SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from _________ to _________
Commission file number 1-11986
TANGER FACTORY OUTLET CENTERS, INC.
(Exact name of Registrant as specified in its charter)
NORTH CAROLINA
(State or other jurisdiction of
incorporation or organization)
1400 WEST NORTHWOOD STREET
GREENSBORO, NC 27408
(Address of principal executive offices)
56-1815473
(I.R.S. Employer
Identification No.)
(910) 274-1666
(Registrant's telephone number)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of exchange on which registered
Common stock, $.01 par value New York Stock Exchange
Series A Cumulative Convertible Redeemable
Preferred Stock, $.01 par value New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No___
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K.[ ]
The aggregate market value of voting shares held by nonaffiliates of the
Registrant was approximately $134,644,000 based on the closing price on the New
York Stock Exchange for such stock on February 28, 1997.
The number of shares of the Registrant's common stock outstanding as of February
28, 1997 was 6,715,855.
DOCUMENTS INCORPORATED BY REFERENCE
Part III incorporates certain information by reference from the Registrant's
definitive proxy statement to be filed with respect to the Annual Meeting of
Shareholders to be held May 9, 1997.
<PAGE>
PART I
ITEM 1. BUSINESS
THE COMPANY
Tanger Factory Outlet Centers, Inc. (the "Company"), a fully-integrated,
self-administered and self-managed real estate investment trust ("REIT"),
focuses exclusively on developing, owning and operating factory outlet centers,
and provides all development, leasing and management services for its centers.
According to Value Retail News, an industry publication, the Company believes
that it is one of the largest owners and operators of factory outlet centers in
the United States. As of December 31, 1996, the Company owned and operated 27
factory outlet centers (the "Properties") with a total gross leasable area
("GLA") of approximately 3.8 million square feet. These centers are
approximately 99% leased, contain over 900 stores and represent over 220 brand
name companies as of such date.
The Properties are presently held by, and all of the Company's operations are
conducted by, the Company's majority-owned subsidiary, Tanger Properties Limited
Partnership (the "Operating Partnership"). Accordingly, the descriptions of the
business, employees and properties of the Company are also descriptions of the
business, employees and properties of the Operating Partnership.
The Company is the sole managing general partner of the Operating Partnership
and The Tanger Family Limited Partnership is the sole limited partner. As of
December 31, 1996, the ownership interests in the Operating Partnership (the
"Units") consisted of 6,602,510 general partnership Units and 106,419 general
preferred partnership Units (which are convertible into approximately 958,835
general partnership Units) held by the Company and 3,033,305 limited partnership
Units held by the Tanger Family Limited Partnership. The Units are exchangeable,
subject to certain limitations to preserve the Company's status as a REIT, into
shares of Common Stock. See "Business-The Operating Partnership". Management of
the Company beneficially owns approximately 33% of all outstanding Common Stock
and partnership interests exchangeable for Common Stock (without giving effect
to the exercise of any outstanding stock and Unit options).
The Company operates in a manner intended to enable it to qualify as a REIT
under the Internal Revenue Code of 1986, as amended (the "Code") and therefore
will not be subject to federal income tax. Direct or constructive ownership of
more than 29,400 shares of the Series A Preferred Stock (or a lesser amount in
certain cases), whether owned directly or through ownership of Depositary Shares
(each representing 1/10 of a share of the Series A Preferred Stock), or more
than 4% of the Common Stock (including as a result of the conversion of Series A
Preferred Stock) is restricted to preserve the Company's status as a REIT. To
maintain its qualification as a REIT for federal income tax purposes, the
Company is required, among other things, to make distributions (including
distributions on preferred stock) equal to at least 95% of its taxable income
each year.
The Company's executive offices are located at 1400 West Northwood Street,
Greensboro, North Carolina, 27408, its telephone number is (910) 274-1666 and
its web site is located at www.tangeroutlet.com. The Company is a North Carolina
corporation that was formed in March 1993.
RECENT DEVELOPMENTS
During 1996, the Company completed six expansions totalling 181,142 square feet.
Construction has also commenced on the initial phase of a new center in
Riverhead, New York totalling approximately 240,000 square feet. Approximately
93% of this additional GLA is leased or committed to be leased and is expected
to be opened by late Spring of 1997. In addition, the Company is in the
preleasing stages of three new sites located in Concord, NC (Charlotte),
Romulus, MI (Detroit) and Ashburn, VA (Washington, D.C.).
Subsequent to year end, on February 28, 1997, the Company completed the purchase
of an existing factory outlet center in Sevierville, Tennessee containing
approximately 123,000 square feet (the "Sevierville Property") for an aggregate
purchase price of $18.0 million. Information in Item 1 and Item 2 herein
provided as of February 28, 1997 does not include information with respect to
the Sevierville Property.
2
<PAGE>
The Company also is in the process of developing plans for additional expansions
and new centers for completion in 1998 and beyond and will consider other
acquisitions that are suitable for its portfolio. However, there can be no
assurance that any of these anticipated or planned developments or expansions
will be started or completed as scheduled, or that any acquisitions will be
made.
The Company and the Operating Partnership filed a shelf registration statement
in November 1995 with the Securities and Exchange Commission to issue up to $100
million in equity securities and $100 million in debt securities. During March
1996, the Company used a portion of its borrowing capacity under the shelf
registration to issue, through the Operating Partnership, $75 million of senior,
unsecured notes, maturing March 11, 2001, with a coupon rate of 8.75% (effective
yield of 8.926%). The proceeds of this offering were used to extinguish the
Company's revolving lines of credit existing prior to January 1996. In April
1996, the Company filed a new registration statement with the SEC to reestablish
the total amount of funds available under the shelf registration at $200
million.
During the year, the Company established a new $50 million secured line of
credit, with interest payable at LIBOR plus 1.5% and established other unsecured
lines of credit totalling $40 million with interest rates ranging from prime
less .25% to prime or LIBOR plus 1.75% to LIBOR plus 1.85%. Amounts available
under these lines of credit, based on debt outstanding at December 31, 1996,
totalled $62.2 million. When considered with the Company's existing interest
rate protection agreement covering $10 million of variable rate debt, the
Company's exposure to interest rate risk on variable rate borrowings outstanding
at December 31, 1996 was limited to $17.8 million. Also, with the addition of
the unsecured borrowings, the Company has effectively unencumbered approximately
55% of its gross real estate assets.
See "Business-Capital Strategy".
THE FACTORY OUTLET CONCEPT
Factory outlets are manufacturer-operated retail stores that sell primarily
first quality, branded goods at significant discounts from regular retail prices
charged by department stores and specialty stores. Factory outlet centers offer
numerous advantages to both consumers and manufacturers. Manufacturers in a
factory outlet store are often able to charge customers lower prices for brand
name and designer products by eliminating the third party retailer, and because
factory outlet centers typically have low operating costs. Factory outlet
centers enable manufacturers to optimize the size of production runs while
continuing to maintain control of their distribution channels. In addition,
factory outlet centers benefit manufacturers by permitting them to sell
out-of-season, overstocked or discontinued merchandise without alienating
department stores or hampering the manufacturer's brand name, as is often the
case when merchandise is distributed via discount chains.
The Company's factory outlet centers are typically located near interstate
highways and at least 20 miles from downtown areas, where major department
stores and manufacturer-owned full price retail stores are usually located.
Manufacturers prefer these locations so that they do not compete directly with
their major customers and their own stores. Factory outlet centers are located
near tourist destinations to attract tourists who consider shopping to be a
recreational activity. Close proximity to interstate highways provides
accessibility and visibility to potential customers.
Management believes that factory outlet centers continue to present attractive
opportunities for capital investment by the Company, particularly with respect
to strategic expansions of existing centers. Because of the moderate land and
construction costs and the availability of local government incentives provided
by communities seeking economic growth, factory outlet centers can be developed
or expanded relatively inexpensively. Management believes that under present
conditions such development costs, coupled with current market lease rates,
permit attractive investment returns. Management further believes, based upon
its contacts with present and prospective tenants, that many companies,
including new entrants into the factory outlet business, desire to open a number
of new factory outlet stores in the next several years, particularly where there
are successful factory outlet centers in which such companies do not have a
significant presence or where there are few factory outlet centers. Thus, the
Company believes that its commitment to developing and expanding factory outlet
centers is justified by the potential financial returns on such centers.
3
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THE COMPANY'S FACTORY OUTLET CENTERS
The Company's factory outlet centers are designed to attract national brand name
tenants. As one of the original participants in this industry, the Company has
developed long-standing relationships with many national and regional
manufacturers. Because of its established relationships with many manufacturers,
the Company believes it is well positioned to capitalize on industry growth.
The Company's factory outlet centers range in size from 8,000 to 286,195 square
feet of GLA and are typically located a significant distance from downtown areas
and major department stores. All of the centers are located near a tourist
destination and/or an interstate highway, providing accessibility and visibility
to prospective customers.
As of December 31, 1996, the Company had a diverse tenant base comprised of over
220 different well-known, upscale, national designer or brand name companies.
Most stores are directly operated by the respective manufacturer. Unlike some
other outlet center developers, the Company has for the most part excluded
off-price retailers (retailers that sell merchandise from a number of sources,
often second quality, limited stock or non-name brand items) from its centers.
The Company believes that this policy helps it attract and maintain a high
quality tenant base.
No single tenant (including affiliates) accounted for 10% or more of combined
base and percentage rental revenues during 1996. During 1995 and 1994, one
tenant (including affiliates) accounted for approximately 10% and 11% of
combined base and percentage rental revenues. Because the typical tenant of the
Company is a large, national manufacturer, the Company has not experienced any
material problems with respect to rent collections or lease defaults.
Minimum base rental revenues and operating expense reimbursements accounted for
approximately 96% of the Company's total revenues in 1996. Percentage rental
revenues accounted for approximately 3% of 1996 revenues. As a result, only a
small portion of the Company's revenues are dependent on contingent revenue
sources, such as percentage rents, which fluctuate depending on tenant's sales
performance.
BUSINESS HISTORY
Stanley K. Tanger, the Company's Chairman and Chief Executive Officer, entered
the factory outlet center business in 1981. Prior to founding the Company,
Stanley K. Tanger and his son, Steven B. Tanger, the Company's President and
Chief Operating Officer, built and managed a successful family owned apparel
manufacturing business, Tanger/Creighton Inc. ("Tanger/Creighton"), whose
business included the operation of five factory outlet stores. Based on their
knowledge of the apparel and retail industries, as well as their experience
operating Tanger/Creighton's factory outlet stores, the Tangers recognized that
there would be a demand for factory outlet centers where a number of
manufacturers could operate in a single location and attract a large number of
shoppers. Since a single manufacturer was generally not in a position to build a
factory outlet center tenanted by other manufacturers and retailers, the Tangers
and the Company found a natural market for their experience.
Stanley K. Tanger's initial investments in the factory outlet business were
joint ventures with third party investors. Having gained experience in the
factory outlet center business and developed the nucleus of a management team
with close contacts with leading retailers, the Company's management made the
strategic decision that future growth would be through projects owned or
controlled by the Company.
Stanley K. Tanger continues to hold a non-controlling interest in three of the
original joint ventures that operate factory outlet centers, containing an
aggregate 109,080 square feet of GLA, which are currently managed by the
Company. Because Mr. Tanger does not hold a controlling interest in these joint
ventures, he was unable to contribute their properties in connection with the
formation of the Operating Partnership and the Company in 1993. Revenues from
managing the joint ventures (which the Company expects to continue to manage)
accounted for less than one tenth of one percent of the Company's revenues in
1996. The Company receives an annual management fee of not less than 5% of the
fixed rents received from the tenants occupying the properties. The management
arrangement is terminable upon notice by either party.
4
<PAGE>
BUSINESS AND OPERATING STRATEGY
The Company intends to increase its cash flow and the value of its portfolio
over the long-term by continuing to own, manage, acquire, develop, and expand
factory outlet centers. The Company's strategy is to increase revenues through
selective acquisitions, new development and expansions of factory outlet centers
while minimizing its operating expenses by designing low maintenance properties
and achieving economies of scale. In connection with the ownership and
management of its properties, the Company places an emphasis on regular
maintenance and intends to make periodic renovations as necessary. In addition,
the Company will seek to maintain high occupancy rates and increasing rental
revenues with a tenant base of nationally recognized brand name tenants.
At December 31, 1996, the Company's centers were 99% leased and have averaged a
99% occupancy level for the last five years. For 1996, the Company has
successfully renewed or released 100% of the space that had come up for renewal
or had expired during the year. Approximately 90% of such space was renewed by
the existing tenant. Lease renewals for the year were at an average base rent
per square foot that was approximately 13% above the expiring rate.
The Company typically seeks locations for its new centers that have at least 3.5
million people residing within an hour's drive, an average household income
within a 50 mile radius of at least $35,000 to $40,000 per year and access to a
highway with a traffic count of at least 35,000 cars per day. The Company will
vary its minimum conditions based on the particular characteristics of a site,
especially if the site is located near or at a vacation destination. The
Company's current goal is to target sites that are large enough to construct
centers with approximately 75 stores totalling at least 300,000 square feet of
GLA. Generally, the Company will build such centers in phases, with the first
phase containing approximately at least 200,000 square feet of GLA. The first
phase usually is more expensive than the later phases because the Company
generally finishes most of the site work, including parking lots, utilities,
zoning and other developmental work, in the first phase.
The Company preleases a large part of the space in each center prior to
acquiring the site and beginning construction. Historically, the Company has not
begun construction until it has obtained a significant amount of signed leases.
Typically, construction of a new factory outlet center has taken the Company
four to six months from groundbreaking to the opening of the first tenant store.
Construction of expansions to existing properties typically takes less time,
usually between three to four months.
Currently, construction has commenced on the initial phase of a second center in
Riverhead, New York totalling approximately 240,000 square feet. Approximately
93% of this additional GLA is leased or committed to be leased and is expected
to be opened by late Spring of 1997. In addition, the Company is in the
preleasing stages of three new sites located in Concord, NC (Charlotte),
Romulus, MI (Detroit) and Ashburn, VA (Washington, D.C.) and, on February 28,
1997, completed the purchase of an existing factory outlet center containing
approximately 123,000 square feet for an aggregate purchase price of $18.0
million. The Company also is in the process of developing plans for additional
expansions and new centers for completion in 1998 and beyond and will consider
other acquisitions that are suitable for its portfolio. However, there can be no
assurance that any of these anticipated or planned developments or expansions
will be started or completed as scheduled, or that any acquisitions will be
made.
CAPITAL STRATEGY
The Company's capital strategy is to maintain a strong and flexible financial
position by: (1) maintaining a low level of leverage, (ii) extending and
sequencing debt maturity dates, (iii) managing its floating rate exposure, (iv)
maintaining its liquidity and (v) reinvesting a significant portion of its cash
flow by maintaining a low distribution payout ratio (distributions paid in
respect of a year as a percent of funds from operations ("FFO") for such year).
The Company's distribution payout ratio for the year ended December 31, 1996 was
69%, which the Company believes to be one of the lowest payout ratios in the
REIT industry. As a result, the Company retained approximately $10 million of
its 1996 FFO. The distribution payout ratio policy allows the Company to retain
capital to maintain the quality of its portfolio, as well as to develop and
expand properties.
The Company and the Operating Partnership filed a shelf registration statement
in November 1995 with the Securities and Exchange Commission to issue up to $100
million in equity securities and $100 million in debt securities. During March
1996, the Company used a portion of its borrowing capacity under the shelf
registration to issue, through the
5
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Operating Partnership, $75 million of senior, unsecured notes, maturing March
11, 2001, with a coupon rate of 8.75% (effective yield of 8.926%). The proceeds
of this offering were used to extinguish the Company's revolving lines of credit
existing prior to January 1996. In April 1996, the Company filed a new
registration statement with the SEC to reestablish the total amount of funds
available under the shelf registration at $200 million.
During the year, the Company established a new $50 million secured line of
credit, with interest payable at LIBOR plus 1.5% and established other unsecured
lines of credit totalling $40 million with interest rates ranging from prime
less .25% to prime or LIBOR plus 1.75% to LIBOR plus 1.85%. Amounts available
under these lines of credit, based on debt outstanding at December 31, 1996,
totalled $62.2 million. When considered with the Company's existing interest
rate protection agreement covering $10 million of variable rate debt, the
Company's exposure to interest rate risk on variable rate borrowings outstanding
at December 31, 1996 was limited to $17.8 million. Also, with the addition of
the unsecured borrowings, the Company has effectively unencumbered approximately
55% of its real estate assets.
The Company's ratio of debt to total market capitalization (defined as the value
of the Company's outstanding shares, including Preferred shares and Operating
Partnership Units both of which are convertible into Common Shares, plus total
debt) at December 31, 1996 was approximately 40% (assuming that each type of
Unit has the same value as the equivalent shares of the Company, which at
February 28, 1997 had a market value of $24.875 per common share).
The Company intends to retain the ability to raise additional capital, including
additional debt, to pursue attractive investment opportunities that may arise
and to otherwise act in a manner that it believes to be in the best interests of
the Company and its shareholders. The organizational documents of the Company do
not impose a limit on the level of debt that the Company may incur.
THE OPERATING PARTNERSHIP
The Properties and other assets of the Company are held by, and all of the
Company's operations are conducted by, the Operating Partnership. As of December
31, 1996, the ownership interests in the Operating Partnership consisted of
6,602,510 general partnership Units and 106,419 general preferred partnership
Units (which are convertible into approximately 958,835 general partnership
Units) held by the Company and 3,033,305 limited partnership Units held by the
Tanger Family Limited Partnership. Each Unit of partnership interest in the
Operating Partnership issued to the Tanger Family Limited Partnership, in
connection with the formation of the Operating Partnership, and to the Company,
in respect of the Company's contribution to the Operating Partnership of the
proceeds from the public offerings, was designed to result in a distribution per
Unit approximately equal to a distribution per share of the Company's Common and
Preferred Shares. Each Unit of limited partnership interest is exchangeable into
one share of Common Stock (subject to certain antidilution adjustments and
certain limitations on exchange to preserve the Company's status as a REIT).
Each Preferred Unit entitles the Company to receive distributions from the
Operating Partnership, in an amount equal to the dividend payable with respect
to a share of Series A Preferred Shares, prior to the payment by the Operating
Partnership of distributions with respect to the general Units. Preferred Units
will be automatically converted into general partnership Units to the extent of
any conversion of Series A Preferred Shares into Common Stock, and will be
redeemed by the Operating Partnership to the extent of any redemption of Series
A Preferred Shares.
There are, however, certain differences between the ownership of Common Stock,
Series A Preferred Shares and Units, including:
Voting Rights. Holders of Common Stock may elect the Board of Directors
of the Company, which, as the general partner of the Operating
Partnership, controls the business of the Operating Partnership.
Holders of Series A Preferred Shares may not elect directors, except
under certain circumstances. Holders of limited partnership Units may
not elect directors, or elect or remove the general partner without the
consent of the Company. So long as holders of limited partnership Units
have at least 10% of the capital of the Operating Partnership, such
holders have certain rights to approve a liquidation of the Operating
Partnership, a merger of the Operating Partnership or the sale of all
or substantially all of its assets.
6
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Transferability. The shares of Common Stock and Series A Preferred
Shares (and the Depositary Shares representing such Series A Preferred
Shares) will be freely transferable under the Securities Act of 1933,
as amended, by holders who are not affiliates of the Company or the
Underwriters. The Units are subject to transfer restrictions under
applicable securities laws and under the partnership agreement of the
Operating Partnership including the required consent of the general
partner to the admission of any new limited partner.
The Operating Partnership agreement may not be amended without consent of the
general partner and a majority interest of the limited partners, except certain
provisions with respect to distributions, conversion rights, and voting rights.
Each limited partnership Unit is exchangeable for one share of Common Stock at
any time (subject to certain limitations and antidilution adjustments). No
limited partner may exchange Units for Common Stock more than once in any six
month period. The issuance of additional Units will be at the discretion of the
Company as the general partner, subject to certain limitations as to the terms
of such issuance contained in the partnership agreement. The limited partners
have certain rights to make pro rata capital contributions in the event of the
admission of new partners. The Operating Partnership may not issue additional
Units that would result in the Company owning less than one-half of the
outstanding Units without the consent of the Company as the general partner. The
Company may not assign or substitute general partners without the consent of all
limited partners.
The Operating Partnership is a North Carolina limited partnership. Its principal
executive offices are located at 1400 West Northwood Street, Greensboro, NC
27408, its telephone number is (910) 274-1666.
COMPETITION
The Company's centers compete for customers primarily with factory outlet
centers built and operated by different developers, traditional shopping malls
and "off-price" retailers. The Company carefully considers the degree of
existing and planned competition in a proposed area before deciding to build a
new center.
The Company's centers compete, to a limited extent, with various full-and
off-price retailers in the highly fragmented retailing industry. However,
management believes that the majority of the Company's customers visit factory
outlet centers because they are intent on buying first-quality, name-brand goods
at discounted prices. Traditional full-and off-price retailers are often unable
to provide such a variety of products at attractive prices.
Tenants of factory outlet centers typically avoid direct competition with major
retailers and their own stores, and therefore generally insist that the outlet
centers be located not less than 20 miles from the nearest major department
store or the tenants' own specialty stores. For this reason, the Company's
centers compete only to a very limited extent with traditional malls in or near
metropolitan areas.
Management believes that the Company competes with as many as four large
national developers of factory outlet centers and numerous small developers.
Competition with other factory outlet centers for new tenants is generally based
on location, quality and mix of the centers' existing tenants, degree and
quality of the support services (including marketing) provided by the property
manager and rental and other charges. The Company believes that its centers have
an attractive tenant mix, as a result of the Company's decision to lease
substantially all of its space to manufacturer operated factory outlets rather
than to off-price retailers, and also as a result of the strong brand identity
of the Company's major tenants.
CORPORATE AND REGIONAL HEADQUARTERS
The Company owns a small office building in Greensboro, North Carolina in which
its corporate headquarters is located. In addition, the Company rents a regional
office in New York City, New York under a lease agreement and sublease
agreement, respectively to better service its principal fashion-related tenants,
many of whom are based in and around that area.
The Company maintains on-site managers and offices at 21 Properties, excluding
the Sevierville Property, to closely monitor the development of those Properties
from construction through opening and operation and to provide effective and
efficient management services. In addition, the Company maintains an off-site
business office in Portland Maine to service the New England Properties.
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INSURANCE
Management believes that the Properties are covered by adequate fire, flood and
property insurance provided by reputable companies and with commercially
reasonable deductibles and limits.
EMPLOYEES
As of February 28, 1997, excluding the Sevierville Property which was acquired
on such date, the Company had 95 full-time employees, located at the Company's
corporate headquarters in North Carolina, its regional office in New York and
its 22 business offices.
ITEM 2. BUSINESS AND PROPERTIES
As of February 28, 1997, the Company's portfolio, excluding the Sevierville
Property which was acquired on such date, consisted of 27 opened centers located
in 22 states. The Company's factory outlet centers range in size from 8,000 to
286,195 square feet of GLA. These factory outlet centers are typically strip
shopping centers which enable customers to view all of the shops from the
parking lot, and therefore minimizing the time needed to shop. The centers are
generally located near tourist destinations or along major interstate highways,
to increase visibility and accessibility to potential customers.
The Company believes that the Properties are well diversified geographically and
by tenant and that it is not dependent upon any single property or tenant. The
only property that represents more than 10% of the Company's consolidated total
assets or consolidated gross revenues as of December 31, 1996 is the property in
Riverhead, NY. See "Business and Properties - Significant Property". No other
property represented more than 10% of the Company's consolidated total assets or
consolidated gross revenues as of December 31, 1996.
