP Units to be Converted:

 

 

 

 

 

Date of this Notice:

 

 

 

G-1

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Exhibit H

 

SCHEDULE OF PARTNERS’ OWNERSHIP
WITH RESPECT TO TENANTS

 

[None.]

 

H-1

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