<TABLE>
<CAPTION>
LOCATION OF PROPERTIES
Number of Gross Leasable
State Centers Area (GLA) Percent of GLA
- ---------------------------------------------------------- ------------- ----------------- -----------------
<S> <C> <C> <C>
Georgia 3 619,124 16%
Texas 2 396,580 10
New York 1 286,195 8
Iowa 1 275,706 7
Missouri 1 255,073 7
Louisiana 1 245,325 7
Pennsylvania 1 203,952 6
Oklahoma 1 197,878 5
Arizona 1 186,018 5
Indiana 1 141,051 4
Minnesota 1 134,480 4
Michigan 1 112,120 3
California 1 108,950 3
Oregon 1 97,749 3
Tennessee 1 94,750 2
Kansas 1 88,200 2
Maine 2 84,958 2
Alabama 1 80,730 2
New Hampshire 2 61,915 2
West Virginia 1 49,252 1
Massachusetts 1 23,417 1
Vermont 1 8,000 ---
Total 27 3,751,423 100%
============= ================= =================
</TABLE>
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The table set forth below summarizes certain information with respect to the
Company's existing centers as of February 28, 1997, excluding the Sevierville
Property which was acquired on such date.
<TABLE>
<CAPTION>
PROPERTY PORTFOLIO
MORTGAGE
DEBT FEE OR
GLA % OUTSTANDING GROUND
DATE OPENED LOCATION (SQ. FEET) LEASED (000'S) (5) LEASE
- ---------------- ------------------------------------- ------------------ ----------- ---------------- ------------
<S> <C> <C> <C> <C>
JUN. 1986 KITTERY I, ME 56,312 100% $6,053 Fee
Aug. 1993 Expansion 3,943
MAR. 1987 CLOVER, NORTH CONWAY, NH 11,000 100% --- Fee
NOV. 1987 MARTINSBURG, WV 42,346 --- Fee
Sep. 1994 Expansion 6,906 100%
APR. 1988 LL BEAN, NORTH CONWAY, NH 50,915 100% --- Fee
JUL. 1988 PIGEON FORGE, TN 94,480 100% --- Ground
Jul. 1994 Expansion 270 Lease
(2086)
AUG. 1988 BOAZ, AL 78,550 96% 1,550 Fee
May 1993 Expansion 2,180
OCT. 1988 MANCHESTER, VT 8,000 100% --- Fee
JUN. 1989 KITTERY II, ME 23,119 100% --- Fee
Nov. 1993 Expansion 1,584
JUL. 1989 COMMERCE, GA 100,100 99% 10,412 Fee
Mar. 1990 Expansion 58,650
May 1992 Expansion 4,500
May 1993 Expansion 12,500
Sep. 1994 Expansion 10,000
OCT. 1989 BOURNE, MA 23,417 100% --- Fee
FEB. 1991 WEST BRANCH, MI 75,120 100% 6,932 Fee
Oct. 1992 Expansion 25,000
May 1994 Expansion 12,000
MAY 1991 WILLIAMSBURG, IA 121,444 93% 17,184 Fee
Nov. 1991 Expansion 50,675
Nov. 1992 Expansion 34,000(1)
Dec. 1993 Expansion 43,400
Apr. 1996 Expansion 26,187
FEB. 1992 CASA GRANDE, AZ 94,223 99% --- Fee
Dec. 1992 Expansion 91,795
AUG. 1992 STROUD, OK 96,378 94% 3,875 Fee
Nov. 1992 Expansion 37,500
Aug. 1993 Expansion 64,000
DEC. 1992 NORTH BRANCH, MN 106,280 96% --- Fee
Aug. 1993 Expansion 28,200
FEB. 1993 GONZALES, LA 105,985 99% 4,650 Fee
Aug. 1993 Expansion 109,450
Feb. 1996 Expansion 29,890
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<PAGE>
MORTGAGE
DEBT FEE OR
GLA % OUTSTANDING GROUND
DATE OPENED LOCATION (SQ. FEET) LEASED (000'S) (5) LEASE
- ---------------- ------------------------------------- ------------------ ----------- ---------------- ------------
MAY 1993 SAN MARCOS, TX 98,820 94% 10,349 Fee
Oct. 1993 Expansion 40,200
Nov. 1994 Expansion 17,500(2)
April 1995 Expansion 32,750
July 1996 Expansion 29,875(3)
DEC. 1993 LAWRENCE, KS 88,200 93% --- Fee
DEC. 1993 MCMINNVILLE, OR 97,749 85% --- Fee
AUG. 1994 RIVERHEAD, NY 285,295 100% --- Ground
Nov. 1996 Expansion 900 Lease
(2004)(4)
AUG. 1994 TERRELL, TX 126,185 98% --- Fee
Oct. 1995 Expansion 51,250
SEP. 1994 SEYMOUR, IN 141,051 99% 8,299 Fee
ACQUIRED LANCASTER, PA 191,152 99% 15,975 Fee
OCT. 1994
Nov. 1995 Expansion 12,800
NOV. 1994 BRANSON, MO 230,073 97% 5,425 Fee
Jun. 1996 Expansion 25,000(3)
NOV. 1994 LOCUST GROVE, GA 168,700 96% --- Fee
Dec. 1995 Expansion 45,964
Aug. 96 Expansion 34,190(3)
JAN. 1995 BARSTOW, CA 108,950 95% --- Fee
DEC. 1995 COMMERCE II, GA 148,520 100% --- Fee
Aug. 1996 Expansion 36,000
Total 3,751,423(3) 97% $90,704
================ ===================================== ================== =========== ================ ============
</TABLE>
(1) GLA EXCLUDES 21,781 SQUARE FOOT LAND LEASE ON OUTPARCEL OCCUPIED BY PIZZA
HUT.
(2) GLA EXCLUDES 17,400 SQUARE FOOT LAND LEASE ON OUTPARCEL OCCUPIED BY
WENDY'S.
(3) GLA INCLUDES SQUARE FEET OF NEW SPACE NOT YET OPEN AT DECEMBER 31, 1996,
WHICH IN THE AGGREGATE TOTALLED 12,400 SQUARE FEET.
(4) THE GROUND LEASE IS SUBJECT TO RENEWAL AT THE OPTION OF THE COMPANY FOR UP
TO SEVEN ADDITIONAL TERMS OF FIVE YEARS EACH.
(5) AS OF DECEMBER 31, 1996. THE WEIGHTED AVERAGE INTEREST RATE FOR DEBT
OUTSTANDING AT DECEMBER 31, 1996 WAS 8.67% AND THE WEIGHTED AVERAGE
MATURITY DATE WAS MAY 2001.
- --------------------------------
Management has an ongoing program for developing new and expanding existing
centers. See Management's Discussion and Analysis of Financial Condition and
Results of Operations under the caption "Liquidity and Capital Resources" for a
discussion of the cost of such programs and the sources of financing thereof. In
the opinion of management, all of the properties are adequately covered by
insurance.
Certain of the Company's properties serve as collateral for mortgage notes
payable and revolving lines of credit. Of the 27 Properties, the Company owns 25
and has ground leases on two. The land on which the Pigeon Forge center is
located is subject to a long-term ground lease expiring in 2086. The land on
which the Riverhead center is located is also subject to a ground lease with an
initial term expiring in 2004, with renewal at the option of the Company for up
to seven additional terms of five years each. The Company in turn leases to
tenants under leases that generally range from five to ten years. The rental
payments are customarily subject to upward adjustments based upon contractual
base
10
<PAGE>
rent increases during the term of the lease, tenant sales volume and operating
expense reimbursements (including real estate taxes, insurance, common area
maintenance and advertising and promotion expenses).
Generally, leases provide for the payment of fixed monthly rent in advance. Most
leases provide for payment by the tenant of a portion of the real estate taxes,
insurance, common area maintenance, advertising and promotion expenses incurred
by the factory outlet center. As a result, substantially all operating expenses
for the centers are borne by the tenants.
LEASE EXPIRATIONS
The following table sets forth, as of February 28, 1997, scheduled lease
expirations, excluding the Sevierville Property which was acquired on such date
and assuming none of the tenants exercise renewal options. Most leases are
renewable for five year terms at lessee's option.
<TABLE>
<CAPTION>
% of Gross
Annual
Rental
No. of Approx. Average Annual Represented
Leases GLA Base Rent Base by Expiring
Year Expiring(2) (sq. ft.) per sq. ft. Rent (1) Leases
- -------------------- --------------- --------------- ---------------- ---------------- ----------------
<S> <C> <C> <C> <C> <C>
1997 60 232,000 $11.91 $2,764,000 5.6%
1998 108 428,000 14.40 6,163,000 12.4
1999 164 604,000 14.48 8,746,000 17.6
2000 147 514,000 14.51 7,457,000 15.0
2001 141 504,000 14.35 7,232,000 14.6
2002 109 422,000 13.49 5,691,000 11.5
2003 50 240,000 13.49 3,238,000 6.5
2004 71 429,000 12.86 5,517,000 11.1
2005 16 103,000 12.06 1,242,000 2.5
2006 3 56,000 10.59 593,000 1.2
Thereafter 13 108,000 9.38 1,013,000 2.0
Total 882 3,640,000 $13.64 $49,656,000 100.0%
==================== =============== =============== ================ ================ ===================
</TABLE>
(1) BASE RENT IS DEFINED AS THE MINIMUM PAYMENTS DUE AS OF DECEMBER 31, 1996,
EXCLUDING PERIODIC CONTRACTUAL FIXED INCREASES.
(2) EXCLUDES LEASES THAT HAVE BEEN ENTERED INTO BUT WHICH TENANT HAS NOT YET
TAKEN POSSESSION AND EXCLUDES MONTH-TO- MONTH LEASES.
RENTAL AND OCCUPANCY RATES
The following table sets forth information regarding the expiring leases during
each of the last four calendar years.
<TABLE>
<CAPTION>
Renewed by Existing
Tenants Released to New Tenants Total Expiring
--------- ------------------------- ---------------
% of % of % of % of Total
GLA Expiring GLA Expiring GLA Expiring Property
Year (Sq Ft.) GLA (Sq Ft.) GLA (Sq Ft.) GLA GLA
- ---------- ------------ ----------------- ------------- ---------------- ------------- ----------------- -----------------
<S> <C> <C> <C> <C> <C> <C> <C>
1996 134,639 90% 15,050 10% 149,689 100% 4%
1995 91,250 97% 2,400 3% 93,650 100% 3%
1994 105,697 91% 10,000 9% 115,697 100% 3%
1993 123,569 96% 5,500 4% 129,069 100% 4%
</TABLE>
11
<PAGE>
The following table sets forth the average base rental rate increases per square
foot upon re-leasing stores that were turned over or renewed during each of the
last four calendar years.
<TABLE>
<CAPTION>
Renewals of Existing Leases Stores Re-leased to New Tenants (1)
----------------------------- ------------------------------------
Average Annualized Base Rents Average Annualized Base Rents
($ per square ft) ($ per square ft)
------------------- ------------------
GLA GLA
Year (Sq Ft.) Expiring New % Increase (Sq Ft.) Expiring New % Increase
- ------------- ------------ ------------ ------------- ------------- ------------- ------------- ----------- --------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1996 134,639 $12.44 $14.02 12.7% 78,268 $14.40 $14.99 4.1%
1995 91,250 11.54 13.03 12.9 59,445 13.64 14.80 8.5
1994 105,697 14.26 16.56 16.1 71,350 12.54 14.30 14.0
1993 123,569 12.83 13.94 8.7 29,000 10.81 14.86 37.5
</TABLE>
- ---------------------
(1) THE SQUARE FOOTAGE RELEASED TO NEW TENANTS FOR 1996, 1995, 1994 AND 1993
CONTAIN 15,050, 2,400, 10,000 AND 5,500 SQUARE FEET, RESPECTIVELY, THAT WAS
RELEASED TO NEW TENANTS UPON EXPIRATION OF AN EXISTING LEASE. THE REMAINING
SPACE WAS RETENANTED PRIOR TO ANY LEASE EXPIRATION.
The following table shows certain information on rents and occupancy rates for
the Operating Partnership during each of the last five calendar years.
<TABLE>
<CAPTION>
Average GLA Open Number of Aggregate
Base Rent at End of Operating Percentage
Year Occupancy Per Square Ft(1) Each Year Properties Rents
- ------------------------ --------------- ------------------- ------------------- ------------------- -------------------
<S <C> <C> <C> <C> <C>
1996 99% $13.89 3,739,000 27 $2,017,000
1995 99% 13.92 3,507,000 27 2,068,000
1994 99% 13.43 3,115,000 25 1,658,000
1993 98% 13.03 1,980,000 19 1,323,000
1992 99% 12.77 1,284,000 15 1,167,000
</TABLE>
- ---------------------
(1) REPRESENTS TOTAL BASE RENTAL REVENUE DIVIDED BY WEIGHTED AVERAGE GLA OF THE
PORTFOLIO, WHICH AMOUNT DOES NOT TAKE INTO CONSIDERATION FLUCTUATIONS IN
OCCUPANCY THROUGHOUT THE YEAR.
OCCUPANCY COSTS
The Company believes that its average occupancy cost (which includes base rent,
common area maintenance, real estate taxes, insurance, and promotions) to
average sales per square foot ratio is low relative to other forms of retail
distribution. The following table sets forth, for each of the last five years,
occupancy costs per square foot as a percentage of reported tenant sales per
square foot.
Occupancy
Year Costs
- --------------------- -----------------------
1996 8.7%
1995 8.5%
1994 7.4%
1993 6.5%
1992 6.5%
12
<PAGE>
TENANTS
The following table sets forth certain information with respect to the Company's
largest tenants and their store concepts as of February 28, 1997, excluding
stores in the Sevierville Property.
<TABLE>
<CAPTION>
Number GLA % of Total
Tenant of Stores (Sq. Ft.) GLA open
- ---------------------------------------------------------- --------- ------------- ----------
<S> <C> <C> <C>
Phillips-Van Heusen Corporation:
Bass Shoes 15 103,162 2.75%
Bass Apparel 2 9,300 0.25%
Bass Company Store 1 6,500 0.17%
Van Heusen 17 74,476 1.99%
Geoffrey Beene Co. Store 17 67,660 1.80%
Izod 17 38,802 1.03%
Gant 9 25,100 0.67%
--------- ------------- ----------
78 325,000 8.66%
Liz Claiborne:
Liz Claiborne 24 272,881 7.27%
Elizabeth 4 18,200 0.49%
--------- ------------- ----------
28 291,081 7.76%
Reebok International, Ltd. 19 141,800 3.78%
Sara Lee Corporation:
L'eggs, Hanes, Bali 18 85,150 2.27%
Champion 3 9,000 0.24%
Sara Lee Bakery 5 11,750 0.31%
Coach 3 7,800 0.21%
Socks Galore 4 4,868 0.13%
--------- ------------- ----------
33 118,568 3.16%
County Seat Stores, Inc.:
County Seat 6 49,000 1.31%
Levi's by County Seat 5 57,700 1.54%
--------- ------------- ----------
11 106,700 2.84%
American Commercial, Inc.:
Mikasa Factory Store 12 91,000 2.43%
Oshkosh B'Gosh, Inc.:
Oshkosh 12 67,540 1.80%
Genuine Kids 6 18,250 0.49%
--------- ------------- ----------
18 85,790 2.29%
VF Factory Outlet, Inc. 3 78,697 2.10%
Brown Group Retail, Inc.:
Famous Footwear 4 21,000 0.56%
Naturalizer 6 14,200 0.38%
Brown Shoe 2 10,500 0.28%
Factory Brand Shoes 6 30,200 0.81%
Air Step/Buster Brown 1 3,000 0.08%
--------- ------------- ----------
19 78,900 2.10%
Lechters, Inc. 14 57,000 1.52%
Total of all tenants shown 235 1,374,536 36.70%
========= ============= ==========
</TABLE>
13
<PAGE>
SIGNIFICANT PROPERTY
The Riverhead, NY property was constructed during 1994 and tenants began to
occupy space mid-year. At December 31, 1994, approximately 83% of the available
GLA had been occupied by tenants and the remaining GLA was occupied in 1995. The
average annualized base rental rate during 1996, 1995 and 1994 was approximately
$17.73, $17.63 and $18.18 per weighted average GLA. No one tenant occupies more
than 10% of the Riverhead property's available GLA. The tenants at the
Riverhead, NY property principally conduct retail sales operations. The Company
currently is constructing an additional property adjacent to the existing
Riverhead, NY property, which will contain an initial phase totalling
approximately 240,000 square feet. See "Business-Recent Developments" and
"Business-Business and Operating Strategy".
Depreciation on the Riverhead, NY property is recognized on a straight-line
basis over 33.33 years, resulting in a depreciation rate of 3% per year. At
December 31, 1996, the net federal tax basis of the property was approximately
$37,509,000. Real estate taxes assessed during 1996 amounted to $749,000.
The following table sets forth, as of February 28, 1997, scheduled lease
expirations at the Riverhead, NY property assuming that none of the tenants
exercise renewal options:
<TABLE>
<CAPTION>
% of Gross
Annual
Rental
No. of Annual Represented
Leases GLA Base Rent Base by Expiring
Year Expiring (sq. ft.) per sq. ft. Rent (1) Leases
- -------------------- --------------- --------------- ---------------- ---------------- ----------------
<S> <C> <C> <C> <C> <C>
1998 1 10,000 $16.00 $160,000 3.1%
1999 23 85,860 18.26 1,568,000 30.7%
2000 5 17,235 18.92 326,000 6.4%
2001 8 34,150 20.12 687,000 13.4%
2002 12 36,000 20.06 722,000 14.1%
2004 18 102,950 16.02 1,649,000 32.3%
Total 67 286,195 $17.86 $5,112,000 100.0%
==================== =============== =============== ================ ================ ================
</TABLE>
(1) BASE RENT IS DEFINED AS THE MINIMUM PAYMENTS DUE AS OF DECEMBER 31, 1996,
EXCLUDING PERIODIC CONTRACTUAL FIXED INCREASES.
ITEM 3. LEGAL PROCEEDINGS
Except for claims arising in ordinary course of business, which are covered by
the Company's liability insurance, the Company is not presently involved in any
litigation involving claims against the Company, nor, to its knowledge, is any
material litigation threatened against the Company or its Properties which would
have a material adverse effect on the Company, its Properties or its operations.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
There were no matters submitted to a vote of security holders, through the
solicitation of proxies or otherwise, during the fourth quarter of the fiscal
year ended December 31, 1996.
14
<PAGE>
EXECUTIVE OFFICERS OF THE REGISTRANT
The following table sets forth certain information concerning the executive
officers of the Company:
<TABLE>
<CAPTION>
NAME AGE POSITION
<S> <C> <C>
Stanley K. Tanger....................... 73 Chairman of the Board of Directors and
Chief Executive Officer
Steven B. Tanger........................ 48 Director, President and Chief Operating Officer
Rochelle G. Simpson .................... 58 Secretary and Senior Vice President -
Administration and Finance
Willard A. Chafin, Jr................... 59 Senior Vice President - Leasing, Site Selection,
Operations and Marketing
Frank C. Marchisello, Jr................ 38 Vice President - Chief Financial Officer
Joseph H. Nehmen........................ 47 Vice President - Operations
Virginia R. Summerell................... 38 Treasurer and Assistant Secretary
C. Randy Warren, Jr..................... 32 Vice President - Leasing
Richard T. Parker....................... 48 Vice President - Development
Carrie A. Johnson....................... 34 Vice President - Marketing
</TABLE>
The following is a biographical summary of the experience of the executive
officers of the Company:
STANLEY K. TANGER. Mr. Tanger is the Chief Executive Officer and Chairman
of the Board of Directors of the Company. He also served as President from
inception of the Company to December 1994. Mr. Tanger opened one of the
country's first outlet shopping centers in Burlington, North Carolina in 1981.
Before entering the factory outlet center business, Mr. Tanger was President and
Chief Executive Officer of his family's apparel manufacturing business,
Tanger/Creighton, Inc., for 30 years.
STEVEN B. TANGER. Mr. Tanger is a director of the Company and was named
President and Chief Operating Officer effective January 1, 1995. Previously, Mr.
Tanger served as Executive Vice President since joining the Company in 1986. He
has been with Tanger-related companies for most of his professional career,
having served as Executive Vice President of Tanger/Creighton for 10 years. He
is responsible for all phases of project development, including site selection,
land acquisition and development, leasing, marketing and overall management of
existing outlet centers. Mr. Tanger is a graduate of the University of North
Carolina at Chapel Hill and the Stanford University School of Business Executive
Program. Mr. Tanger is the son of Stanley K. Tanger.
ROCHELLE G. SIMPSON. Ms. Simpson was named Senior Vice President -
Administration and Finance of the Company in October 1995. She is also the
Secretary of the Company and previously served as Treasurer from May 1993
through May 1995. She entered the factory outlet center business in January
1981, in general management and as chief accountant for Stanley K. Tanger and
later became Vice President - Administration and Finance of the Predecessor
Company. Ms. Simpson oversees the accounting and finance departments and has
overall management responsibility for the Company's headquarters.
WILLARD A. CHAFIN, JR. Mr. Chafin was named Senior Vice President -
Leasing, Site Selection, Operations and Marketing of the Company in October
1995. He joined the Company in April 1990, and since has held various executive
positions where his major responsibilities included supervising the Marketing,
Leasing and Property Management Departments, and leading the Asset Management
Team. Prior to joining the Company, Mr. Chafin was the Director of Store
Development for the Sara Lee Corporation, where he spent 21 years. Before
joining Sara Lee, Mr. Chafin was employed by Sears Roebuck & Co. for nine years
in advertising/sales promotion, inventory control and merchandising.
15
<PAGE>
FRANK C. MARCHISELLO, JR. Mr. Marchisello was named Vice President and
Chief Financial Officer of the Company in November 1994. Previously, he served
as Chief Accounting Officer since joining the Company in January 1993 and
Assistant Treasurer since February 1994. He was employed by Gilliam, Coble &
Moser, certified public accountants, from 1981 to 1992, the last six years of
which he was a partner of the firm in charge of various real estate clients.
While at Gilliam, Coble & Moser, Mr. Marchisello worked directly with the
Tangers since 1982. Mr. Marchisello is a graduate of the University of North
Carolina at Chapel Hill and is a certified public accountant.
JOSEPH H. NEHMEN. Mr. Nehmen joined the Company in September 1995 and was
elected Vice President of Operations in October 1995. Mr. Nehmen has over 20
years experience in private business. Prior to joining Tanger, Mr. Nehmen was
owner of Merchants Wholesaler, a privately held distribution company in St.
Louis, Missouri. He is a graduate of Washington University. Mr. Nehmen is the
son-in-law of Stanley K. Tanger.
VIRGINIA R. SUMMERELL. Ms. Summerell was named Treasurer of the Company in
May 1995 and Assistant Secretary in November 1994. Previously, she held the
position of Director of Finance since joining the Company in August 1992, after
nine years of service with NationsBank. Her major responsibilities include cash
management and oversight of all project and corporate finance transactions. Ms.
Summerell is a graduate of Davidson College and holds an MBA from the Babcock
School at Wake Forest University.
C. RANDY WARREN, JR. Mr. Warren is the Vice President - Leasing of the
Company and joined the Company in November 1995. He was previously director of
anchor leasing at Prime Retail, L.P., where he managed anchor tenant relations
and negotiation on a national basis. Prior to that, he worked as a leasing
executive for the company. Before entering the outlet industry, he was founder
of Preston Partners, a development consulting firm in Baltimore, MD. Mr. Warren
is a graduate of Towson State University and holds an MBA from Loyola College.
RICHARD T. PARKER. Mr. Parker is the Vice President - Development and
joined the Company in April 1996. Prior to joining Tanger, Mr. Parker was with
The Mills Corp for nine years where he served as Vice President of Land
Development responsible for organizing and planning the development,
merchandising and sale of peripheral land surrounding 2 million-plus square foot
super regional mall projects. Prior to joining The Mills Corp, Mr. Parker was
employed by Marriott International for 6 years where he served as Director of
Franchise Development. Mr. Parker is a graduate of Golden Gate University and a
veteran of the United States Air Force.
CARRIE A. JOHNSON. Ms. Johnson was named Vice President - Marketing in
September 1996. Previously, she held the position of Assistant Vice President -
Marketing since joining the Company in December 1995. Prior to joining Tanger,
Ms. Johnson was with Prime Retail, LP for 4 years where she served as Regional
Marketing Director responsible for coordinating and directing marketing for five
outlet centers in the southeast region. Prior to joining Prime Retail, Inc., Ms.
Johnson was Marketing Manager for North Hills, Inc. for five years and also
served in the same role for the Edward J. DeBartolo Corp. for two years. Ms.
Johnson is a graduate of East Carolina University.
16
<PAGE>
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED SHAREHOLDERS' MATTERS
The Common Stock commenced trading on the New York Stock Exchange on May 28,
1993. The initial public offering price was $22.50 per share. The following
table sets forth the high and low sales prices of the Common Stock as reported
on the New York Stock Exchange Composite Tape, during the periods indicated.
<TABLE>
<CAPTION>
Common
1996 High Low Dividends Paid
- ----------------------------- ------------------ ------------------ ------------------
<S> <C> <C> <C>
First Quarter $26.00 $23.38 $.50
Second Quarter 25.38 22.63 .52
Third Quarter 24.88 22.88 .52
Fourth Quarter 27.38 23.50 .52
Year 1996 $27.38 $22.63 $2.06
- ----------------------------- ------------------ ------------------ ------------------
Common
1995 High Low Dividends Paid
- ----------------------------- ------------------ ------------------ ------------------
First Quarter $27.25 $22.75 $.46
Second Quarter 26.75 22.75 .50
Third Quarter 27.75 24.50 .50
Fourth Quarter 26.00 22.63 .50
Year 1995 $27.75 $22.63 $1.96
- ----------------------------- ------------------ ------------------ ------------------
</TABLE>
As of February 28, 1997, there were approximately 467 shareholders of record.
Certain of the Company's debt agreements limit the payment of dividends such
that dividends shall not exceed 95% of funds from operations, as defined in the
agreements, on a cumulative basis. Based on continuing favorable operations and
available funds from operations, the Company intends to continue to pay regular
quarterly dividends.
17
<PAGE>
ITEM 6. SELECTED FINANCIAL DATA
<TABLE>
<CAPTION>
(In thousands, except per share data) 1996 1995 1994 1993 1992
- --------------------------------------- ------------- ------------- -------------- --------------- --------------
<S> <C> <C> <C> <C> <C>
OPERATING DATA
Total revenues $75,500 $68,604 $45,988 $29,204 $17,931
EBITDA 46,474 41,058 26,089 17,519 10,926
Income before minority interest and
extraordinary item 16,177 15,352 15,147 8,555 1,991
Income before extraordinary
item(1) 11,752 11,218 11,168 4,574 ---
Net income (1)(3) 11,191 11,218 11,168 1,898 ---
- --------------------------------------- ------------- ------------- -------------- --------------- --------------
SHARE DATA (2)
Income before extraordinary item $1.46 $1.36 $1.32 $.90
Net income (3) $1.37 $1.36 $1.32 $.35
Common dividends paid $2.06 $1.96 $1.80 $.535
Weighted average common shares
outstanding 6,402 6,095 5,177 4,858
- --------------------------------------- ------------- ------------- -------------- --------------- --------------
- --------------------------------------- ------------- ------------- -------------- --------------- --------------
BALANCE SHEET DATA
Real estate assets, before depreciation $358,361 $325,881 $292,406 $137,666 $85,460
Total assets 332,138 315,130 294,802 182,396 88,192
Long-term debt 178,004 156,749 121,323 20,316 90,188
Shareholders' equity (deficit) 110,657 114,813 118,177 120,067 (9,419)
- --------------------------------------- ------------- ------------- -------------- --------------- --------------
OTHER DATA
Funds from operations (4) $32,313 $29,597 $23,189 $12,008 $4,471
Cash flows from:
Operating activities $38,051 $32,423 $21,304 $11,571 $4,263
Investing activities ($36,401) ($44,788) ($143,683) ($49,277) ($29,374)
Financing activities ($4,176) $13,802 $80,661 $81,324 $25,528
Gross leasable area open at year end 3,739 3,507 3,115 1,980 1,284
Number of centers 27 27 25 19 15
- --------------------------------------- ------------- ------------- -------------- --------------- --------------
</TABLE>
(1) All earnings prior to the initial public offering ("IPO") on June 4, 1993
have been allocated to minority interest. Subsequent to the IPO, earnings
have been allocated to the Company and the minority interest based on their
respective weighted average ownership interests in the Operating
Partnership during the year.
(2) Not applicable in 1992 since the IPO took place in June 1993.
(3) Pro forma net income and net income per common share, which reflect
adjustments to historical information to present income information as if
the IPO had taken place on January 1, 1992, were $6,551 and $1.31 per share
during 1993 and $3,467 and $.71 per share during 1992.
(4) Funds from operations for all years presented have been restated in
accordance with the new definition provided by the National Association of
Real Estate Investment Trusts. See Management's Discussion and Analysis of
Financial Condition and Results of Operations under the caption "Liquidity
and Capital Resources" for a complete discussion of funds from operations.
18
<PAGE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The following discussion should be read in conjunction with the consolidated
financial statements appearing elsewhere in this report. Historical results and
percentage relationships set forth in the consolidated statements of operations,
including trends which might appear, are not necessarily indicative of future
operations.
The discussion of the Company's results of operations reported in the
consolidated statements of operations compares the years ended December 31, 1996
and 1995, as well as December 31, 1995 and 1994. Certain comparisons between the
periods are made on a percentage basis as well as on a weighted average gross
leasable area ("GLA") basis, a technique which adjusts for certain increases or
decreases in the number of centers and corresponding square feet related to the
development and expansion or disposition of rental properties. The computation
of weighted average GLA, however, does not adjust for fluctuations in occupancy
throughout each year shown since GLA is not reduced when original occupied space
subsequently becomes vacant.
GENERAL OVERVIEW
The Company continues to grow principally through the development of new factory
outlet centers, acquisitions and expansion of existing centers. During 1996, the
Company completed six expansions totalling 181,142 square feet. In addition,
construction has commenced on the initial phase of a new center in Riverhead,
New York totalling approximately 240,000 square feet. During 1995, the Company
substantially completed two new centers and expanded four existing centers.
Total square feet opened in 1995, including completion of certain projects that
commenced at the end of 1994, was 392,312 square feet.
A summary of the operating results for the years ended December 31, 1996, 1995
and 1994 is presented in the following table, expressed in amounts calculated on
a weighted average GLA basis.
<TABLE>
<CAPTION>
Year Ended December 31,
---------------------------------------------
1996 1995 1994
----------- ---------------- ----------------
<S> <C> <C> <C>
GLA open at end of period (000's) 3,739 3,507 3,115
Weighted average GLA (000's) (1) 3,642 3,292 2,230
Outlet centers in operation 27 27 25
New centers opened --- 2 6
Centers expanded 6 4 6
States operated in at end of period 22 22 21
PER SQUARE FOOT
Revenues
Base rentals $13.89 $13.92 $13.43
Percentage rentals .55 .63 .74
Expense reimbursements 6.04 6.05 5.96
Other income .25 .24 .49
Total revenues 20.73 20.84 20.62
----------- ---------------- ----------------
Expenses
Property operating 6.47 6.83 6.95
General and administrative 1.50 1.54 1.97
Mortgage interest 3.84 3.44 1.26
Depreciation and amortization 4.52 4.37 3.65
Total expenses 16.33 16.18 13.83
----------- ---------------- ----------------
Income before gain on sale of land, minority interest and
extraordinary item $4.40 $4.66 $6.79
=========== ================ ================
</TABLE>
(1) GLA WEIGHTED BY MONTHS OF OPERATIONS.
19
<PAGE>
CAUTIONARY STATEMENTS
The discussion below contains certain forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995 which reflect
management's current views with respect to future events and financial
performance. Such forward-looking statements are subject to certain risks and
uncertainties; including, but not limited to, the effects of future events on
the Company's financial performance; the risk that the Company may not be able
to finance its planned development activities; risks related to the retail
industry in which the Company's outlet centers compete, including the potential
adverse impact of external factors such as inflation, tenant demand for space,
consumer confidence, unemployment rates and consumer tastes and preferences;
risks associated with the Company's development activities, such as the
potential for cost overruns, delays and lack of predictability with respect to
the financial returns associated with these development activities; the risk of
potential increase in market interest rates from current rates; risks associated
with real estate ownership, such as the potential adverse impact of changes in
the local economic climate on the revenues and the value of the Company's
properties; and the risks that a significant number of tenants may become unable
to meet their lease obligations or that the Company may be unable to renew or
re-lease a significant amount of available space on economically favorable
terms.
RESULTS OF OPERATIONS
1996 COMPARED TO 1995
Base rentals increased $4.8 million, or 10%, for the year ended December 31,
1996 when compared to the same period in 1995 primarily as a result of a 11%
increase in weighted average GLA. Base rentals per weighted average GLA
decreased less than 1% from $13.92 per square foot to $13.89 per square foot
reflecting a slightly lower average occupancy rate during 1996 compared to 1995.
The increase in base rents in 1996 consists of $1.1 million associated with
leases added during 1996 and $3.7 million related to the effect of a full year's
operation of centers opened in 1995.
Percentage rentals decreased $51,000, or 2%, in 1996 compared to 1995 and
percentage rentals per weighted average GLA declined $.08 per square foot, or
13%, as a result of the dilutive effect of the increase in additional square
footage associated with the expansions since tenant sales at centers in their
first year of operation often do not reach the level on which percentage rentals
are required (the "breakpoint"). The decrease is also a result of escalating
breakpoints in certain leases renewing at existing centers without comparable
increases in sales. Tenant sales per square foot for centers which were opened
all of 1996 and 1995 increased 2% to approximately $226 per square foot.
Expense reimbursements, which represent the contractual recovery from tenants of
certain common area maintenance, operating, property tax, promotional and
management expenses, increased $2.1 million during 1996 as compared to the same
period in 1995 due principally to the related increase in reimbursable operating
and maintenance expenses associated with the growth in GLA. Expense
reimbursements expressed as a percent of property operating expenses were 93% in
the 1996 period compared to 89% in the 1995 period due to certain contractual
increases and reductions in nonrecoverable operating and maintenance expenses.
Property operating expenses increased by $1.1 million, or 5%, in 1996 as
compared to 1995. On a weighted average GLA basis, property operating expenses
decreased from $6.83 per square foot to $6.47 per square foot primarily due to a
reduction in advertising and promotion expenses reflecting the Company's use of
cost efficient means in advertising and promoting its centers. The decrease was
partially offset by increases in real estate taxes as a result of reassessments
of recently completed properties, particularly the property in Riverhead, NY.
General and administrative expenses decreased 3% on a weighted average GLA basis
to $1.50 for the year ended 1996. General and administrative expenses as a
percent of revenues decreased 3% to 7.2% in 1996 compared to 7.4% in 1995.
Aggregate interest expense increased $2.7 million and $.40 per weighted average
GLA during 1996 period as compared to 1995. The increase is due to higher
average borrowings outstanding during the period associated with the growth in
GLA and due to a higher average interest rate under the senior unsecured notes
issued in March 1996 when compared with the short term lines of credit
previously utilized. Depreciation and amortization per weighted average GLA
increased 3% from $4.37 per square foot to $4.52 per square foot primarily due
to increases in tenant finishing allowances included in building and
improvements which are depreciated over shorter lives and the accelerated
depreciation of certain tenant finishing allowances related to tenants who
vacated or terminated their lease prior to the expiration of the lease term.
20
<PAGE>
The extraordinary item represents the write off of previously deferred financing
costs of $831,000 in connection with the early retirement of debt with the
proceeds from the senior unsecured notes issued in March 1996.
1995 COMPARED TO 1994
Base rentals increased $15.9 million, or 53%, for the year ended December 31,
1995 when compared to the same period in 1994 primarily as a result of a 48%
increase in weighted average GLA as well as the impact of leases renewing at
higher base rental rates. The increase in base rents in 1995 consists of $2.2
million associated with leases added during 1995, $13.0 million related to the
effect of a full year's operation of centers opened in 1994, and $670,000
related to rental renewals in previously established outlet centers.
Percentage rents increased approximately $410,000 for the year ended December
31, 1995 over the same period in 1994. However, percentage rents per weighted
average GLA declined as a result of the dilutive effect of the increase in
additional square footage associated with the new centers (since tenant sales at
centers opening during the year often do not reach the level where percentage
rents are required) and due to a changing mix in the amount of base and
percentage rents on leases renewing at existing centers. Tenant sales per square
foot for centers which were opened all of 1995 and 1994 were virtually the same
as the prior year at approximately $226 per square foot.
Expense reimbursements, which represent the contractual recovery from tenants of
certain common area maintenance, operating, property tax, promotional and
management expenses, increased $6.6 million during 1995 as compared to the same
period in 1994 due principally to the related increase in reimbursable property
operating expenses associated with the growth in GLA. Expense reimbursements
expressed as a percent of property operating expenses were 89% in the 1995
period compared to 86% in the 1994 period primarily as a result of certain
contractual increases.
Property operating expenses increased by $7.0 million, or 45%, in 1995 as
compared to 1994. On a weighted average GLA basis, property operating expenses
decreased from $6.95 per square foot to $6.83 per square foot. New developments
usually carry a higher than average cost per square foot until all the square
footage for that center is open for the entire period. Fewer new centers were
opened in 1995 as compared to the significant amount of openings in the 1994
period, contributing to the favorable decrease in property operating expenses
per weighted average GLA in 1995 compared to 1994. Excluding the new centers
which were opened in 1994, property operating expenses increased 4%, or $.27 per
square foot, due primarily to additional advertising and promotion expenses,
which reflect the Company's strategy to more actively promote its centers, and
increases in real estate taxes. General and administrative expenses decreased
22% on a weighted average GLA basis to $1.54 for the year ended 1995 and
decreased from 10% to 7% of total revenues reflecting continued economies of
scale achieved through controlling expenses despite the continued development
and growth in GLA.
Financing the Company's development resulted in further utilization of long-term
borrowings and aggregate interest expense increased $8.5 million during 1995 as
compared to 1994. The incremental borrowings in 1994 of $101 million, resulting
from the record development that year, did not significantly impact 1994
interest expense due to the effect of capitalizing the related interest costs
during the construction period. However, the completion of those projects,
combined with the impact of an additional $35.4 million of borrowings in 1995,
is reflected in the increase in interest expense per weighted average GLA from
$1.26 per square foot in 1994 to $3.44 per square foot in 1995. Depreciation and
amortization per weighted average GLA increased 20% due primarily to increases
in costs associated with site preparation and improvements in the layout and
design of new centers as well as increased tenant finishing allowances included
in building and improvements which are depreciated over shorter lives.
LIQUIDITY AND CAPITAL RESOURCES
Net cash provided by operating activities was $38.1, $32.4 and $21.3 million for
the years ended December 31, 1996, 1995 and 1994, respectively. The increases
for all three years were primarily due to the incremental operating income
associated with new development. Net cash used in investing activities amounted
to $36.4, $44.8 and $143.7 million during 1996, 1995 and 1994 which reflects the
lower levels of development over the past two years (181,142 square feet
developed in 1996, 392,312 square feet in 1995 and 1,134,900 square feet in
1994). Due to the lower levels of construction activity, cash provided by
financing activities has also decreased from $80.7 in 1994 to $13.8 and $(4.2)
in 1995 and 1996.
21
<PAGE>
During 1996 and 1995, the Company slowed its pace of new development in response
to a soft retail environment and lower tenant demand. In turn, management
concentrated its efforts on expanding and enhancing land in the current
portfolio while at the same time diligently searching for new sites which will
maximize value to both the Company's shareholders and tenants. However,
management believes, based upon its discussions with present and prospective
tenants, that many companies, including new entrants into the factory outlet
business, desire to open a number of new factory outlet stores in the next
several years, particularly where there are successful factory outlet centers in
which such companies do not have a significant presence or where there are few
factory outlet centers.
Construction has begun on a second property in Riverhead, NY (expected to begin
opening in Spring 1997) totalling approximately 240,000 square feet. Upon total
build out of this development over the next several years, the combined GLA of
both properties should total approximately 750,000 square feet, making this
outlet shopping center one of the largest in the nation. In addition, the
Company is in the preleasing stages of three new sites located in Concord, NC
(Charlotte), Romulus, MI (Detroit) and Ashburn, VA (Washington, D.C.) and on
February 28, 1997, completed the purchase of an existing factory outlet center
containing approximately 123,000 square feet for an aggregate purchase price of
$18.0 million. The Company also is in the process of developing plans for
additional expansions and new centers for completion in 1998 and beyond and will
consider other acquisitions that are suitable for its portfolio. However, there
can be no assurance that any of these anticipated or planned developments or
expansions will be started or completed as scheduled, or that any acquisitions
will be made. Commitments for construction underway as of December 31, 1996
(which represent only those costs contractually required to be paid by the
Company) amounted to $18.2 million.
Management intends to continually have access to the capital resources necessary
to expand and develop its business and, accordingly, may seek to obtain
additional funds through equity offerings or debt financing. The Company has a
shelf registration with the Securities and Exchange Commission providing for the
issuance of up to $100 million in additional equity securities and $100 million
in additional debt securities. During March 1996, the Company used a portion of
its borrowing capacity under the shelf registration to issue, through the
Operating Partnership, $75 million of senior, unsecured notes, maturing March
11, 2001, with a coupon rate of 8.75% (effective yield of 8.926%). The proceeds
of this offering were used to extinguish the Company's revolving lines of credit
existing prior to January 1996. In April 1996, the Company filed a new
registration statement with the SEC to reestablish the total amount of funds
available under the shelf registration at $200 million.
During the year, the Company established a new $50 million secured line of
credit, with interest payable at LIBOR plus 1.5% and established other unsecured
lines of credit totalling $40 million with interest rates ranging from prime
less .25% to prime or LIBOR plus 1.75% to LIBOR plus 1.85%. Amounts available
under these lines of credit, based on debt outstanding at December 31, 1996,
totalled $62.2 million. When considered with the Company's existing interest
rate protection agreement covering $10 million of variable rate debt, the
Company's exposure to interest rate risk on variable rate borrowings outstanding
at December 31, 1996 was limited to $17.8 million. Also, with the addition of
the unsecured borrowings, the Company has effectively unencumbered approximately
55% of its real estate assets.
Based on existing credit facilities, ongoing negotiations with certain financial
institutions and funds available under the shelf registration, management
believes that the Company has access to the necessary financing to fund the
planned capital expenditures during 1997 and 1998.
The Company anticipates that adequate cash will be available to fund its
operating and administrative expenses, regular debt service obligations, and the
payment of dividends in accordance with REIT requirements in both the short and
long term. Although the Operating Partnership receives most of its rental
payments on a monthly basis, distributions are made quarterly. Amounts
accumulated for distribution will be invested in short-term money market or
other suitable instruments. Certain of the Company's debt agreements limit the
payment of dividends such that dividends will not exceed 95% of funds from
operations ("FFO"), as defined in the agreements, on a cumulative basis.
22
<PAGE>
FUNDS FROM OPERATIONS
Management believes that to facilitate a clear understanding of the consolidated
historical operating results of the Company, FFO should be considered in
conjunction with net income as presented in the audited consolidated financial
statements included elsewhere in the annual report. Management generally
considers FFO to be an appropriate measure of the performance of an equity real
estate investment trust ("REIT"). FFO is generally defined as net income (loss),
computed in accordance with generally accepted accounting principles, before
extraordinary item and gains (losses) on sale of properties, plus depreciation
and amortization and adjustments for other non-cash items. The Company cautions
that the calculation of FFO may vary from entity to entity and as such the
presentation of FFO by the Company may not be comparable to other similarly
titled measures of other reporting companies. FFO does not represent net income
or cash flow from operations as defined by generally accepted accounting
principles and should not be considered an alternative to net income as an
indication of operating performance or to cash from operations as a measure of
liquidity. FFO is not necessarily indicative of cash flows available to fund
dividends to shareholders and other cash needs.
In March 1995, the National Association of Real Estate Investment Trusts
("NAREIT") issued an interpretive letter providing guidance as to the use and
intent of its definition of funds from operations. Among other things, the
letter clarifies that the amortization of deferred financing costs and
depreciation of assets not uniquely significant to real estate should be
excluded from total depreciation and amortization added back to net income in
calculating funds from operations. All REIT's were encouraged to implement the
recommendations of the letter no later than fiscal periods beginning in 1996.
The Company adopted the new NAREIT definition of funds from operations beginning
January 1, 1996 and has reclassified the prior year amounts to conform with the
current year presentation. Below is a calculation of funds from operations for
the years ended December 31, 1996 and 1995.
<TABLE>
<CAPTION>
FUNDS FROM OPERATIONS
(IN THOUSANDS)
1996 1995
----------------- -----------------
<S> <C> <C>
Income before gain on sale of land, minority interest
and extraordinary item $16,018 $15,352
Adjusted for:
Depreciation and amortization uniquely significant
to real estate 16,295 14,245
Funds from operations before minority interest $32,313 $29,597
================= =================
Weighted average shares outstanding(1) 10,670 10,601
================= =================
</TABLE>
(1) ASSUMES CONVERSION OF ALL PARTNERSHIP UNITS HELD BY THE MINORITY INTEREST
AND PREFERRED SHARES TO COMMON SHARES.
ECONOMIC CONDITIONS AND OUTLOOK
Substantially all of the Company's leases contain provisions designed to
mitigate the impact of inflation. Such provisions include clauses for the
escalation of base rent and clauses enabling the Company to receive percentage
rentals based on tenants' gross sales (above predetermined levels, which the
Company believes often are lower than traditional retail industry standards)
which generally increase as prices rise. Most of the leases require the tenant
to pay their share of property operating expenses, including common area
maintenance, real estate taxes, insurance and promotion, thereby reducing
exposure to increases in costs and operating expenses resulting from inflation.
In addition, the Company has an interest rate protection agreement which limits
the effect of changes in interest rates on approximately $10 million of its
floating rate debt through October 1998. This agreement, combined with the
existing fixed rate mortgages, mitigate the Company's exposure to interest rate
risk on approximately 90% of total debt outstanding as of December 31, 1996.
Approximately 240,000 square feet of space is currently up for renewal or
re-tenanting in 1997. Existing tenants' sales have remained stable and renewals
to existing tenants have remained strong. In addition, the Company has continued
to attract and retain additional tenants. However, as typical in the factory
outlet industry, certain tenants have either filed
23
<PAGE>
for protection under bankruptcy laws or have elected to close some or all of
their stores, resulting in approximately a 2% decrease in occupancy since
year end. Although there can be no assurance that any tenant whose lease
expires will renew such lease or that terminated leases will be re-leased on
economically favorable terms, management currently does not expect any material
adverse impact as a result of these leases up for renewal, bankruptcy filings or
notices of store closings. The Company's factory outlet centers typically
include well known, national, brand name companies. By maintaining a broad base
of credit tenants and a geographically diverse portfolio of properties located
across the United States, the Company reduces its operating and leasing risks.
CONTINGENCIES
There are no recorded amounts resulting from environmental liabilities as there
are no known material loss contingencies with respect thereto. Future claims for
environmental liabilities are not measurable given the uncertainties surrounding
whether there exists a basis for any such claims to be asserted and, if so,
whether any claims will, in fact, be asserted. Furthermore, no condition is
known to exist that would give rise to a material environmental liability for
site restoration, post-closure and monitoring commitments, or other costs that
may be incurred upon the sale or disposal of a property. Management has no plans
to abandon any of the properties and is unaware of any other material loss
contingencies.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The information required by this Item is set forth at the pages indicated in
Item 14(a) below.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
Not applicable.
PART III
Certain information required by Part III is omitted from this Report in that the
registrant will file a definitive proxy statement pursuant to Regulation 14A
(the "Proxy Statement") not later than 120 days after the end of the fiscal year
covered by this Report, and certain information included therein is incorporated
herein by reference. Only those sections of the Proxy Statement which
specifically address the items set forth herein are incorporated by reference.
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The information concerning the Company' directors required by this Item is
incorporated by reference to the Company's Proxy Statement.
The information concerning the Company's executive officers required by this
Item is incorporated by reference herein to the section in Part I, Item 4,
entitled "Executive Officers of the Registrant".
The information regarding compliance with Section 16 of the Securities and
Exchange Act of 1934 is to be set forth in the Proxy Statement and is hereby
incorporated by reference.
ITEM 11. EXECUTIVE COMPENSATION
The information required by this Item is incorporated by reference to the
Company's Proxy Statement.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information required by this Item is incorporated by reference to the
Company's Proxy Statement.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information required by this Item is incorporated by reference to the
Company's Proxy Statement.
24
<PAGE>
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENTS SCHEDULES, AND REPORTS ON FORM 8-K
(A) DOCUMENTS FILED AS A PART OF THIS REPORT:
1. Financial Statements
<TABLE>
<CAPTION>
<S> <C>
Report of Independent Accountants F-1
Consolidated Balance Sheets-December 31, 1996 and 1995 F-2
Consolidated Statements of Operations-
Years Ended December 31, 1996, 1995 and 1994 F-3
Consolidated Statements of Shareholders' Equity-
For the Years Ended December 31, 1996, 1995 and 1994 F-4
Consolidated Statements of Cash Flows-
Years Ended December 31, 1996, 1995 and 1994 F-5
Notes to Consolidated Financial Statements F-6
2. Financial Statement Schedules
Schedule III
Report of Independent Accountants F-15
Real Estate and Accumulated Depreciation F-16,17
</TABLE>
All other schedules have been omitted because of the absence of
conditions under which they are required or because the required
information is given in the above-listed financial statements or notes
thereto.
3. Exhibits
Exhibit No. Description
3.1 Amended and Restated Articles of Incorporation of the Company.
3.1A Amendment to Articles of Incorporation dated May 29, 1996.
3.2 Amended and Restated By-Laws of the Company. (Note 1)
3.3 Amended and Restated Agreement of Limited Partnership for the
Operating Partnership. (Note 1)
4.1 Form of Deposit Agreement, by and between the Company and the
Depositary, including Form of Depositary Receipt. (Note 1)
4.2 Form of Preferred Stock Certificate. (Note 1)
10.1 Unit Option Plan of the Company. (Note 2)
10.1A First Amendment to the Unit Option Plan. (Note 1)
10.1B Second Amendment to the Unit Option Plan. (Note 6)
10.1C Third Amendment to the Unit Option Plan.
10.2 Stock Option Plan of the Company. (Note 2)
10.2A First Amendment to the Stock Option Plan. (Note 1)
25
<PAGE>
10.2B Second Amendment to the Stock Option Plan. (Note 6)
10.2C Third Amendment to the Stock Option Plan.
10.3 Form of Stock Option Agreement between the Company and certain
Directors. (Note 3)
10.4 Form of Unit Option Agreement between the Operating Partnership
and certain employees. (Note 3)
10.5 Amended and Restated Employment Agreement for Stanley K. Tanger.
10.6 Amended and Restated Employment Agreement for Steven B. Tanger.
10.7 Amended and Restated Employment Agreement for Willard Chafin.
10.8 Amended and Restated Employment Agreement for Rochelle Simpson.
10.9 Employment Agreement for Joseph H. Nehmen.
10.10 Registration Rights Agreement among the Company, the Tanger Family
Limited Partnership and Stanley K. Tanger. (Note 2)
10.10A Amendment to Registration Rights Agreement among the Company, the
Tanger Family Limited Partnership and Stanley K. Tanger. (Note 6)
10.11 Agreement Pursuant to Item 601(b)(4)(iii)(A) of Regulation S-K.
(Note 2)
10.12 Assignment and Assumption Agreement among Stanley K. Tanger,
Stanley K. Tanger & Company, the Tanger Family Limited
Partnership, the Operating Partnership and the Company. (Note 2)
10.13 Promissory Notes by and between the Operating Partnership and John
Hancock Mutual Life Insurance Company aggregating $50,000,000,
dated as of December 13, 1994. (Note 4)
10.14 Promissory Note and Mortgage, Assignment of Leases and Rents, and
Security Agreement by and between the Operating Partnership and
New York Life Insurance Company, dated as of March 28, 1995. (Note
5)
10.15 Credit Agreement among Tanger Properties Limited Partnership,
Tanger Factory Outlet Centers, Inc. and National Westminister
Bank, Plc dated January 15, 1996. (Note 7)
10.15A Amendment No. 1 to Credit Agreement among Tanger Properties
Limited Partnership, Tanger Factory Outlet Centers, Inc. and
National Westminister Bank, Plc dated February 20, 1996. (Note 9)
10.15B Amendment No. 2 to Credit Agreement among Tanger Properties
Limited Partnership, Tanger Factory Outlet Centers, Inc. and
National Westminister Bank, Plc dated May 31, 1996.
10.16 Form of Senior Indenture. (Note 8)
10.17 Form of First Supplemental Indenture (to Senior Indenture).
(Note 8)
10.18 Loan Agreement dated as of October 14, 1996 between Tanger
Properties Limited Partnership and First National Bank of
Commerce.
26
<PAGE>
10.19 Loan Agreement dated as of November 18, 1996 between Tanger
Properties Limited Partnership and Southtrust Bank of Alabama,
National Association
21.1 List of Subsidiaries. (Note 2)
23.1 Consent of Coopers & Lybrand L.L.P.
Notes to Exhibits:
1. Incorporated by reference to the exhibits to the Company's Registration
Statement on Form S-11 filed October 6, 1993, as amended.
2. Incorporated by reference to the exhibits to the Company's Registration
Statement on Form S-11 filed May 27, 1993, as amended.
3. Incorporated by reference to the exhibits to the Company's Annual
Report on Form 10-K for the year ended December 31, 1993.
4. Incorporated by reference to the exhibits to the Company's Annual
Report on Form 10-K for the year ended December 31, 1994
5. Incorporated by reference to the exhibits to the Company's Quarterly
Report of Form 10-Q for the period ended March 31, 1995..
6. Incorporated by reference to the exhibits to the Company's Annual
Report on Form 10-K for the year ended December 31, 1995.
7. Incorporated by reference to the exhibits to the Company's Current
Report on Form 8-K dated January 23, 1996.
8. Incorporated by reference to the exhibits to the Company's Current
Report on Form 8-K dated March 6, 1996.
9. Incorporated by reference to the exhibits to the Company's Quarterly
Report of Form 10-Q for the period ended March 31, 1996.
(B) REPORTS ON FORM 8-K - No reports on Form 8-K were filed by the Company
during the fourth quarter ended December 31, 1996.
27
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
TANGER FACTORY OUTLET CENTERS, INC.
By: /s/ Stanley K. Tanger
Stanley K. Tanger
Chairman of the Board and
Chief Executive Officer
March 18, 1997
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated:
<TABLE>
<CAPTION>
Signature Title Date
<S> <C> <C>
/s/ Stanley K. Tanger Chairman of the Board and March 18, 1997
Stanley K. Tanger Chief Executive Officer
(Principal Executive Officer)
/s/ Steven B. Tanger Director, President and March 18, 1997
Steven B. Tanger Chief Operating Officer
/s/ Frank C. Marchisello, Jr. Vice President and March 18, 1997
Frank C. Marchisello, Jr. Chief Financial Officer
(Principal Financial and
Accounting Officer)
/s/ Jack Africk Director March 18, 1997
Jack Africk
/s/ William G. Benton Director March 18, 1997
William G. Benton
/s/ Thomas E. Robinson Director March 18, 1997
Thomas E. Robinson
</TABLE>
28
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Shareholders of
TANGER FACTORY OUTLET CENTERS, INC. AND SUBSIDIARY:
We have audited the accompanying consolidated balance sheets of Tanger Factory
Outlet Centers, Inc. and Subsidiary as of December 31, 1996 and 1995, and the
related consolidated statements of operations, shareholders' equity and cash
flows for each of the three years in the period ended December 31, 1996. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of Tanger Factory
Outlet Centers, Inc. and Subsidiary as of December 31, 1996 and 1995, and the
consolidated results of their operations and their cash flows for each of the
three years in the period ended December 31, 1996 in conformity with generally
accepted accounting principles.
COOPERS & LYBRAND L.L.P.
Greensboro, NC
January 27, 1997, except for Note 14, which is dated February 28, 1997
F-1
<PAGE>
TANGER FACTORY OUTLET CENTERS, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
<TABLE>
<CAPTION>
DECEMBER 31,
1996 1995
------------- -----------------
<S> <C> <C>
ASSETS
Rental property, net $311,454 $294,423
Cash and cash equivalents 2,585 5,111
Deferred charges, net 7,846 5,728
Other assets 10,253 9,868
TOTAL ASSETS $332,138 $315,130
============= =================
LIABILITIES AND SHAREHOLDERS' EQUITY
LIABILITIES
Long-term debt $178,004 $156,749
Construction trade payables 8,320 11,305
Accounts payable and accrued expenses 9,558 4,679
TOTAL LIABILITIES 195,882 172,733
------------- -----------------
Commitments
Minority interest 25,599 27,584
------------- -----------------
SHAREHOLDERS' EQUITY
Preferred stock, $.01 par value, 1,000,000
shares authorized, 106,419 and 141,484
shares issued and outstanding at
December 31, 1996 and 1995 1 1
Common stock, $.01 par value, 50,000,000 shares
authorized, 6,602,510 and 6,286,581 shares
issued and outstanding at December 31, 1996
and 1995 66 63
Paid in capital 121,384 121,158
Distributions in excess of net income (10,794) (6,409)
TOTAL SHAREHOLDERS' EQUITY 110,657 114,813
------------- -----------------
TOTAL LIABILITIES AND SHAREHOLDERS'
EQUITY $332,138 $315,130
============= =================
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL
STATEMENTS.
F-2
<PAGE>
TANGER FACTORY OUTLET CENTERS, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
1996 1995 1994
------------- ------------- -------------
<S> <C> <C> <C>
REVENUES
Base rentals $50,596 $45,818 $29,937
Percentage rentals 2,017 2,068 1,658
Expense reimbursements 21,991 19,913 13,295
Other income 896 805 1,098
Total revenues 75,500 68,604 45,988
------------- ------------- -------------
EXPENSES
Property operating 23,559 22,467 15,500
General and administrative 5,467 5,079 4,399
Interest 13,998 11,337 2,798
Depreciation and amortization 16,458 14,369 8,144
Total expenses 59,482 53,252 30,841
------------- ------------- -------------
INCOME BEFORE GAIN ON SALE OF LAND, MINORITY INTEREST
AND EXTRAORDINARY ITEM 16,018 15,352 15,147
Gain on sale of land 159 --- ---
------------- ------------- -------------
INCOME BEFORE MINORITY INTEREST AND EXTRAORDINARY ITEM 16,177 15,352 15,147
Minority interest (4,425) (4,134) (3,979)
------------- ------------- -------------
INCOME BEFORE EXTRAORDINARY ITEM 11,752 11,218 11,168
Extraordinary item - Loss on early extinguishment of debt, net of
minority interest of $270 (561) --- ---
NET INCOME $11,191 $11,218 $11,168
============= ============= =============
PER COMMON SHARE OUTSTANDING:
Income before extraordinary item $1.46 $1.36 $1.32
Net income 1.37 1.36 1.32
============= ============= =============
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL
STATEMENTS.
F-3
<PAGE>
TANGER FACTORY OUTLET CENTERS, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 1996, 1995, AND 1994
(In thousands, except share data)
<TABLE>
<CAPTION>
Distributions Total
Preferred Common Paid in in Excess of Shareholders'
Stock Stock Capital Net Income Equity
---------- ------------ ------------ ------------- ----------------
<S> <C> <C> <C> <C> <C>
BALANCE, DECEMBER 31, 1993 $3 $49 $120,716 $(701) $120,067
Conversion of 70,556 preferred
shares into 635,679 common shares (1) 6 (5) --- ---
Compensation under Unit Option Plan --- --- 216 --- 216
Net income --- --- --- 11,168 11,168
Preferred dividends paid ($15.06 per share) --- --- --- (3,954) (3,954)
Common dividends paid ($1.80 per share) --- --- --- (9,320) (9,320)
BALANCE, DECEMBER 31, 1994 2 55 120,927 (2,807) 118,177
Conversion of 87,960 preferred
shares into 792,506 common shares (l) 8 (7) --- ---
Issuance of 600 common shares upon
exercise of unit options --- --- 14 --- 14
Compensation under Unit Option Plan --- --- 224 --- 224
Net income --- --- --- 11,218 11,218
Preferred dividends paid ($17.66 per share) --- --- --- (2,944) (2,944)
Common dividends paid ($1.96 per share) --- --- --- (11,876) (11,876)
BALANCE, DECEMBER 31, 1995 1 63 121,158 (6,409) 114,813
Conversion of 35,065 preferred shares
into 315,929 common shares --- 3 (3) --- ---
Compensation under Unit Option Plan --- --- 229 --- 229
Net Income --- --- --- 11,191 11,191
Preferred dividends paid ($18.56 per share) --- --- --- (2,416) (2,416)
Common dividends paid ($2.06 per share) --- --- --- (13,160) (13,160)
BALANCE, DECEMBER 31, 1996 $1 $66 $121,384 $(10,794) $110,657
========== ============ ============ ============= ================
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL
STATEMENTS.
F-4
<PAGE>
TANGER FACTORY OUTLET CENTERS, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
1996 1995 1994
------------- ------------- -------------
<S> <C> <C> <C>
OPERATING ACTIVITIES
Net income $11,191 $11,218 $11,168
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization 16,458 14,369 8,144
Amortization of deferred financing costs 953 955 690
Minority interest 4,155 4,134 3,979
Loss on early extinguishment of debt 831 --- ---
Gain on sale of land (159) --- ---
Straight-line base rent adjustment (1,192) (1,316) (941)
Compensation under Unit Option Plan 338 334 342
Increase (decrease) due to changes in:
Other assets 597 2,431 (3,610)
Accounts payable and accrued expenses 4,879 298 1,532
------------- ------------- -------------
NET CASH PROVIDED BY OPERATING ACTIVITIES 38,051 32,423 21,304
------------- ------------- -------------
INVESTING ACTIVITIES
Acquisition of real estate --- --- (23,800)
Additions to rental properties (35,408) (43,758) (118,551)
Additions to deferred lease costs (1,167) (1,030) (1,332)
Proceeds from sale of land 174 --- ---
------------- ------------- -------------
NET CASH USED IN INVESTING ACTIVITIES (36,401) (44,788) (143,683)
------------- ------------- -------------
FINANCING ACTIVITIES
Cash dividends paid (15,576) (14,820) (13,274)
Distributions to minority interest (6,249) (5,945) (5,460)
Proceeds from notes payable 75,000 16,250 56,400
Repayments on notes payable (1,019) (949) (15,793)
Proceeds from revolving lines of credit 70,301 113,555 113,500
Repayments on revolving lines of credit (123,027) (93,430) (53,100)
Additions to deferred financing costs (3,606) (873) (1,612)
Proceeds from exercise of unit options --- 14 ---
------------- ------------- -------------
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES (4,176) 13,802 80,661
------------- ------------- -------------
Net increase (decrease) in cash and cash equivalents (2,526) 1,437 (41,718)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 5,111 3,674 45,392
------------- ------------- -------------
CASH AND CASH EQUIVALENTS, END OF PERIOD $2,585 $5,111 $3,674
============= ============= =============
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL
STATEMENTS.
F-5
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS, EXCEPT SHARE DATA)
1. ORGANIZATION AND FORMATION OF THE COMPANY
Tanger Factory Outlet Centers, Inc. (the "Company") is a self-administered,
self-managed real estate investment trust ("REIT") that develops, owns and
operates factory outlet centers. Recognized as one of the largest owners and
operators of factory outlet centers in the United States, the Company owned and
operated 27 factory outlet centers (the "Properties") located in 22 states with
a total gross leasable area of approximately 3.8 million square feet at the end
of 1996. The Company is a fully-integrated real estate company and provides all
development, leasing and management services for its centers. The Company is the
successor to a factory outlet business that consisted of 17 Properties (the
"predecessor business") that were individually owned and controlled by Stanley
K. Tanger and the Tanger Family Limited Partnership (the "Original Owners").
The factory outlet centers and other assets of the Company's business are held
by, and all of its operations are conducted by, the Company's majority owned
subsidiary, Tanger Properties Limited Partnership (the "Operating Partnership").
The Operating Partnership was formed in June 1993 through the contributions by
the Company, the sole general partner, the Tanger Family Limited Partnership,
the sole limited partner, and Stanley K. Tanger. The Company contributed the
proceeds of an initial public offering ("IPO") and two properties it had
acquired for shares of the Company's Common Stock. The Original Owners
contributed the remaining 15 Properties, subject to their related mortgage
indebtedness, as well as the net assets of the related property and lease
management business and certain other assets.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
PRINCIPLES OF CONSOLIDATION-The Company, as sole general partner,
consolidates the Operating Partnership for financial reporting purposes. All
significant intercompany balances and transactions have been eliminated in
consolidation. In addition, the Company accounted for the transfer of the
Properties and the management business to the above mentioned entities as a
reorganization of entities under common control using an "as if pooling" method
of accounting, whereby historical results of operations and financial condition
of the properties and the management business were combined with the Company's
consolidated results of operations and financial condition.
MINORITY INTEREST-Minority interest reflects the limited partner's
percentage ownership of Operating Partnership Units (the "Units") . Allocation
of net income to the limited partner subsequent to the IPO is based on this
respective ownership interest (See Note 7).
USE OF ESTIMATES-The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
RENTAL PROPERTIES-Rental properties are recorded at cost less accumulated
depreciation. Costs incurred for the acquisition, construction, and development
of properties are capitalized. Depreciation is computed on the straight-line
basis over the estimated useful lives of the assets. The Company generally uses
estimated lives ranging from 25 to 33 years for buildings, 15 years for land
improvements and seven years for equipment. Expenditures for ordinary
maintenance and repairs are charged to operations as incurred while significant
renovations and improvements, including tenant finishing allowances, that
improve and/or extend the useful life of the asset are capitalized and
depreciated over their estimated useful life.
The pre-construction stage of project development involves incurrence of
certain costs to secure land control and zoning and complete other initial tasks
which are essential to the development of the project. These costs are
transferred to developments under construction when the pre-construction tasks
are completed. The Company provides for the costs of potentially unsuccessful
pre-construction efforts by charges to operations.
F-6
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS, EXCEPT SHARE DATA)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
CASH AND CASH EQUIVALENTS-All highly liquid investments with an original
maturity of three months or less at the date of purchase are considered to be
cash and cash equivalents. Cash balances at a limited number of banks may
periodically exceed insurable amounts. The Company believes that it mitigates
its risk by investing in or through major financial institutions. Recoverability
of investments is dependent upon the performance of the issuer.
DEFERRED CHARGES-Deferred lease costs consist of fees and costs incurred to
initiate operating leases and are amortized over the average minimum lease term.
Deferred financing costs include fees and costs incurred to obtain long-term
financing and are being amortized over the terms of the respective loans.
Unamortized deferred financing costs are charged to expense when debt is retired
before the maturity date.
IMPAIRMENT OF LONG-LIVED ASSETS-In the event that facts and circumstances
indicate that the cost of the Company's long-lived assets may be impaired, an
evaluation of recoverability would be performed. If an evaluation were required,
the estimated future undiscounted cash flows associated with the asset would be
compared to the asset's carrying amount to determine if a write-down to market
value or discounted cash flow value is required.
REVENUE RECOGNITION - Minimum rental income is recognized on a straight
line basis over the term of the lease. Substantially all leases contain
provisions which provide additional rents based on tenants' sales volume
("percentage rentals") and reimbursement of the tenants' share of advertising
and promotion, common area maintenance, insurance and real estate tax expenses.
Percentage rentals are recognized when earned. Expense reimbursements are
recognized in the period the applicable expenses are incurred. Payments received
from the early termination of leases are recognized when the applicable space is
released, or otherwise, are amortized over the remaining lease term.
INCOME TAXES-The Company operates in a manner intended to enable it to
qualify as a REIT under the Internal Revenue Code (the "Code"). A REIT which
distributes at least 95% of its taxable income to its shareholders each year and
which meets certain other conditions is not taxed on that portion of its taxable
income which is distributed to its shareholders. The Company intends to continue
to qualify as a REIT and to distribute substantially all of its taxable income
to its shareholders. Accordingly, no provision has been made for Federal income
taxes. The Company paid preferred dividends per share of $18.56, $17.66 and
$15.06 in 1996, 1995 and 1994, respectively, all of which are treated as
ordinary income. The table below summarizes the common dividends paid per share
and the amount representing estimated return of capital.
1996 1995 1994
------------ ------------ -------------
Common dividends per share
Ordinary income $1.607 $1.352 $1.458
Return of capital .453 .608 .342
$2.060 $1.960 $1.800
============ ============ =============
INCOME PER SHARE-Income per share is calculated by dividing income, less
applicable preferred dividends of $2,399, $2,903 and $4,351 for the years ended
December 31, 1996, 1995 and 1994, by the weighted average number of common
shares outstanding (6,401,505, 6,094,667 and 5,177,292 for the years ended
December 31, 1996, 1995 and 1994). Options outstanding are not included since
their inclusion would not be materially dilutive. The assumed conversion of
Depositary Shares as of the beginning of the year would have been anti-dilutive.
The assumed conversion of the partnership Units held by the limited partner as
of the beginning of the year, which would result in the elimination of earnings
allocated to the minority interest, would have no impact on earnings per share
since the allocation of earnings to an Operating Partnership Unit is equivalent
to earnings allocated to a share of Common Stock.
CONCENTRATION OF CREDIT RISK-The Company's management performs ongoing
credit evaluations of their tenants. Although the tenants operate principally in
the retail industry, the properties are geographically diverse. During 1995 and
1994, one tenant accounted for approximately 10% and 11% of combined base and
percentage rental income. No single tenant accounted for 10% or more of combined
base and percentage rental income during 1996.
F-7
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS, EXCEPT SHARE DATA)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
SUPPLEMENTAL CASH FLOW INFORMATION-The Company purchases capital equipment
and incurs costs relating to construction of new facilities, including tenant
finishing allowances. Expenditures included in construction trade payables as of
December 31, 1996, 1995 and 1994 amounted to $8,320, $11,305 and $21,636,
respectively. Interest paid, net of interest capitalized, in 1996, 1995 and 1994
was $10,637, $10,266 and $1,824, respectively.
RECLASSIFICATIONS - Certain prior year amounts have been reclassified to
conform with the current year presentation.
3. RENTAL PROPERTIES
The following summarizes the carrying amounts of rental property as of December
31, 1996 and 1995:
1996 1995
-------------- -----------------
Land $43,339 $37,176
Buildings and improvements 299,534 284,292
Developments under construction 15,488 4,413
-------------- -----------------
358,361 325,881
Accumulated depreciation 46,907 31,458
-------------- -----------------
$311,454 $294,423
============== =================
Buildings and improvements consist primarily of permanent buildings and
improvements made to land such as landscaping and infrastructure and costs
incurred in providing rental space to tenants. Interest costs capitalized during
1996, 1995 and 1994 amounted to $1,044, $580 and $1,481, and development costs
capitalized amounted to $1,321, $1,253 and $1,599, respectively. Depreciation
expense for each of the years ended December 31, 1996, 1995 and 1994 was
$15,449, $13,451 and $7,571, respectively.
Commitments for construction of new developments and additions to existing
properties amounted to $18,242 at December 31, 1996. Commitments for
construction represent only those costs contractually required to be paid by the
Company.
4. DEFERRED CHARGES
Deferred charges as of December 31, 1996 and 1995 consist of the following:
1996 1995
--------------- -----------------
Deferred lease costs $6,705 $5,538
Deferred financing costs 4,657 3,628
--------------- -----------------
11,362 9,166
Accumulated amortization 3,516 3,438
--------------- -----------------
$7,846 $5,728
=============== =================
Amortization of deferred lease costs for the years ended December 31, 1996, 1995
and 1994 was $799, $731 and $434, respectively. Amortization of deferred
financing costs for the years ended December 31, 1996, 1995 and 1994 was $953,
$955 and $690, respectively. During 1996, the Company expensed the remaining
unamortized financing costs totalling $831 related to debt extinguished with
other current year borrowings. Such amount is shown as an extraordinary item in
the accompanying consolidated statements of operations.
F-8
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS, EXCEPT SHARE DATA)
5. LONG-TERM DEBT
Long-term debt at December 31, 1996 and 1995 consists of the following:
<TABLE>
<CAPTION>
1996 1995
--------------- -----------------
<S> <C> <C>
8.75% Senior, unsecured notes, maturing March 2001 $75,000 $---
Mortgage notes with fixed interest at:
8.92%, maturing January 2002 48,817 49,435
8.625%, maturing September 2000 10,412 10,657
9.77%, maturing April 2005 15,975 16,131
Revolving lines of credit with variable interest
rates ranging from either prime less .25% to prime
or LIBOR plus 1.50% to LIBOR plus 1.80% 27,800 80,526
$178,004 $156,749
=============== =================
</TABLE>
Maturities of the existing long-term debt are as follows:
%
1997 $1,153 1
1998 13,561 8
1999 16,880 9
2000 10,567 6
2001 76,184 43
Thereafter 59,659 33
$178,004 100
============= =============
The Company maintains revolving lines of credit which provide for borrowing up
to $90,000. The agreements expire at various times through 1999. Interest is
payable based on alternative interest rate bases at the Company's option.
Amounts available under these facilities at December 31, 1996 totalled $62,200.
Certain of the Company's properties, which had a net book value of approximately
$141,640 at December 31, 1996, serve as collateral for the fixed rate mortgages
and revolving lines of credit.
The credit agreements require the maintenance of certain ratios, including debt
service coverage and leverage, and limit the payment of dividends such that
dividends will not exceed 95% of funds from operations, as defined in the
agreements, on a cumulative basis. All three existing fixed rate mortgage notes
contain prepayment penalty clauses.
6. DERIVATIVES AND FAIR VALUE OF FINANCIAL INSTRUMENTS
The Company selectively enters into interest rate protection agreements to
mitigate changes in interest rates on its variable rate borrowings. The notional
amounts of such agreements are used to measure the interest to be paid or
received and do not represent the amount of exposure to loss. None of these
agreements are used for trading purposes. The cost of these agreements are
included in deferred financing costs and are being amortized on a straight-line
basis over the life of the agreements.
In October 1995, the Company entered into an interest rate swap, at no cost to
the Company, effective through October 1998 with a notional amount of $10,000
which fixed the 30 day LIBOR index at 5.99%. The impact of this agreement,
F-9
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS, EXCEPT SHARE DATA)
together with an interest rate swap agreement which expired during 1996, reduced
mortgage interest expense by $88, $693 and $275 during 1996, 1995 and 1994.
The carrying amount of cash equivalents approximates fair value due to the
short-term maturities of these financial instruments. The fair value of
long-term debt at December 31, 1996, which is estimated as the present value of
future cash flows, discounted at interest rates available at the reporting date
for new debt of similar type and remaining maturity, was approximately $179,636.
The estimated fair value of the interest rate swap agreement at December 31,
1996, as determined by the issuing financial institution, was an unrealized loss
of approximately $23.
7. SHAREHOLDERS' AND PARTNERSHIP EQUITY
On June 4, 1993, the Company completed an initial public offering of 4,857,796
shares of $.01 par value Common Stock. The net proceeds totalled approximately
$91,916 and were contributed to the Operating Partnership in exchange for units
in the Operating Partnership equivalent to the number of shares issued in the
offering.
On December 9, 1993, the Company sold 3,000,000 Depositary Shares, each
representing 1/10 of a share of Series A Cumulative Convertible Redeemable
Preferred Shares, at $25 per share. Proceeds from this offering, net of
underwriters discount and estimated offering expenses, totalled $70,800 and were
contributed to the Operating Partnership in return for preferred general
partnership Units. The Preferred Shares have a liquidation preference equivalent
to $25 per Depositary Share and dividends accumulate per Depositary Share equal
to the greater of (i) $1.575 per year or (ii) the dividends on the Common Stock
or portion thereof, into which a depositary share is convertible. The Preferred
Shares rank senior to the Common Stock in respect of dividend and liquidation
rights.
The Preferred Shares are convertible at the option of the holder at any time
into shares of Common Stock of the Company at a rate equivalent to .901 shares
of Common Stock for each Depositary Share (equivalent to a conversion price of
$27.75 per share of Common Stock). At December 31, 1996, 958,835 shares of
Common Stock were reserved for the conversion of preferred Depositary Shares.
The Preferred Shares and the related Depositary Shares are not redeemable prior
to December 15, 1998. On and after December 15, 1998, the Preferred Shares and
Depositary Shares may be redeemed at the option of the Company, in whole or in
part, at a redemption price of $25 per Depositary Share, plus accrued and unpaid
dividends.
As of December 31, 1996, the ownership interests of the Operating Partnership
consisted of 6,602,510 general partnership Units held by the Company, 106,419
preferred general partnership Units (which are convertible into approximately
958,835 general partnership Units) held by the Company and 3,033,305 limited
partnership Units held by the Tanger Family Limited Partnership. The limited
partner's Units are exchangeable, subject to certain limitations to preserve the
Company's status as a REIT, on a one-for-one basis for shares of the Company's
common stock. Preferred Units are automatically converted into general
partnership Units to the extent of any conversion of Series A Preferred Shares
of the Company into common shares of the Company.
8. EMPLOYEE BENEFIT PLANS
The Company has a non-qualified and incentive stock option plan ("The 1993 Stock
Option Plan") and the Operating Partnership has a non-qualified Unit option plan
("The 1993 Unit Option Plan"). Units received upon exercise of Unit options are
exchangeable for Common Stock. The Company accounts for these plans under APB
Opinion No. 25, under which no compensation cost has been recognized.
F-10
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS, EXCEPT SHARE DATA)
Had compensation cost for these plans been determined for options granted since
January 1, 1995 consistent with SFAS #123, ACCOUNTING FOR STOCK-BASED
COMPENSATION, the Company's net income and earnings per share would have been
reduced to the following pro forma amounts:
1996 1995
-------------- ---------------
Net income: As reported $11,191 $11,218
Pro forma $11,114 $11,207
Primary EPS: As reported $1.37 $1.36
Pro forma $1.36 $1.36
Because the Statement 123 method of accounting has not been applied to options
granted prior to January 1, 1995, the resulting pro forma compensation cost may
not be representative of that to be expected in future years.
The Company may issue up to 1,000,000 shares under The 1993 Stock Option Plan
and The 1993 Unit Option Plan. The Company has granted 916,550 options, net of
options forfeited, through December 31, 1996. Under both plans, the option
exercise price is determined by the Stock and Unit Option Committee of the Board
of Directors. Non-qualified stock and Unit options granted expire 10 years from
the date of grant and are exercisable in five equal installments commencing one
year from the date of grant.
A summary of the status of the Company's two plans at December 31, 1996, 1995
and 1994 and changes during the years then ended is presented in the table and
narrative below:
<TABLE>
<CAPTION>
1996 1995 1994
------ ------ -----
Wtd Avg Wtd Avg Wtd Avg
Shares Ex Price Shares Ex Price Shares Ex Price
------------ ------------ ---------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Outstanding at beginning of year 680,650 $23.58 546,000 $23.57 403,000 $22.50
Granted 237,700 24.29 154,550 23.50 143,000 26.63
Exercised --- --- (600) 22.50 --- ---
Forfeited (2,400) 23.59 (19,300) 22.70 --- ---
Outstanding at end of year 915,950 $23.77 680,650 $23.58 546,000 $23.57
------------ ------------ ---------------- ------------- ------------- -------------
Exercisable at end of year 320,410 $23.31 184,700 $23.11 80,600 $22.50
Weighted average fair value of
options granted $2.56 $2.18 N/A
</TABLE>
Options outstanding at December 31, 1996 have exercise prices between $22.50 and
$31.25, with a weighted average exercise price of $23.31 and a weighted average
remaining contractual life of 7.9 years.
The fair value of each option grant is estimated on the date of grant using the
Black-Scholes option pricing model with the following weighted-average
assumptions used for grants in 1996 and 1995, respectively: expected dividend
yields of 8%; expected lives ranging from 5 years to 7 years; expected
volatility 20%; and risk-free interest rates ranging from 5.6% to 6.75% in 1996
and from 5.8% to 5.9% in 1995.
F-11
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS, EXCEPT SHARE DATA)
Unamortized stock compensation, which relates to options that were granted at an
exercise price below the fair market value at the time of grant, was $533 and
$871 at December 31, 1996 and 1995. Compensation expense recognized during 1996,
1995 and 1994 was $338, $334 and $342, respectively.
During 1994, the Company established a qualified retirement plan, with a salary
deferral feature designed to qualify under Section 401 of the Code (the "401(k)
Plan"), which covers substantially all officers and employees of the Company.
The 401(k) Plan permits employees of the Company, in accordance with the
provisions of Section 401(k) of the Code, to defer up to 20% of their eligible
compensation on a pre-tax basis subject to certain maximum amounts. Employee
contributions are fully vested and are matched by the Company at a rate of
compensation deferred to be determined annually at the Company's discretion. The
matching contribution is subject to vesting under a schedule providing for 20%
annual vesting starting with the third year of employment and 100% vesting after
seven years of employment.
9. LEASE AGREEMENTS
The Company is the lessor of a total of 916 stores in 27 factory outlet centers,
under operating leases with initial terms that expire from 1997 to 2014. Most
leases are renewable for five years at the lessee's option. Future minimum lease
receipts under noncancelable operating leases as of December 31, 1996 are as
follows:
1997 $49,125
1998 44,768
1999 39,219
2000 30,050
2001 21,863
Thereafter 41,516
$226,541
===============
10. COMMITMENTS
The Company purchased the rights to lease land on which two of the outlet
centers are situated for $1,520. These leasehold rights are being amortized on a
straight-line basis over 30 and 40 year periods. Accumulated amortization was
$419 and $371 at December 31, 1996 and 1995, respectively. The annual rental
payments for these leases aggregated $315, $312 and $231 for the years ended
December 31, 1996, 1995 and 1994, respectively. Minimum lease payments for the
next five years and thereafter are as follows:
1997 $318
1998 321
1999 338
2000 351
2001 354
Thereafter 26,166
$27,848
===============
F-12
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS, EXCEPT SHARE DATA)
11. RELATED PARTY INFORMATION
Vernon, Vernon, Wooten, Brown, Andrews & Garrett, P.A., a law firm in which a
partner served on the Company's Board of Directors from June 1993 to December
1994, provides legal services to the Company. During 1994, the Company paid
approximately $1,523 for these services.
12. ACQUISITION
On October 19, 1994, the Company completed its acquisition of the assets of
MillStream Factory Shops, a factory outlet center in Lancaster, Pennsylvania,
for an aggregate purchase price of $23,800. The acquisition was accounted for
using the purchase method whereby the purchase price was allocated to assets
acquired based on their fair values. The results of operations of the acquired
property have been included in the consolidated results of operations since the
acquisition date.
Pro forma total revenues, net income and net income per share for the year ended
December 31, 1994, which reflect adjustments to present the historical
information as if the acquisition had occurred as of the beginning of the
respective period, were $48,833, $11,035 and $1.29, respectively. The pro forma
information is presented for informational purposes only and may not be
indicative of what actual results of operations would have been had the
acquisition occurred at the beginning of the respective period, nor does it
purport to represent the results of operations for future periods.
13. SUPPLEMENTARY INCOME STATEMENT INFORMATION
The following amounts are included in operating and maintenance expense for the
years ended December 31:
1996 1995 1994
------------- --------------- ------------
Advertising and promotion $7,691 $8,884 $5,769
Common area maintenance 6,681 5,960 4,079
Real estate taxes 4,699 3,483 2,210
Other operating expenses 4,488 4,140 3,442
$23,559 $22,467 $15,500
============= =============== ============
14. SUBSEQUENT EVENT
On February 28, 1997, the Company completed its acquisition of Five Oaks Factory
Stores, a factory outlet center in Sevierville, Tennessee, for an aggregate
purchase price of $18,000. The acquisition will be accounted for using the
purchase method whereby the purchase price will be allocated to assets acquired
based on fair values.
F-13
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS, EXCEPT SHARE DATA)
15. QUARTERLY FINANCIAL INFORMATION (Unaudited)
<TABLE>
<CAPTION>
1996 QUARTER FIRST SECOND THIRD FOURTH
-------------- ---------------- ----------------- -----------------
<S> <C> <C> <C> <C>
Total revenues $18,123 $18,189 $19,453 $19,735
Income before minority interest and
extraordinary item 3,910 3,591 4,083 4,593
Income before extraordinary item 2,849 2,634 2,964 3,305
Net income 2,288 2,634 2,964 3,305
Per Share:
Income before extraordinary item .35 .32 .37 .42
Net income .26 .32 .37 .42
-------------- ---------------- ----------------- -----------------
1995 QUARTER First Second Third Fourth
-------------- ---------------- ----------------- -----------------
Total revenues $15,760 $17,235 $17,768 $17,841
Income before minority interest 3,744 3,525 3,847 4,236
Net income 2,748 2,597 2,808 3,065
Net income per share .33 .31 .34 .39
-------------- ---------------- ----------------- -----------------
</TABLE>
F-14
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
Our report on the consolidated financial statements of Tanger Factory
Outlet Centers, Inc. and Subsidiary is included on page F-1 of this Form 10-K.
In connection with our audits of such financial statements, we have also audited
the related financial statement schedule listed in the index on page 25 of this
Form 10-K.
In our opinion, the financial statement schedule referred to above, when
considered in relation to the basic financial statements taken as a whole,
presents fairly, in all material respects, the information required to be
included therein.
COOPERS & LYBRAND L.L.P.
Greensboro, North Carolina
January 27, 1997, except for Note 14,
which is dated February 28, 1997
F-15
<PAGE>
TANGER FACTORY OUTLET CENTERS, INC. AND SUBSIDIARY
SCHEDULE III
REAL ESTATE AND ACCUMULATED DEPRECIATION
FOR THE YEAR ENDED DECEMBER 31, 1996
(Amounts in thousands)
<TABLE>
<CAPTION>
Costs Capitalized
Depreciation in Income
Description Initial Cost to Company (Improvements)
- -------------------------------------- -------------------------- ---------------------------
Outlet Center Building Building
Name Location Encumbrances Land & Fixtures Land & Fixtures
- ---------------- -------------------- ---------------- ------------ ------------ --------- ----------------
<S> <C> <C> <C> <C> <C> <C>
Barstow Barstow, CA $ --- $3,941 $12,533 $ --- $883
Boaz Boaz, AL 1,550 616 2,195 --- 864
Bourne Bourne, MA --- 899 1,361 --- 185
Branch N. Branch, MN --- 423 5,644 249 2,408
Branson Branson, MO 5,425 4,557 25,040 --- 3,086
Casa Grande Casa Grande, AZ --- 753 9,091 --- 1,138
Clover North Conway, NH --- 393 672 --- 49
Commerce I Commerce, GA 10,412 755 3,511 492 5,121
Commerce II Commerce, GA --- 1,299 14,046 541 2,554
Gonzales Gonzales, LA 4,650 1,011 16,165 10 3,247
Kittery-I Kittery, ME 6,053 1,242 2,961 229 1,150
Kittery-II Kittery, ME --- 921 1,835 530 219
Lancaster Lancaster, PA 15,975 3,691 19,907 --- 2,225
Lawrence Lawrence, KS --- 1,013 5,542 439 681
LL Bean North Conway, NH --- 1,894 3,351 --- 128
Locust Grove Locust Grove, GA --- 2,609 11,801 --- 6,928
Manchester Manchester, VT --- 500 857 --- 66
Martinsburg Martinsburg, WV --- 800 2,812 --- 1,252
McMinnville McMinnville, OR --- 1,071 8,162 5 517
Pigeon Forge Pigeon Forge, TN --- 299 2,508 --- 953
Riverhead Riverhead, NY --- --- 36,374 -- 190
Riverhead II Riverhead, NY --- 5191 14,837 --- ---
San Marcos San Marcos, TX 10,349 2,012 9,440 17 5,869
Seymour Seymour, IN 8,299 1,794 13,249 --- 92
Stroud Stroud, OK 3,875 446 7,048 --- 4,734
Terrell Terrell, TX --- 805 13,432 --- 3,905
West Branch West Branch, MI 6,932 350 3,428 120 3,250
Williamsburg Williamsburg, IA 17,184 706 6,781 716 8,745
Totals $90,704 $39,991 $254,583 $3,348 $60,439
================ ==================== ================ ============ ============ ========= ===============
<CAPTION>
Gross Amount Carried at Close of Period Life Used to
Description 12/31/96 (1) Compute
- --------------------------- ---------------------------------------- Depreciation
Outlet Center Building Accumulated Date of in Income
Name Location Land & Fixtures Total Depreciation Construction Statement
- --------------- ---------- ---------- ----------- -------------- --------------- ------------ --------------
<S> <C> <C> <C> <C> <C> <C> <C>
Barstow Barstow, CA $3,941 $13,416 $17,357 $1,350 1995 (2)
Boaz Boaz, AL 616 3,059 3,675 1,057 1988 (2)
Bourne Bourne, MA 899 1,546 2,445 549 1989 (2)
Branch N. Branch, MN 672 8,052 8,724 1,738 1992 (2)
Branson Branson, MO 4,557 28,126 32,683 2,952 1994 (2)
Casa Grande Casa Grande, AZ 753 10,229 10,982 2,601 1992 (2)
Clover North Conway, NH 393 721 1,114 294 1987 (2)
Commerce I Commerce, GA 1,247 8,632 9,879 2,526 1989 (2)
Commerce II Commerce, GA 1,840 16,600 18,440 788 1995 (2)
Gonzales Gonzales, LA 1,021 19,412 20,433 3,423 1992 (2)
Kittery-I Kittery, ME 1,471 4,111 5,582 1,597 1986 (2)
Kittery-II Kittery, ME 1,451 2,054 3,505 644 1989 (2)
Lancaster Lancaster, PA 3,691 22,132 25,823 2,222 (3) (2)
Lawrence Lawrence, KS 1,452 6,223 7,675 978 1993 (2)
LL Bean North Conway, NH 1,894 3,479 5,373 1,247 1988 (2)
Locust Grove Locust Grove, GA 2,609 18,729 21,338 1,583 1994 (2)
Manchester Manchester, VT 500 923 1,423 315 1988 (2)
Martinsburg Martinsburg, WV 800 4,064 4,864 1,309 1987 (2)
McMinnville McMinnville, OR 1,076 8,679 9,755 1,535 1993 (2)
Pigeon Forge Pigeon Forge, TN 299 3,461 3,760 1,215 1988 (2)
Riverhead Riverhead, NY --- 36,564 36,564 3,551 1993 (2)
Riverhead II Riverhead, NY 5,191 14,837 20,028 --- (4) (2)
San Marcos San Marcos, TX 2,029 15,309 17,338 2,108 1993 (2)
Seymour Seymour, IN 1,794 13,341 15,135 1,581 1994 (2)
Stroud Stroud, OK 446 11,782 12,228 2,674 1992 (2)
Terrell Terrell, TX 805 17,337 18,142 1,978 1994 (2)
West Branch West Branch, MI 470 6,678 7,148 1,511 1991 (2)
Williamsburg Williamsburg, IA 1,422 15,526 16,948 3,581 1991 (2)
Totals $43,339 $315,022 $358,361 $46,907
================ ============================ ============== =============== =============== ============== ==============
</TABLE>
(1) Aggregate cost for federal income tax purposes is approximately
$346,583,000.
(2) The Company generally uses estimated lives ranging from 25 to 33 years
for buildings and 15 years for land improvements. Tenant finishing
allowances are depreciated over the initial lease term.
(3) Acquired in October 1994.
(4) Under construction at December 31, 1996.
F-16
<PAGE>
TANGER FACTORY OUTLET CENTERS, INC. AND SUBSIDIARY
SCHEDULE III
REAL ESTATE AND ACCUMULATED DEPRECIATION (CONTINUED)
For the Year Ended December 31, 1996
(Amounts in thousands)
The changes in total real estate for the three years ended December 31, 1996 are
as follows:
<TABLE>
<CAPTION>
1994 1995 1996
------------------- ------------------- ---------------------
<S> <C> <C> <C>
Balance, beginning of year $137,666 $292,406 $325,881
Acquisition of real estate 23,598 --- ---
Improvements 131,142 33,475 32,511
Dispositions and other --- --- (31)
Balance, end of year $292,406 $325,881 $358,361
=================== =================== =====================
</TABLE>
The changes in accumulated depreciation for the three years ended December 31,
1996 are as follows:
<TABLE>
<CAPTION>
1994 1995 1996
------------------- ------------------- ---------------------
<S> <C> <C> <C>
Balance, beginning of year $10,436 $18,007 $31,458
Depreciation for the period 7,571 13,451 15,449
Dispositions and other --- --- ---
Balance, end of year $18,007 $31,458 $46,907
=================== =================== =====================
</TABLE>
F-17
<PAGE>
AMENDED AND RESTATED ARTICLES OF INCORPORATION
OF
TANGER FACTORY OUTLET CENTERS, INC.
--------------------
The corporation hereby amends and restates its Articles of
Incorporation as follows:
ARTICLE I
The name of the corporation shall be TANGER FACTORY OUTLET CENTERS,
INC.
ARTICLE II
A. The number of shares that the corporation is authorized to issue is 76
million shares, divided into three classes, as follows: 50 million Common Shares
with a par value of $0.01 per share (the "Common Shares"), 25 million Excess
Shares with a par value of $0.01 per share (the "Excess Shares") and one million
Preferred Shares with a par value of $0.01 per share (the "Preferred Shares").
The preferences, limitations and relative rights of each class of shares are as
follows:
B. Common Shares.
1. Dividend Rights. Subject to the preferential dividend rights of the
Preferred Shares, if any, as may be determined by the Board of Directors of the
corporation pursuant to paragraph D of this Article II, the holders of Common
Shares shall be entitled to receive such dividends as may be declared by the
Board of Directors of the corporation.
2. Rights Upon Liquidation. Subject to the preferential rights of the
Preferred Shares, if any, as may be determined by the Board of Directors of the
corporation pursuant to paragraph D of this Article II, in the event of any
voluntary or involuntary liquidation, dissolution or winding up of, or any
distribution of the assets of, the corporation, each holder of Common Shares
shall be entitled to receive, ratably with each other holder of Common Equity
Shares, that portion of the assets of the corporation available for distribution
to its shareholders as the number of Common Shares held by such holder bears to
the total number of Common Equity Shares then outstanding.
3. Voting Rights. The holders of Common Shares shall have
unlimited voting rights and each common share shall be entitled to one vote on
all matters voted on at a shareholder's meeting.
4. Restrictions on Ownership and Transfer to Preserve Tax
Benefit; Conversion and Exchange For Excess Shares.
(a) Definitions.
1
<PAGE>
For the purposes of paragraphs B and C of this Article II, the following terms
shall have the following meanings:
"Beneficial Ownership" shall mean ownership of Common Shares
or Excess Shares by a Person who is or would be treated as an owner of
such Common Shares or Excess Shares either directly or constructively
through the application of Section 544 of the Code, as modified by
Section 856(h)(1)(B) of the Code. The terms "Beneficial Owner,"
"Beneficially Owns" and "Beneficially Owned" shall have the correlative
meanings.
"Beneficiary" shall mean the beneficiary of the Trust as
determined pursuant to subparagraph C(5) of this Article II.
"Code" shall mean the Internal Revenue Code of 1986, as
amended from time to time.
"Common Equity Shares" shall mean shares of stock that are
either Common Shares or Excess Shares.
"Constructive Ownership" shall mean ownership of Common Shares
or Excess Stock by a Person who is or would be treated as an owner of
such Common Shares or Excess Shares either directly or constructively
through the application of Section 318 of the Code, as modified by
Section 856(d)(5) of the Code. The terms "Constructive Owner,"
"Constructively Owns" and "Constructively Owned" shall have the
correlative meanings.
"Existing Holder" shall mean (i) the Tanger Family
Partnership, Stanley K. Tanger and each other Person who is a
Beneficial Owner of Common Shares Beneficially Owned by the Tanger
Family Partnership or Stanley K. Tanger so long as the Tanger Family
Partnership, Stanley K. Tanger or such Person, as the case may be,
shall have an Existing Holder Limit in excess of the Ownership Limit
and (ii) any other Person (other than an Existing Holder) to whom an
Existing Holder transfers Beneficial Ownership of Common Shares causing
such transferee to Beneficially Own Common Shares in excess of the
Ownership Limit.
"Existing Holder Limit" (i) for any Existing Holder who is an
Existing Holder by virtue of clause (i) of the definition thereof,
shall mean, initially, the percentage of the outstanding Common Equity
Shares Beneficially Owned by such Existing Holder immediately after the
Initial Public Offering resulting from Beneficial Ownership of Common
Equity Shares by the Tanger Family Partnership or Stanley K. Tanger
provided, however, that the combined Existing Holder Limit for all
Existing Holders in the aggregate, counting each Common Equity Share
only once, shall constitute 33% of the outstanding Common Equity
Shares, and after any adjustment pursuant to subparagraph B (4)(i) of
this Article II, shall mean such percentage of the outstanding
Common Equity Shares as so adjusted; and (ii) for any Existing Holder
who becomes an Existing Holder by virtue of clause (ii) of the
definition thereof, shall mean, initially, the percentage of the
outstanding
2
<PAGE>
Common Equity Shares Beneficially Owned by such Existing
Holder immediately following the Transfer or other event pursuant to
which such Existing Holder becomes an Existing Holder, and after any
adjustment pursuant to subparagraph B(4)(i) of this Article II, shall
mean such percentage of the outstanding Common Equity Shares as so
adjusted. From the date of the Initial Public ffering and
Oprior to the Restriction Termination Date, the secretary of the
corporation shall maintain and, upon request, make available to
each Existing Holder, a schedule which sets forth the then current
Existing Holder Limits for each Existing Holder.
"Initial Public Offering" shall mean the sale of Common Shares
pursuant to the corporation's first effective registration statement
for such Common Shares filed under the Securities Act of 1933, as
amended.
"IRS" means the United States Internal Revenue Service.
"IRS Ruling Satisfactory To The Corporation" shall mean a
ruling by the IRS, in form and substance satisfactory to the Board of
Directors of the corporation in their sole discretion, evidenced by a
resolution passed by such Board of Directors and filed with the
secretary of the corporation, that the issuance by the corporation of
Excess Shares and the immediate conversion of Common Shares into such
Excess Shares will not cause the corporation to fail to satisfy the
organizational and operational requirements that must be met to qualify
for treatment as a REIT.
"Market Price" shall mean the last reported sales price
reported on the New York Stock Exchange of the Common Shares on the
trading day immediately preceding the relevant date, or if the Common
Shares are not then traded on the New York Stock Exchange, the last
reported sales price of the Common Shares on the trading day
immediately preceding the relevant date as reported on any exchange or
quotation system over which the Common Shares may be traded, or if the
Common Shares are not then traded over any exchange or quotation
system, then the market price of the Common Shares on the relevant date
as determined in good faith by the Board of Directors of the
corporation.
"Ownership Limit" shall initially mean 4% of the outstanding
Common Equity Shares of the corporation, and after any adjustment as
set forth in subparagraph B(4)(j) of this Article II, shall mean such
greater percentage (but not more than 9.8%) of the outstanding Common
Equity Shares as so adjusted.
"Partnership Agreement" shall mean the Agreement of Limited
Partnership of Tanger Properties Limited Partnership, of which the
corporation is the sole general partner, dated as of May 24, 1993, as
such agreement may be amended from time to time.
"Person" shall mean an individual, corporation, partnership,
estate, trust (including a trust qualified under Section 401(a) or
501(c)(17) of the Code), a portion of a trust permanently set aside for
or to be used exclusively for the purposes described in Section
3
<PAGE>
642(c) of the Code, association, private foundation within the meaning
of Section 509(a) of the Code, joint stock company or other entity and
also includes a group as that term is used for purposes of Section
13(d)(3) of the Securities Exchange Act of 1934, as amended; but
does not include an underwriter which participates in a public offering
of the Common Shares provided that the ownership of Common Shares by
such underwriter would not result in the corporation being "closely
held" within the meaning of Section 856(h) of the Code, or would
otherwise result in the corporation failing to qualify as a REIT.
"Purported Beneficial Transferee" shall mean, with respect to
any purported Transfer which results in Excess Shares, the purported
beneficial transferee or owner for whom the Purported Record Transferee
would have acquired or owned shares of Common Shares, if such Transfer
had been valid under subparagraph B(4)(b) of this Article II.
"Purported Record Transferee" shall mean, with respect to any
purported Transfer which results in Excess Shares, the record holder of
the Common Equity Shares if such Transfer had been valid under
subparagraph B(4)(b) of this Article II.
"REIT" shall mean a Real Estate Investment Trust under Section
856 of the Code.
"Restriction Termination Date" shall mean the first day after
the date of the Initial Public Offering on which the Board of Directors
of the corporation determines that it is no longer in the best
interests of the corporation to attempt to, or continue to, qualify as
a REIT.
"Transfer" shall mean any sale, transfer, gift, assignment,
devise or other disposition of Common Equity Shares, (including (i) the
granting of any option or entering into any agreement for the sale,
transfer or other disposition of Common Equity Shares or (ii) the sale,
transfer, assignment or other disposition of any securities (or rights
convertible into or exchangeable for Common Equity Shares), whether
voluntary or involuntary, whether of record or beneficially or
Beneficially or Constructively (including but not limited to transfers
of interests in other entities which results in changes in Beneficial
or Constructive Ownership of Common Equity Shares), and whether by
operation of law or otherwise.
"Trust" shall mean the trust created pursuant to subparagraph
C(1) of this Article II.
"Trustee" shall mean the corporation as trustee for the Trust,
and any successor trustee appointed by the corporation.
"Units" shall mean the units into which partnership interests
of Tanger Properties Limited Partnership are divided, and as the same
may be adjusted, as provided in the Partnership Agreement.
(b) Restriction on Ownership and Transfers.
4
<PAGE>
(i) Except as provided in subparagraph B(4)(l)
of this Article II, from the date of the Initial Public Offering and prior to
the Restriction Termination Date, no Person (other than an Existing Holder)
shall Beneficially Own Common Shares in excess of the Ownership Limit, no
Existing Holder shall Beneficially Own Common Shares in excess of the Existing
Holder Limit for such Existing Holder and no Person shall Constructively Own
Common Shares in excess of 9.8% of the outstanding Common Equity Shares.
(ii) Except as provided in subparagraph B(4)(l)
of this Article II, from the date of the Initial Public Offering and prior to
the Restriction Termination Date, any Transfer (whether or not such transfer is
the result of a transaction entered into through the facilities of the New York
Stock Exchange ("NYSE")), that, if effective, would result in any Person (other
than an Existing Holder) Beneficially Owning Common Shares in excess of the
Ownership Limit shall be void ab initio as to the Transfer of such Common
Shares which would be otherwise Beneficially Owned by such Person in excess
of the Ownership Limit; and the intended transferee shall acquire no rights in
such Common Shares.
(iii) Except as provided in subparagraph B(4)(l)
of this Article II, from the date of the Initial Public Offering and prior to
the Restriction Termination Date, any Transfer (whether or not such transfer is
the result of a transaction entered into through the facilities of the NYSE)
that, if effective, would result in any Existing Holder Beneficially Owning
Common Shares in excess of the applicable Existing Holder Limit shall be void
ab initio as to the Transfer of such Common Shares which would be otherwise
Beneficially Owned by such Existing Holder in excess of the applicable Existing
Holder Limit; and such Existing Holder shall acquire no rights in such Common
Shares.
(iv) Except as provided in subparagraph B(4)(l)
of this Article II, from the date of the Initial Public Offering and prior to
the Restriction Termination Date, any Transfer (whether or not such transfer is
the result of a transaction entered into through the facilities of the NYSE)
that, if effective, would result in any Person Constructively Owning Common
Shares in excess of 9.8% of the outstanding Common Equity Shares shall be void
ab initio as to the Transfer of such Common Shares which would be otherwise
Constructively Owned by such Person in excess of such amount; and the intended
transferee shall acquire no rights in such Common Shares.
(v) Except as provided in subparagraph B(4)(l)
of this Article II, from the date of the Initial Public Offering and prior to
the Restriction Termination Date, any Transfer (whether or not such transfer is
the result of a transaction entered into through the facilities of the NYSE)
that, if effective, would result in the Common Shares being beneficially owned
by less than 100 Persons (determined without reference to any rules of
attribution) shall be void ab initio as to the Transfer of such Common Shares
which would be otherwise beneficially owned by the transferee; and the intended
transferee shall acquire no rights in such Common Shares.
(vi) Notwithstanding any other provisions
contained in this Article II, from the date of the Initial Public Offering and
prior to the Restriction Termination Date, any Transfer
5
<PAGE>
(whether or not such transfer is the result of a transaction entered into
through the facilities of the NYSE) or other event that, if effective, would
result in the corporation being "closely held" within the meaning of Section
856(h) of the Code, or would otherwise result in the corporation failing to
qualify as a REIT (including, but not limited to, a Transfer or other event
that would result in the corporation owning (directly or Constructively) an
interest in a tenant that is described in Section 856(d)(2)(B) of the Code if
the income derived by the corporation from such tenant would cause the
corporation to fail to satisfy any of the gross income requirements of Section
856(c) of the Code), shall be void ab initio as to the Transfer of the Common
Shares or other event which would cause the corporation to be "closely held"
within the meaning of Section 856(h) of the Code or would otherwise result in
the corporation failing to qualify as a REIT; and the intended transferee or
owner or Constructive or Beneficial Owner shall acquire or retain no rights in
such Common Shares.
(vii) It is expressly intended that the
restrictions on ownership and transfer described in this subparagraph B(4) of
Article II shall apply to the exchange rights provided in Section 8.4 of the
Partnership Agreement. Notwithstanding any of the provisions of the Partnership
Agreement to the contrary, a partner of Tanger Properties Limited Partnership
shall not be entitled to effect an exchange of an interest in Tanger Properties
Limited Partnership into Common Equity Shares if the direct or beneficial or
Beneficial or Constructive ownership of Common Shares would be prohibited under
the provisions of this Article II, and no Person shall be deemed to Beneficially
or Constructively Own Common Shares for which Units are exchangeable, so long
as such Units are not then exchangeable into Common Shares.
(c) Conversion Into and Exchange For Excess Shares.
(i) The provision in this subparagraph B(4)(c)
shall take effect only if the IRS Ruling Satisfactory To The Corporation has
been obtained.
(ii) If, notwithstanding the other provisions
contained in this Article II, at any time after the date of the Initial Public
Offering and prior to the Restriction Termination Date, there is a purported
Transfer (whether or not such transfer is the result of a transaction entered
into through the facilities of the NYSE), change in the capital structure of
the corporation, or other event such that one or more of the restrictions on
ownership and transfers described in subparagraph B(4)(b), above, has been
violated then the Common Shares being Transferred (or in the case of an event
other than a Transfer, the shares owned or Constructively Owned or
Beneficially Owned) which would cause one or more of the restrictions on
ownership or transfer to be violated (rounded up to the nearest whole share)
shall be automatically converted into an equal number of Excess Shares.
Such conversion shall be effective as of the close of business on
the business day prior to the date of such Transfer or other event.
(d) Remedies For Breach. If the Board of Directors or its
designees shall at any time determine in good faith that a Transfer or other
event has taken place in violation of subparagraph B(4)(b) of this Article II or
that a Person intends to acquire, has attempted to acquire or may acquire
beneficial ownership (determined without reference to any rules of attribution),
6
<PAGE>
Beneficial Ownership or Constructive Ownership of any shares of the corporation
in violation of subparagraph B(4)(b) of this Article II, the Board of Directors
or its designees shall take such action as it deems advisable to refuse to give
effect or to prevent such Transfer, including, but not limited to, causing the
corporation to redeem shares refusing to give effect to such Transfer on the
books of the corporation or instituting proceedings to enjoin such Transfer;
provided, however, that any Transfers (or, in the case of events other than a
Transfer, ownership or Constructive Ownership or Beneficial Ownership) in
violation of subparagraph B(4)(b) of this Article II (1) if the IRS Ruling has
not yet occurred, shall be void AB INITIO, or (2) if the IRS Ruling has
occurred, shall automatically result in the conversion described in
subparagraph B(4)(c), in either case irrespective of any action (or non-action)
by the Board of Directors.
(e) Notice of Restricted Transfer. Any Person who acquires or
attempts to acquire shares in violation of subparagraph B(4)(b) of this Article
II, or any Person who is a transferee such that Excess Shares result under
subparagraph B(4)(c) of this Article II, shall immediately give written notice
to the corporation of such event and shall provide to the corporation such other
information as the corporation may request in order to determine the effect, if
any, of such Transfer or attempted Transfer on the corporation's status as a
REIT.
(f) Owners Required To Provide Information. From the date of
the Initial Public Offering and prior to the Restriction Termination Date each
Person who is a beneficial owner or Beneficial Owner or Constructive Owner of
Common Shares and each Person (including the shareholder of record) who is
holding Common Shares for a Beneficial Owner or Constructive Owner shall provide
to the corporation such information that the corporation may request, in good
faith, in order to determine the corporation's status as a REIT.
(g) Remedies Not Limited. Nothing contained in this Article II
(but subject to paragraph G of this Article II) shall limit the authority of the
Board of Directors to take such other action as it deems necessary or advisable
to protect the corporation and the interests of its shareholders by preservation
of the corporation's status as a REIT.
(h) Ambiguity. In the case of an ambiguity in the application
of any of the provisions of subparagraph B(4) of this Article II, including any
definition contained in subparagraph B(4)(a), the Board of Directors shall have
the power to determine the application of the provisions of this subparagraph
B(4) with respect to any situation based on the facts known to it (subject,
however, to the provisions of paragraph G of this Article II).
(i) Subject to the limitations provided in subparagraph
B(4)(k), any Existing Holder may reduce its Existing Holder Limit and increase
or create, as the case may be, an Existing Holder Limit of another Person in
connection with a Transfer of Common Shares (the "Transferred Securities") by
such Existing Holder as follows:
(i) The Existing Holder Limit of the transferee
of such Transferred Securities, and of each Person who would Beneficially Own
such Transferred Securities after such
7
<PAGE>
Transfer but who did not Beneficially Own such Transferred Securities prior
to such Transfer (each a "Transferee"), shall be the lesser of (i) the
percentage of the outstanding Common Equity Shares Beneficially Owned by
such Transferee after such proposed Transfer and (ii) the maximum Existing
Holder Limit permitted for such Transferee under subparagraph b(4)(k) after
giving effect to the proposed Transfer and subparagraph b(4)(i)(ii); provided
that no such adjustment to an Existing Holder Limit shall result in any Person
having an Existing Holder Limit less than the Ownership Limit or greater than
33%.
(ii) The Existing Holder Limit of the transferor
of such Transferred Securities and of each Person whose Beneficial Ownership
would decrease following such Transfer (each, a "Transferor"), shall be
decreased to the percentage of outstanding Common Equity Shares Beneficially
Owned by each such Transferor after giving effect to such Transfer, but no such
decrease shall reduce the Existing Holder Limit of any Transferor below the
Ownership Limit.
(iii) The Transferor shall give the Board of
Directors written notice of such proposed Transfer.
(iv) At the request and with the consent of all
Persons whose Existing Holder Limits are affected by a Transfer, the Board of
Directors may further adjust the Existing Holder Limit for each such Person.
(j) Modification of Ownership Limit. Subject to the
limitations provided in subparagraph B(4)(k), the Board of Directors may from
time to time increase the Ownership Limit.
(k) Limitations on Modifications.
(i) Neither the Ownership Limit nor any Existing
Holder Limit may be increased (nor may any additional Existing Holder Limit be
created) if, after giving effect to such increase (or creation), five Beneficial
Owners of Common Shares (including all of the then Existing Holders) could
(taking into account the Ownership Limit and the Existing Holder Limit)
Beneficially Own, in the aggregate, more than 49% of the outstanding Common
Equity Shares.
(ii) Prior to the modification of any Existing
Holder Limit or Ownership Limit pursuant to subparagraphs B(4)(i) or B(4)(j) of
this Article II, the Board of Directors of the corporation may require such
rulings from the Internal Revenue Service, opinions of counsel, affidavits,
representations, undertakings or agreements as it may deem necessary or
advisable in order to determine or ensure the corporation's status as a REIT.
(iii) No Existing Holder Limit shall be reduced
to a percentage which is less than the Ownership Limit.
(iv) The Ownership Limit may not be increased
to a percentage which is greater than 9.8%.
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(l) Exceptions.
(i) Subject to subparagraph B(4)(b)(vi), the
Board of Directors, in its sole discretion, may exempt a Person from the
Ownership Limits or the Existing Holder Limits, as the case may be, if such
Person is not an individual for purposes of Section 542(a)(2) of the Code and
the Board of Directors obtains such representations and undertakings from such
Person as are reasonably necessary to ascertain that no individual's Beneficial
Ownership of such Common Shares will violate the Ownership Limit or the
applicable Existing Holder Limit, as the case may be, and agrees that,
if the IRS Ruling Satisfactory To The Corporation has been obtained, any
violation of such representations or undertaking (or other action which is
contrary to the restrictions contained in this subparagraph B(4) of this
Article II) or attempted violation will result in such Common Shares being
exchanged for Excess Shares in accordance with subparagraph B(4)(c) of this
Article II.
(ii) Subject to subparagraph B(4)(b)(vi), the
Board of Directors, in its sole discretion, may exempt a Person from the
limitation on a Person Constructively Owning Common Shares in excess of 9.8%
of the outstanding Common Equity Shares, if such Person does not and represents
that it will not own, directly or constructively (by virtue of the application
of Section 318 of the Code, as modified by Section 856(d)(5) of the Code), more
than a 9.8% interest (as set forth in Section 856(d)(2)(B)) in a tenant of the
corporation and the corporation obtains such representations and undertakings
from such Person as are reasonably necessary to ascertain this fact and agrees
that, if the IRS Ruling Satisfactory To The Corporation has been obtained, any
violation or attempted violation will result in such Common Shares in excess of
9.8% of the outstanding Common Equity Shares being exchanged for Excess Shares
in accordance with subparagraph B(4)(c) of this Article II.
(iii) Prior to granting any exception pursuant to
subparagraph B(4)(l)(i) or (ii) of this Article II, the Board of Directors may
require a ruling from the Internal Revenue Service, or an opinion of counsel,
in either case in form and substance satisfactory to the Board of Directors
in it sole discretion, as it may deem necessary or advisable in order to
determine or ensure the corporation's status as a REIT.
5. Legend. Each certificate for Common Shares shall bear the
following legend:
"The corporation is authorized to issue three classes of
capital stock which are designated as Common Shares, Excess Shares and Preferred
Shares. The Board of Directors is authorized to determine the preferences,
limitations and relative rights of the Preferred Shares before the issuance of
any Preferred Shares. The corporation will furnish, without charge, to any
shareholder making a written request therefor, a copy of the corporation's
articles of incorporation and a written statement of the designations, relative
rights, preferences and limitations applicable to each such class of stock.
Requests for such written statement may be directed to Tanger Factory Outlet
Centers, Inc., 1400 West Northwood Street, P.O. Box 29168, Greensboro, N.C.
27408.
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The Common Shares represented by this certificate are subject
to restrictions on ownership and transfer for the purpose of the corporation's
maintenance of its status as a Real Estate Investment Trust under the Internal
Revenue Code of 1986, as amended. No Person may Beneficially Own Common Shares
in excess of 4% (or such greater percentage as may be determined by the Board of
Directors of the corporation) of the outstanding Common Equity Shares of the
corporation (unless such Person is an Existing Holder) and no Person may
Constructively Own Common Shares in excess of 9.8% of the outstanding Common
Equity Shares of the corporation, with certain exceptions set forth in the
corporation's articles of incorporation. Any Person who attempts to Beneficially
Own or Constructively Own Common Shares in excess of the above limitations must
immediately notify the corporation. All capitalized terms in this legend have
the meanings defined in the corporation's articles of incorporation. Transfers
in violation of the restrictions described above may be void AB INITIO.
In addition, upon the occurrence of certain events, if the
restrictions on ownership are violated, the Common Shares represented hereby may
be automatically exchanged for Excess Shares which will be held in trust by the
corporation. The corporation has an option to acquire Excess Shares under
certain circumstances. The corporation will furnish to the holder hereof upon
request and without charge a complete written statement of the terms and
conditions of the Excess Shares. Requests for such statement may be directed to
Tanger Factory Outlet Centers, Inc., 1400 West Northwood Street, Greensboro,
N.C. 27408."
6. Severability. If any provision of this Article II or any application
of any such provision is determined to be invalid by any Federal or state court
having jurisdiction over the issues, the validity of the remaining provisions
shall not be affected and other applications of such provision shall be affected
only to the extent necessary to comply with the determination of such court.
C. Excess Shares.
1. Ownership in Trust. Upon any purported Transfer (whether or not such
transfer is the result of a transaction entered into through the facilities of
the NYSE) that results in the issuance of Excess Shares pursuant to subparagraph
B(4)(c) of this Article II, such Excess Shares shall be deemed to have been
transferred to the corporation, as Trustee of a Trust for the exclusive benefit
of such Beneficiary or Beneficiaries to whom an interest in such Excess Shares
may later be transferred pursuant to subparagraph C(5). Excess Shares so held in
trust shall be issued and outstanding stock of the corporation. The Purported
Record Transferee shall have no rights in such Excess Shares except the right to
designate a transferee of such Excess Shares upon the terms specified in
subparagraph C(5) of this Article II. The Purported Beneficial Transferee shall
have no rights in such Excess Shares except as provided in subparagraph C(5).
2. Dividend Rights. Excess Shares shall not be entitled to any
dividends. Any dividend or distribution paid prior to the discovery by the
corporation that the Common Shares have been converted into Excess Shares shall
be repaid to the corporation upon demand.
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3. Rights Upon Liquidation. Subject to the preferential rights of the
Preferred Shares, if any, as may be determined by the Board of Directors of the
corporation pursuant to paragraph D of this Article II, in the event of any
voluntary or involuntary liquidation, dissolution or winding up of, or any
distribution of the assets of, the corporation, each holder of Excess Shares
shall be entitled to receive, ratably with each other holder of Common Equity
Shares, that portion of the assets of the corporation available for distribution
to its stockholders as the number of the Excess Shares held by such holder bears
to the total number of Common Equity Shares then outstanding. The corporation,
as holder of the Excess Shares in trust, or if the corporation shall have been
dissolved, any trustee appointed by the corporation prior to its dissolution,
shall distribute ratably to the Beneficiaries of the Trust, when determined,
any such assets received in respect of the Excess Shares in any liquidation,
dissolution or winding up of, or any distribution of the assets of the
corporation.
4. Voting Rights. The holders of Excess Shares shall not be
entitled to vote on any matters (except as required by law).
5. Restrictions On Transfer; Designation of Beneficiary.
(a) Excess Shares shall not be transferable. The Purported
Record Transferee may freely designate a Beneficiary of an interest in the Trust
(representing the number of Excess Shares held by the Trust attributable to a
purported Transfer that resulted in the issuance of Excess Shares), if (i) the
Excess Shares held in the Trust would not be Excess Shares in the hands of such
Beneficiary and (ii) the Purported Beneficial Transferee does not receive a
price for designating such Beneficiary that reflects a price per share for such
Excess Shares that exceeds (x) the price per share such Purported Beneficial
Transferee paid for the Common Shares in the purported Transfer that resulted in
the issuance of Excess Shares, or (y) if the Transfer or other event that
resulted in the issuance of Excess Shares was not a transaction in which the
Purported Beneficial Transferee gave value for such Excess Shares, a price per
share equal to the Market Price on the date of the purported Transfer or other
event that resulted in the issuance of Excess Shares. Upon such transfer of an
interest in the Trust, the corresponding Excess Shares in the Trust shall be
automatically exchanged for an equal number of Common Shares and such Common
Shares shall be transferred of record to the transferee of the interest in the
Trust if such Common Shares would not be Excess Shares in the hands of such
transferee. Prior to any transfer of any interest in the Trust, the Purported
Record Transferee must give advance notice to the corporation of the intended
transfer and the corporation must have waived in writing its purchase rights
under subparagraph C(6) of this Article II.
(b) Notwithstanding the foregoing, if a Purported Beneficial
Transferee receives a price for designating a Beneficiary of an interest in the
Trust that exceeds the amounts allowable under subparagraph C(5)(a) of this
Article II, such Purported Beneficial Transferee shall pay, or cause such
Beneficiary to pay, such excess to the corporation.
6. Purchase Right in Excess Shares. Excess Shares shall be deemed to
have been offered for sale to the corporation, or its designee, at a price per
share equal to the lesser of (i) the price per share in the transaction that
created the issuance of such Excess Shares (or, if the Transfer or other
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event that resulted in the issuance of Excess Shares was not a transaction in
which the Purported Beneficial Transferee gave value for such Excess Shares, a
price per share equal to the Market Price on the date of the purported Transfer
or other event that resulted in the issuance of Excess Shares) and (ii) the
Market Price on the date the corporation, or its designee, accepts such offer.
The corporation shall have the right to accept such offer for a period of ninety
days after the later of (i) the date of the Transfer or other event which
resulted in the issuance of such Excess Shares and (ii) the date the Board of
Directors determines in good faith that a Transfer or other event resulting in
the issuance of Excess Shares has occurred, if the corporation does not receive
a notice of such Transfer or other event pursuant to subparagraph B(4)(e) of
this Article II. The corporation may appoint a special trustee of the trust
established under subparagraph C(1) for the purpose of consummating the purchase
of Excess Shares by the corporation.
D. Preferred Shares. Prior to the issuance of any Preferred Shares, the
Board of Directors of the corporation shall determine, in whole or in part, the
preferences, limitations and relative rights of the Preferred Shares. Such
determination shall be made within the limits and as provided in the North
Carolina Business Corporation Act.
E. Exchange of Units. The Board of Directors of the corporation is hereby
expressly vested with authority to issue, and shall issue, to the extent that
such issuance will not result in a violation of subparagraph B(4)(b) of Article
II hereunder, Common Shares in exchange for Units, pursuant to the Partnership
Agreement, so long as the corporation remains the general partner of Tanger
Properties Limited Partnership.
F. Reservation of shares. Pursuant to the obligations of the corporation under
the Partnership Agreement to issue Common Shares in exchange for Units, the
Board of Directors is hereby required to reserve a sufficient number of
authorized but unissued Common Shares to permit the corporation to issue Common
Shares in exchange for Units that may be exchanged for Common Shares pursuant to
the Partnership Agreement.
G. Nothing in this Article II shall preclude the settlement of any
transaction entered into through the facilities of the NYSE.
H. Series A Cumulative Convertible Redeemable Preferred Shares. There is hereby
established the following series of authorized preferred shares having a par
value of $0.01 per share, which shall be designated as "Series A Cumulative
Convertible Redeemable Preferred Shares" and which shall consist of 345,000
Series A Preferred Shares having the following preferences, limitations and
relative rights:
1. Certain Definitions.
Unless the context otherwise requires, for purposes of this Paragraph H
of this Article II the following terms shall have the meanings herein specified
(with terms defined in the singular having comparable meanings when used in the
plural).
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Accumulated Funds from Operations. The term "Accumulated Funds from
Operations" shall mean, on a consolidated basis, the corporation's income (loss)
before extraordinary items and minority interests and gains (losses) on sale of
properties, plus depreciation and amortization as such terms are determined on a
basis consistent with generally accepted accounting principles and increased or
decreased (as applicable) for adjustments for other non-cash items as such items
are determined on a basis consistent with the corporation's financial reporting
practices for the period beginning on June 4, 1993 and ending on the last day of
the calendar quarter immediately preceding the date of determination, less (i)
that portion of the amount so determined allocable to minority interests in
Tanger Properties Limited Partnership (and in any other majority owned
subsidiary of the corporation), if any, (ii) dividends and other distributions
(other than distributions of the corporation's own shares) made by the
corporation with respect to any of its capital stock prior to the date of
determination and (iii) dividends payable with respect to the Series A
Preferred Shares, or any other shares ranking senior to or on a parity with the
Series A Preferred Shares as to payment of dividends which are in arrears and
unpaid on the date of determination.
Beneficial Ownership. The term "Beneficial Ownership" shall mean
ownership of Common Shares, Series A Preferred Shares or Excess Series A
Preferred Shares by a Person who is or would be treated as an owner of such
Common Shares, Series A Preferred Shares or Excess Series A Preferred Shares
either directly or constructively through the application of Section 544 of the
Code, as modified by Section 856(h)(1)(B) of the Code. The terms "Beneficial
Owner," "Beneficially Owns" and "Beneficially Owned" shall have the correlative
meanings.
Beneficiary. The term "Beneficiary" shall mean the beneficiary of the
Trust as determined pursuant to subparagraph H(9)(d).
Business Day. The term "Business Day" shall mean any day, other than a
Saturday or Sunday, that is neither a legal holiday nor a day on which banking
institutions in New York City are authorized or required by law, regulation or
executive order to close.
Code. The term "Code" shall mean the Internal Revenue Code of 1986,
as amended from time to time.
Common Equity Shares. The term "Common Equity Shares" shall mean shares
of stock that are either Common Shares or Excess Shares.
Common Share Conversion. The term "Common Share Conversion" shall mean
a conversion of Series A Preferred Shares into Common Shares, as provided in
subparagraph H(6) hereof.
Common Share Conversion Price. The term "Common Share Conversion
Price" shall have the meaning set forth in subparagraph H(6)(b) below.
Common Shares. The term "Common Shares" shall mean the corporation's
authorized
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Common Shares with a par value of $.01 per share.
Constructive Ownership. The term "Constructive Ownership" shall mean
ownership of Common Shares, Series A Preferred Shares or Excess Series A
Preferred Shares by a Person who is or would be treated as an owner of such
Common Shares, Series A Preferred Shares or Excess Series A Preferred Shares
either directly or constructively through the application of Section 318 of the
Code, as modified by Section 856(d)(5) of the Code. The terms "Constructive
Owner," "Constructively Owns" and "Constructively Owned" shall have the
correlative meanings.
Corporation Induced Event. The term "Corporation Induced Event" shall
mean either (i) the election by one or more holders of Series A Preferred Shares
to convert all or a portion of such Series A Preferred Shares into Common
Shares, or (ii) the redemption or purchase by the corporation of all or a
portion of the outstanding Series A Preferred Shares.
Dividend Payment Date. The term "Dividend Payment Date" shall have
the meaning set forth in subparagraph H(2)(b) below.
Dividend Period. The term "Dividend Period" shall mean the period from,
and including, the Series A Preferred Issue Date to, but not including, the
first Dividend Payment Date and thereafter, each quarterly period from, and
including, a Dividend Payment Date to, but not including, the next Dividend
Payment Date.
Excess Series A Preferred Shares. The term "Excess Series A Preferred
Shares" shall mean that series of capital stock of the corporation described in
subparagraph H(9).
Existing Holder Limit. The term "Existing Holder Limit" shall have the
meaning assigned to such term in subparagraph B(4) of this Article.
IRS. The term "IRS" shall mean the United States Internal Revenue
Service.
IRS Ruling Satisfactory to the Corporation. The term "IRS Ruling
Satisfactory To The Corporation" shall mean a ruling by the IRS, in form and
substance satisfactory to the Board of Directors of the corporation in their
sole discretion, evidenced by a resolution passed by such Board of Directors and
filed with the secretary of the corporation, that the issuance by the
corporation of Excess Series A Preferred Shares and the immediate conversion of
Series A Preferred Shares into such Excess Series A Preferred Shares will not
cause the corporation to fail to satisfy the organizational and operational
requirements that must be met to qualify for treatment as a REIT.
Liquidation Preference. The term "Liquidation Preference" shall mean
$250.00 per share of the Series A Preferred Shares, plus an amount equal to all
accrued and unpaid dividends thereon to the date of any liquidation,
dissolution, or winding up of the affairs of the corporation.
Market Price. The term "Market Price" shall mean the last reported
sales price of the Series
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A Preferred Shares (determined, if necessary, by reference to the last
reported sales price of Depositary Shares representing such Series A Preferred
Shares) reported on the New York Stock Exchange (the "NYSE") on the trading
day immediately preceding the relevant date, or if the Series A Preferred
Shares (or Depositary Shares) are not then traded on the New York Stock
Exchange, the last reported sales price of the Series A Preferred Shares
(or Depositary Shares) on the trading day immediately preceding the
relevant date as reported on any exchange or quotation system over which the
Series A Preferred Shares (or Depositary Shares) may be traded, or if the Series
A Preferred Shares (or Depositary Shares) are not then traded over any exchange
or quotation system, then the market price of the Series A Preferred Shares (or
Depositary Shares) on the relevant date as determined in good faith by the Board
of Directors of the corporation.
Non-Voidable Event. The term "Non-Voidable Event" shall have the
meaning set forth in subparagraph H(10)(b).
Offering. The term "Offering" shall mean the offering and sale of
Series A Preferred Shares pursuant to the Corporation's registration statement
on Form S-11 (File No. 33-70034) for such Series A Preferred Shares filed under
the Securities Act of 1933, as amended.
Ordinary Cash Distribution. The term "Ordinary Cash Distribution" shall
mean a cash dividend or other cash distribution made by the corporation with
respect to its Common Shares which is an amount not greater than the
corporation's Accumulated Funds from Operations.
Person. The term "Person" shall mean an individual, corporation,
partnership, estate, trust (including a trust qualified under Section 401(a) or
501(c)(17) of the Code), a portion of a trust permanently set aside for or to be
used exclusively for the purposes described in Section 642(c) of the Code,
association, private foundation within the meaning of Section 509(a) of the
Code, joint stock company or other entity, and also includes a group as that
term is used for purposes of Section 13(d)(3) of the Securities Exchange Act of
1934, as amended; but does not include an underwriter which participates in a
public offering of the Series A Preferred Shares provided that the ownership of
Series A Preferred Shares by such underwriter would not result in the
corporation being "closely held" within the meaning of Section 856(h) of the
Code, or would otherwise result in the corporation failing to qualify as a REIT.
Preferred Share Ownership Limit. The term "Preferred Share Ownership
Limit" shall mean, with respect to any Person, the lesser of:
(1) Constructive or Beneficial Ownership of 9.8% of the
aggregate number of Series A Preferred Equity Shares issued in the
Offering;
(2) The maximum amount of Series A Preferred Shares which such
Person could convert into Common Shares without violating any of the
restrictions set forth in subparagraph B(4)(b) of Article II (taking
into account any other Common Shares Beneficially Owned by such
Person); PROVIDED, HOWEVER, that for purposes of computing
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the above referenced amount, all shares of Series A Preferred Shares
then outstanding shall be considered to have been converted into Common
Shares;
(3) The maximum amount of Series A Preferred Shares which
could be Beneficially Owned by such Person without causing five or
fewer Persons to Beneficially Own more than 49% of the total combined
value of all of the outstanding stock of the corporation; or
(4) The maximum amount of Series A Preferred Shares which
could be Constructively Owned by such Person without causing any Person
(other than a Person as to which subparagraph B(4)(l)(ii) of Article II
applies or a person as to which subparagraph H(8)(h)(2) applies) to
Constructively Own more than 9.8% of the total combined value of
all of the outstanding stock of the corporation.
Purported Beneficial Transferee. The term "Purported Beneficial
Transferee" shall mean, with respect to any purported Transfer which results in
Excess Series A Preferred Shares, the purported beneficial transferee or owner
for whom the Purported Record Transferee would have acquired or owned shares of
Series A Preferred Shares, if such Transfer had been valid under subparagraph
H(8)(a).
Purported Record Transferee. The term "Purported Record Transferee"
shall mean, with respect to any purported Transfer which results in Excess
Series A Preferred Shares, the record holder of the Series A Preferred Shares if
such Transfer had been valid under subparagraph H(8)(a).
Record Date. The term "Record Date" shall mean the date designated by
the Board of Directors of the corporation at the time a dividend is declared;
provided, however, that such Record Date shall be the first day of the calendar
month in which the applicable Dividend Payment Date falls or such other date
designated by the Board of Directors for the payment of dividends that is not
more than thirty (30) days nor less than ten (10) days prior to such Dividend
Payment Date.
Redemption Date. The term "Redemption Date" shall have the meaning set
forth in subparagraph H(4)(b) below.
Redemption Price. The term "Redemption Price" shall mean $250.00 per
share of the Series A Preferred Shares, plus all accrued and unpaid dividends,
if any, thereon to the Redemption Date, except as may be provided below, without
interest.
REIT. The term "REIT" shall mean a Real Estate Investment Trust under
Section 856 of the Code.
Restriction Termination Date. The term "Restriction Termination Date"
shall mean the first day on which the Board of Directors of the corporation
determines that it is no longer in the best interests of the corporation to
attempt to, or continue to, qualify as a REIT.
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Series A Preferred Equity Shares. The term "Series A Preferred Equity
Shares" shall mean shares that are either Series A Preferred Shares or Excess
Series A Preferred Shares.
Series A Preferred Issue Date. The term "Series A Preferred Issue Date"
shall mean the date that Series A Preferred Shares are first issued by the
corporation.
Series A Preferred Shares. The term "Series A Preferred Shares" shall
mean the Series A Cumulative Convertible Redeemable Preferred Shares of the
corporation established pursuant to this Paragraph H, including fractions
thereof.
Transfer. The term "Transfer" shall mean any sale, transfer, gift,
assignment, devise or other disposition of Series A Preferred Equity Shares,
including (i) the conversion of Series A Preferred Shares into Common Shares,
(ii) the granting of any option or entering into any agreement for the sale,
transfer or other disposition of Series A Preferred Equity Shares or (iii) the
sale, transfer, assignment or other disposition of any securities (or rights
convertible into or exchangeable for Series A Preferred Equity Shares), whether
voluntary or involuntary, whether of record or beneficially or Beneficially or
Constructively (including but not limited to transfers of interests in other
entities which results in changes in Beneficial or Constructive Ownership of
Series A Preferred Equity Shares), and whether by operation of law or otherwise.
Trust. The term "Trust" shall mean the trust created pursuant to
subparagraph H(9)(a).
Trustee. The term "Trustee" shall mean the Corporation as trustee for
the Trust, and any successor trustee appointed by the Corporation.
2. Dividends.
(a) The record holders of Series A Preferred Shares shall be
entitled to receive dividends, when and as declared by the Board of Directors of
the corporation, out of funds legally available for payment of dividends.
Dividends shall be payable quarterly in arrears on February 15, May 15, August
15, and November 15 of each year (each, a "Dividend Payment Date"), commencing
on February 15, 1994, when and as declared by the Board of Directors of the
corporation. If any Dividend Payment Date occurs on a day that is not a Business
Day, any accrued dividends otherwise payable on such Dividend Payment Date shall
be paid on the next succeeding Business Day. Such dividends shall be payable by
the corporation in cash in an amount per whole Series A Preferred Share equal to
the greater of (i) $3.9375 per quarter (equivalent to $15.75 per annum) or (ii)
the dividend on the Common Shares, or portion thereof, into which such whole
Series A Preferred Share is convertible. The amount referred to in (ii) of the
immediately preceding sentence shall be determined as of each Dividend Payment
Date by multiplying the number of Common Shares, or portion thereof, calculated
to the fourth decimal place, into which a whole Series A Preferred Share is
convertible at the opening of business on such date by the quarterly dividend
payable in respect of a whole
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Common Share on such date (or, if no quarterly dividend is payable with respect
to the Common Shares on such date, by the most recent quarterly dividend paid
in respect of a whole Common Share as of such Dividend Payment Date). The amount
of dividends payable in respect of any Dividend Period which is less than a
full Dividend Period in length will be computed on the basis of a 360-day year
of twelve 30-day months. Dividends shall be payable proportionally in respect
of fractional Series A Preferred Shares.
(b) Dividends on Series A Preferred Shares shall accrue and be
cumulative from the Series A Preferred Issue Date in the amount per share set
forth in subparagraph H(2)(a). Dividends shall be paid to the holders of record
of the Series A Preferred Shares as their names shall appear on the stock
transfer records of the corporation at the close of business on the Record Date
for such dividend. Dividends in respect of any past Dividend Periods that are in
arrears may be declared and paid at any time to holders of record on the Record
Date therefor. Any dividend payment made on Series A Preferred Shares shall be
first credited against the earliest accrued but unpaid dividend due with respect
to such Series A Preferred Shares which remains payable. No interest, or sum
of money in lieu of interest, shall be payable in respect of any dividend
payment or payments on the Series A Preferred Shares which may be in arrears.
(c) Notwithstanding anything contained herein to the contrary,
no dividends on Series A Preferred Shares shall be declared by the Board of
Directors of the corporation or paid or set apart for payment by the corporation
at such time as the terms and provisions of any agreement of the corporation,
including any agreement relating to its indebtedness, prohibits such
declaration, payment or setting apart for payment or provides that such
declaration, payment or setting apart for payment would constitute a breach
thereof or a default thereunder, or if such declaration or payment shall be
restricted or prohibited by law.
(d) If any Series A Preferred Shares are outstanding, no full
dividends shall be declared or paid or set apart for payment with respect to any
series of preferred shares ranking junior to or on a parity with the Series A
Preferred Shares as to dividends for any period unless full cumulative dividends
have been or contemporaneously are declared and paid or declared and a sum
sufficient for the payment thereof set apart for such payment on the Series A
Preferred Shares for all past Dividend Periods and the then current Dividend
Period. When dividends are not paid in full (or a sum sufficient for such full
payment is not so set apart) upon the Series A Preferred Shares and any shares
of any series of preferred shares ranking on a parity as to dividends with the
Series A Preferred Shares, all dividends declared upon the Series A Preferred
Shares and any other such series of preferred shares shall be declared pro rata
so that the amount of dividends declared per share on the Series A Preferred
Shares and such other series of preferred shares shall in all cases bear to each
other the same ratio that accrued and unpaid dividends per share on the shares
of the Series A Preferred Shares and such other series of Parity Shares bear to
each other.
(e) Except as provided in subparagraph H(2)(d), unless full
cumulative dividends on the Series A Preferred Shares have been or
contemporaneously are declared and paid or declared and a sum sufficient for the
payment thereof set apart for payment for all past Dividend Periods and the then
current Dividend Period, no dividends (other than in Common Shares or other
capital stock ranking junior to the Series A Preferred Shares as to dividends
and upon liquidation) shall be
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declared or paid or set aside for payment and no other distribution shall be
declared or made upon any Common Shares or other capital stock of the
corporation ranking junior to or on parity with the Series A Preferred
Shares as to dividends or upon liquidation, dissolution or winding up nor shall
any Common Shares or other capital stock of the corporation ranking junior to
or on parity with the Series A Preferred Shares as to dividends or upon
liquidation, dissolution or winding up be redeemed, purchased or otherwise
acquired for any consideration (or any moneys be paid to or made available for a
sinking fund for the redemption of any such shares) by the corporation (except
by conversion into or exchange for other capital stock of the corporation
ranking junior to the Series A Preferred Shares as to dividends and upon
liquidation, dissolution or winding up).
(f) Notwithstanding anything contained herein to the contrary,
dividends on the Series A Preferred Shares, if not paid on a Dividend Payment
Date, will accrue whether or not dividends are declared for such Dividend
Payment Date, whether or not the corporation has earnings and whether or not
there are funds legally available for the payment of such dividends.
(g) If, for any taxable year, the corporation elects to
designate as "capital gain dividends" (as defined in Section 857 of the Code)
any portion (the "Capital Gains Amount") of the dividends paid or made available
for the year to holders of all classes of stock (the "Total Dividends"), then
the portion of the Capital Gains Amount that shall be allocable to holders of
the Series A Preferred Shares shall be the amount that the total dividends paid
or made available to the holders of the Series A Preferred Shares for the year
bears to the Total Dividends.
3. Distributions Upon Liquidation, Dissolution or Winding Up.
(a) Upon any voluntary or involuntary liquidation, dissolution
or winding up of the affairs of the corporation, subject to the prior
preferences and other rights of any class or series of preferred shares of the
corporation ranking senior to the Series A Preferred Shares as to the
distribution of assets upon liquidation, dissolution or winding up (which class
or series has been approved by the holders of the Series A Preferred Shares in
accordance with subparagraph H(5)(a)), but before any distribution or payment
shall be made to the holders of Common Shares or other capital stock ranking
junior to the Series A Preferred Shares in the distribution of assets upon any
liquidation, dissolution or winding up of the corporation, the holders of Series
A Preferred Shares shall be entitled to receive out of the assets of the
corporation legally available for distribution to its shareholders liquidating
distributions in cash or property at its fair market value as determined by the
Board of Directors of the corporation in the amount of the Liquidation
Preference per share. After payment of the full amount of the liquidating
distributions to which they are entitled, the holders of Series A Preferred
Shares will have no right or claim to any of the remaining assets of the
corporation and shall not be entitled to any other distribution in the event of
liquidation, dissolution or winding up of the affairs of the corporation.
(b) In the event that, upon any such voluntary or involuntary
liquidation, dissolution or other winding up the legally available assets of the
corporation are insufficient to pay the amount of the Liquidation Preference per
share and the corresponding amounts payable on all
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shares of capital stock ranking on a parity with the Series A Preferred Shares
in the distribution of assets upon liquidation, dissolution or winding up,
then the holders of the Series A Preferred Shares and all other such capital
stock shall share ratably in any such distribution of assets in proportion to
the full liquidating distributions to which they otherwise be respectively
entitled. Neither the consolidation or merger of the corporation into or
with another corporation or corporations nor the sale, lease, transfer or
conveyance of all or substantially all of the assets of the corporation to
another corporation or any other entity shall be deemed a liquidation,
dissolution or winding up of the affairs of the corporation within the
meaning of this subparagraph H(3).
4. Redemption by the Corporation.
(a) The Series A Preferred Shares may be redeemed for cash, in
whole or from time to time in part, at any time on and after December 15, 1998
at the option of the corporation at the Redemption Price.
(b) Each date fixed for redemption by the corporation pursuant
to subparagraph H(4)(a) above is called a "Redemption Date." If the Redemption
Date is after a Record Date and before the related Dividend Payment Date, the
dividend payable on such Dividend Payment Date shall be paid to the holder in
whose name the Series A Preferred Shares to be redeemed is registered at the
close of business on such Record Date notwithstanding the redemption thereof
between such Record Date and the related Dividend Payment Date or the
corporation's default in the payment of the dividend due.
(c) In case of redemption of less than all Series A Preferred
Shares at the time outstanding, the shares to be redeemed shall be selected pro
rata from the holders of record of such shares in proportion to the number of
shares held by such holders or by any other equitable method determined by the
corporation that will not result in a violation of the Preferred Share Ownership
Limit.
(d) Notice of any redemption will be given by publication in a
newspaper of general circulation in the City of New York, such publication to be
made once a week for two successive weeks commencing not less than 30 nor more
than 60 days prior to the Redemption Date. A similar notice will be mailed by
the corporation, postage prepaid, not less than 30 nor more than 60 days prior
to the Redemption Date, addressed to the respective holders of record of the
Series A Preferred Shares to be redeemed at their respective addresses as they
appear on the stock transfer records of the corporation. No failure to give such
notice or any defect therein or in the mailing thereof shall affect the validity
of the proceedings for the redemption of any Series A Preferred Shares except as
to the holder to whom the corporation has failed to give notice or except as to
the holder to whom notice was defective or not given. In addition to any
information required by law or by the applicable rules of any exchange upon
which Series A Preferred Shares may be listed or admitted to trading, such
notice shall state: (i) the Redemption Date; (ii) the Redemption Price; (iii)
the aggregate number of Series A Preferred Shares to be redeemed and, if less
than all shares held by such holder are to be redeemed, the number of such
shares to be redeemed; (iv) the place or
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places where certificates for such shares are to be surrendered for payment
of the Redemption Price; (v) that dividends on the shares to be redeemed
will cease to accrue on the Redemption Date; and (vi) that any conversion
rights with respect to such shares shall terminate at the close of business on
the third (3rd) Business Day immediately preceding the Redemption Date.
(e) If notice has been mailed in accordance with subparagraph
H(4)(d) and provided that on or before the Redemption Date specified in such
notice all funds necessary for such redemption shall have been irrevocably set
aside by the corporation, separate and apart from its other funds, in trust for
the pro rata benefit of the holders of the shares so called for redemption, so
as to be, and to continue to be available therefor, then, from and after the
Redemption Date, dividends on the Series A Preferred Shares so called for
redemption shall cease to accrue, and said shares shall no longer be deemed to
be outstanding and shall not have the status of Series A Preferred Shares, and
all rights of the holders thereof as shareholders of the corporation (except the
right to receive from the corporation the Redemption Price and any other amounts
payable in respect thereof) shall cease. Upon surrender, in accordance with said
notice, of the certificates for any Series A Preferred Shares so redeemed
(properly endorsed or assigned for transfer, if the corporation shall so require
and the notice shall so state), such shares shall be redeemed by the corporation
at the Redemption Price plus any other amounts payable in respect thereof. In
case fewer than all the shares represented by any such certificate are redeemed,
a new certificate or certificates shall be issued representing the unredeemed
shares without cost to the holder thereof.
(f) Any funds deposited with a bank or trust company for the
purpose of redeeming Series A Preferred Shares shall be irrevocable except that:
(i) the corporation shall be entitled to receive
from such bank or trust company the interest or other earnings, if any, earned
on any money so deposited in trust, and the holders of any shares redeemed
shall have no claim to such interest or other earnings; and
(ii) any balance of monies so deposited by the
corporation and unclaimed by the holders of the Series A Preferred Shares
entitled thereto at the expiration of two (2) years from the applicable
Redemption Date shall be repaid, together with any interest or other earnings
earned thereon, to the corporation, and after any such repayment, the holders
of the shares entitled to the funds so repaid to the corporation shall look
only to the corporation for payment without interest or other earnings.
(g) No Series A Preferred Shares may be redeemed except with
funds legally available for the payment of the Redemption Price.
(h) Unless full cumulative dividends on all Series A Preferred
Shares shall have been or contemporaneously are declared and paid or declared
and a sum sufficient for the payment thereof set apart for payment for all past
Dividend Periods and the then current Dividend Period, no Series A Preferred
Shares shall be redeemed unless all outstanding Series A Preferred Shares are
simultaneously redeemed; PROVIDED, HOWEVER, that the foregoing shall not prevent
the purchase or
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acquisition of Series A Preferred Shares pursuant to a purchase or exchange
offer made on the same terms to holders of all outstanding Series A Preferred
Shares, and, unless full cumulative dividends on all outstanding Series
A Preferred Shares have been or contemporaneously are declared and paid or
declared and a sum sufficient for the payment thereof set apart for payment
for all past Dividend Periods and the then current Dividend Period, the
corporation shall not purchase or otherwise acquire directly or indirectly any
Series A Preferred Shares (except by conversion into or exchange for capital
stock of the corporation ranking junior to the Series A Preferred Shares as to
dividends and upon liquidation, dissolution or winding up).
(i) All Series A Preferred Shares redeemed pursuant to this
subparagraph H(4) shall be retired and shall be restored to the status of
authorized and unissued preferred shares, without designation as to series and
may thereafter be reissued as any series of preferred shares.
5. Voting Rights.
(a) The holders of record of Series A Preferred Shares shall
not be entitled to any voting rights except as hereinafter provided in this
subparagraph H(5) or as otherwise provided by law. The corporation shall
not, without the affirmative vote or consent of the holders of at least
two-thirds of the Series A Preferred Shares outstanding at the time, given
in person or by proxy, either in writing or at a meeting (such Series A
Preferred Shares voting separately as a class), (i) authorize, create or
issue, or increase the authorized or issued amount of, any class or series of
capital stock ranking senior to the Series A Preferred Shares as to the payment
of dividends or the distribution of assets upon liquidation, dissolution or
winding up, or reclassify any authorized capital stock into any such capital
stock, or create, authorize or issue any obligation or security convertible into
or evidencing the right to purchase any such capital stock; or (ii) amend, alter
or repeal the provisions of the Articles of Incorporation, whether by merger,
consolidation or otherwise, so as to materially and adversely affect any
preferences, limitations or relative rights of the Series A Preferred Shares or
the holders thereof; PROVIDED, HOWEVER, that any increase in the amount of
authorized Series A Preferred Shares, or any increase in the amount of the
authorized preferred shares or the creation or issuance of any other series of
preferred shares in each case ranking on a parity with or junior to the Series A
Preferred Shares with respect to payment of dividends or the distribution of
assets upon liquidation, dissolution or winding up, shall not be deemed to
materially and adversely affect such preferences, limitations and relative
rights.
(b) If and whenever dividends payable on Series A Preferred
Shares shall be in arrears for six (6) or more consecutive quarterly periods,
then the holders of Series A Preferred Shares, voting separately as a group
(with such other series of preferred shares as provided in subparagraph H(5)(f)
below), shall be entitled at the next annual meeting of the shareholders or at
any special meeting of such voting group, to elect two (2) directors who, upon
election, shall become directors of the corporation. If the number of directors
of the corporation including the two (2) directors elected by the holders of the
Series A Preferred Shares does not exceed the maximum number of directors
permitted under Article IV hereof, the number of directors of the corporation
shall be automatically increased by two. If the number of directors of the
corporation including the
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two (2) directors elected by the holders of the Series A Preferred Shares would,
but for this paragraph H(5)(b), exceed the maximum number of directors permitted
under Article IV hereof, the two (2) directors elected by the holders of the
Series A Preferred Shares shall replace the two (2) directors most recently
elected by the holders of Common Shares. The term of office of the two (2)
directors being replaced by the two (2) directors elected by the holders of the
Series A Preferred Shares shall end on the date of the election of the two (2)
directors elected by the holders of the Series A Preferred Shares. The maximum
number of directors shall not exceed the maximum number of directors permitted
under Article IV hereof. As long as Series A Preferred Shares are outstanding,
the Board of Directors shall not fix the number of directors to be elected other
than by the Series A Preferred Shares voting as a group at more than thirteen
(13).
(c) Whenever such voting right shall have vested, such right
may be exercised initially either at a special meeting of the holders of Series
A Preferred Shares, called as hereinafter provided, or at any annual meeting of
shareholders held for the purpose of electing directors, and thereafter at such
annual meetings or by the written consent of the holders of Series A Preferred
Shares. Such right of the holders of Series A Preferred Shares to elect
directors may be exercised until all dividends to which the holders of Series A
Preferred Shares shall have been entitled for all previous Dividend Periods and
the current Dividend Period shall have been paid in full or declared
and a sum of money sufficient for the payment thereof set aside for payment, and
at which time the right of the holders of Series A Preferred Shares to elect
such number of directors shall cease, the term of such directors previously
elected shall thereupon terminate, and the authorized number of directors of the
corporation shall thereupon return to the number of authorized directors
otherwise in effect, but subject always to the same provisions for the renewal
and divestment of such special voting rights in the case of any such future
dividend default or defaults.
(d) At any time when such voting right shall have vested in
the holders of Series A Preferred Shares and if such right shall not already
have been initially exercised, a proper officer of the corporation shall, upon
the written request of any holder of record of Series A Preferred Shares then
outstanding, addressed to the Secretary of the corporation, call a special
meeting of holders of Series A Preferred Shares. Such meeting shall be held at
the earliest practicable date upon the notice required for annual meetings of
shareholders at the place for holding annual meetings of shareholders of the
corporation or, if none, at a place designated by the Secretary of the
corporation. If such meeting shall not be called by the proper officers of the
corporation within thirty (30) days after the personal service of such written
request upon the Secretary of the corporation, or within thirty (30) days after
mailing the same within the United States, by registered mail, addressed to the
Secretary of the corporation at its principal office (such mailing to be
evidenced by the registry receipt issued by the postal authorities), then the
holders of record of ten percent (10%) of Series A Preferred Shares then
outstanding may designate in writing a holder of Series A Preferred Shares to
call such meeting at the expense of the corporation, and such meeting may be
called by such person so designated upon the notice required for annual meetings
of shareholders and shall be held at the place for holding annual meetings of
the corporation or, if none, at a place designated by such holder. Any holder of
Series A Preferred Shares that would be entitled to vote at such meeting shall
have access to the stock books of the corporation for the purpose of causing a
meeting of
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shareholders to be called pursuant to the provisions of this paragraph.
Notwithstanding the provisions of this paragraph, however, no such special
meeting shall be called if any such request is received less than 90 days before
the date fixed for the next ensuing annual or special meeting of shareholders.
(e) If any of the directors so elected by the holders of
Series A Preferred Shares (voting with each other series of preferred shares as
provided in subparagraph H(5)(f), if applicable) shall cease to serve as a
director before his term shall expire, the holders of Series A Preferred Shares
then outstanding (voting with the holders of such other series, if applicable)
may, at a special meeting of the holders called as provided above, elect a
successor to hold office for the unexpired term of the director whose place
shall be vacant.
(f) If at any time when the holders of Series A Preferred Shares are
entitled to elect directors pursuant to the foregoing provisions of this
subparagraph H(5) the holders of any one or more additional series of preferred
shares are entitled to elect directors by reason of any default or event
specified in the Articles of Incorporation as in effect at the time and, if the
terms for such other additional series so permit, then the voting rights of the
two or more series then entitled to vote shall be combined (with each series
having a number of votes proportional to the aggregate liquidation preference of
its outstanding shares). In such case, the holders of Series A Preferred Shares
and of all such other series then entitled so to vote, voting as a class, shall
elect such directors. If the holders of any such other series have elected such
directors prior to the happening of the default or event permitting the holders
of Series A Preferred Shares to elect directors, or prior to a written request
for the holding of a special meeting being received by the Secretary of the
corporation as elsewhere required in subparagraph H(5)(d) above, then a new
election shall be held with all such other series of preferred stock and the
Series A Preferred Shares voting together as a single class for such directors,
resulting in the termination of the term of such previously elected directors
upon the election of such new directors. If the holders of any such other series
are entitled to elect in excess of two directors, the Series A Preferred Shares
shall not participate in the election of more than two such directors, and those
directors whose terms first expire shall be deemed to be the directors elected
in part by the holders of Series A Preferred Shares; provided that if at the
expiration of such terms the holders of Series A Preferred Shares are entitled
to vote in the election of directors pursuant to the provisions of this
subparagraph H(5), then the Secretary of the corporation shall call a meeting
(which meeting may be the annual meeting or special meeting of shareholders
referred to in subparagraph H(5)(c) above) of holders of Series A Preferred
Shares for the purpose of electing replacement directors (in accordance with the
provisions of this subparagraph H(5) to be held at or prior to the time of
expiration of the expiring terms referred to above.
(g) In any matter in which the Series A Preferred Shares may
vote (as expressly provided herein or as may be required by law), including any
action by written consent, each share of Series A Preferred Shares shall be
entitled to ten (10) votes, each of which ten (10) votes may be directed
separately by the holder thereof (or by any proxy or proxies of such holder).
With respect to each share of Series A Preferred Shares, the holder thereof may
designate up to ten (10) proxies, with each such proxy having the right to vote
one vote or a whole number of votes (totalling ten (10)
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votes per share of Series A Preferred Shares).
(h) Except as required by law, the foregoing voting provisions
shall not apply if, at or prior to the time when the act with respect to which
such vote would otherwise be required shall be effected, all outstanding Series
A Preferred Shares shall have been redeemed or have been called for redemption
upon proper notice and sufficient funds shall have been irrevocably deposited in
trust to effect such redemption.
6. Conversion Rights. Subject to subparagraphs H(7) and H(8) hereof, the
holders of Series A Preferred Shares shall have the right, at their option, to
convert such shares into Common Shares on the following terms and conditions:
(a) Series A Preferred Shares shall be convertible at any
time in whole or from time to time in part (including any fraction thereof
having a denomination of 10), except as provided below in the case of Series A
Preferred Shares called for redemption, into validly issued, fully paid and
nonassessable Common Shares at a conversion price of $27.75 per Common Share
(the "Conversion Price"). The Conversion Price shall be subject to adjustment
from time to time as hereinafter provided. For purposes of such conversion, each
Series A Preferred Share will be valued at $250.00 (and any fraction thereof
shall be valued at the corresponding fraction of $250.00). The number of Common
Shares into which each Series A Preferred Share (or a fraction thereof) may be
converted shall be determined by dividing $250 (or the applicable fraction
thereof) by the Conversion Price. If any Series A Preferred Shares shall be
called for redemption, the right to convert the shares designated for redemption
shall terminate at the close of business on the third (3rd) Business Day
immediately preceding the date fixed for redemption unless default is made in
the payment of the Redemption Price. In the event of default in the payment of
the Redemption Price, the right to convert the shares designated for redemption
shall terminate at the close of business on the Business Day immediately
preceding the date that such default is cured.
(b) In order to convert Series A Preferred Shares into Common
Shares, the holder thereof shall surrender the certificates therefor, duly
endorsed if the corporation shall so require, or accompanied by appropriate
instruments of transfer satisfactory to the corporation, at the office of the
transfer agent for Series A Preferred Shares, or at such other office as may be
designated by the corporation, together with written notice that such holder
irrevocably elects to convert such shares or any fraction of a Series A
Preferred Share having a denominator of 10. Such notice shall also state the
name and address in which such holder wishes the certificate for the Common
Shares issuable upon conversion to be issued. As soon as practicable after
receipt of the certificates representing the Series A Preferred Shares to be
converted and the notice of election to convert the same, the corporation shall
issue and deliver at said office a certificate for the number of whole Common
Shares issuable upon conversion of the Series A Preferred Shares surrendered for
conversion, together with a cash payment in lieu of any fraction of a Common
Share, as hereinafter provided, to the person entitled to receive the same. If
more than one stock certificate for Series A Preferred Shares shall be
surrendered for conversion at one time by the same holder, the number of full
Common Shares issuable upon conversion thereof shall be computed on the basis of
the
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aggregate number of shares represented by all the certificates so
surrendered. Series A Preferred Shares shall be deemed to have been converted
immediately prior to the close of business on the date such shares are
surrendered for conversion and notice of election to convert the same is
received by the corporation in accordance with the foregoing provision, and the
person entitled to receive the Common Shares issuable upon such conversion shall
be deemed for all purposes as the record holder of such Common Shares as of such
date.
(c) In the case of any Series A Preferred Shares converted
after the close of business of any Record Date with respect to the payment of a
dividend on the Series A Preferred Shares and prior to the opening of business
on the corresponding Dividend Payment Date, then, notwithstanding any
conversion, the dividend due on such Dividend Payment Date shall be payable on
such Dividend Payment Date to the holder of record of such shares as of such
preceding Record Date. Series A Preferred Shares surrendered for conversion
during the period from the close of business on any Record Date with respect to
the payment of a dividend on the Series A Preferred Shares to the opening of
business on the next succeeding Dividend Payment Date shall (except in the case
of Series A Preferred Shares which have been previously called for redemption)
be accompanied by payment in New York Clearing House funds or other funds
acceptable to the corporation of an amount equal to the dividend payable on such
Dividend Payment Date on the Series A Preferred Shares being surrendered for
conversion. The dividend with respect to any Series A Preferred Shares called
for redemption prior to the conversion thereof shall be payable on the
applicable Dividend Payment Date to the holder of record of such shares on the
related Record Date, notwithstanding the conversion of such Series A Preferred
Shares after such Record Date and prior to such Dividend Payment Date, and the
holder converting such Series A Preferred Shares called for redemption need not
include a payment of such dividend amount upon surrender of such Series A
Preferred Shares for conversion. Except as provided in this subparagraph
H(6)(c), no payment or adjustment shall be made upon any conversion on account
of any dividends accrued on Series A Preferred Shares surrendered for conversion
or on account of any dividends on the Common Shares issued upon conversion.
(d) No fractional Common Shares shall be issued upon
conversion of any Series A Preferred Shares. If more than one Series A Preferred
Share is surrendered at one time by the same holder, the number of full shares
issuable upon conversion thereof shall be computed on the basis of the aggregate
number of shares so surrendered. If the conversion of any Series A Preferred
Shares would result in the issuance of fractional Common Shares, the corporation
shall pay cash in lieu thereof in an amount equal to such fraction multiplied by
the closing price, determined as provided in subparagraph H(6)(e)(6) below, on
the last trading day prior to the date of conversion.
(e) The Conversion Price shall be adjusted from time to time
as follows:
(i) If the corporation shall pay or make a dividend or other
distribution on Common Shares in Common Shares, the Conversion Price in effect
at the opening of business on the date following the date fixed for the
determination of shareholders entitled to receive such dividend or other
distribution shall be reduced by multiplying such Conversion Price by a fraction
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of which the numerator shall be the number of Common Shares outstanding at the
close of business on the date fixed for such determination and the denominator
shall be the sum of such number of shares and the total number of shares
constituting such dividend or other distribution, such reduction to become
effective immediately after the opening of business on the day following the
date fixed for such determination. For purposes of this subparagraph H(6)(e),
the number of Common Shares at any time outstanding shall not include shares
held in the treasury of the corporation but shall include shares issuable in
respect of scrip certificates issued in lieu of fractions of Common Shares. The
corporation will not pay any dividend or make any distribution on Common Shares
held in the treasury of the corporation.
(ii) If the corporation shall issue additional rights or
warrants to all holders of its Common Shares entitling them to subscribe for or
purchase Common Shares at a price per share less than the then current market
price per share (determined as provided in subparagraph H(6)(e)(6)) of the
Common Shares on the date fixed for the determination of shareholders entitled
to receive such rights or warrants (other than pursuant to a dividend
reinvestment plan), the Conversion Price in effect at the opening of business on
the day following the date fixed for such determination shall be reduced by
multiplying such Conversion Price by a fraction of which the numerator shall be
the number of Common Shares outstanding at the close of business on the date
fixed for such determination plus the number of Common Shares which the
aggregate of the offering price of the total number of Common Shares so offered
for subscription or purchase would purchase at such current market price
(determined as provided in subparagraph H(6)(e)(6)) and the denominator shall be
the number of Common Shares outstanding at the close of business on the date
fixed for such determination plus the number of Common Shares so offered for
subscription or purchase, such reduction to become effective immediately after
the opening of business on the day following the date fixed for such
determination. For the purposes of this subparagraph (2), the number of Common
Shares at any time outstanding shall not include shares held in the treasury of
the corporation but shall include shares issuable in respect of scrip
certificates issued in lieu of fractions of Common Shares. The corporation will
not issue any rights or warrants in respect of Common Shares held in the
treasury of the corporation during the period so held.
(iii) If outstanding Common Shares shall be subdivided into
a greater number of Common Shares, the Conversion Price in effect at the opening
of business on the date following the day upon which such subdivision becomes
effective shall be proportionately reduced, and, conversely, if outstanding
Common Shares shall be combined into a smaller number of Common Shares, the
Conversion Price in effect at the opening of business on the day following the
day upon which such combination becomes effective shall be proportionately
increased, such reduction or increase, as the case may be, to become effective
immediately after the opening of business on the day following the day upon
which such subdivision or combination becomes effective.
(iv) If the corporation shall, by dividend or otherwise,
distribute to all holders of its Common Shares evidences of its indebtedness or
assets (including securities, but excluding (i) any rights or warrants referred
to in subparagraph H(6)(e)(2), (ii) any Ordinary Cash
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Distribution and (iii) any dividend or distribution referred to in subparagraph
H(6)(e)(1)), the Conversion Price shall be adjusted so that the same shall equal
the price determined by multiplying the Conversion Price in effect immediately
prior to the close of business on the date fixed for the determination of
shareholders entitled to receive such distribution by a fraction of which the
numerator shall be the current market price per share (determined as provided in
subparagraph H(6)(e)(6)) of a Common Share on the date fixed for such
determination less the then fair market value (as determined by the Board of
Directors, whose determination shall be conclusive and shall be described in a
statement filed with the transfer agent for the Series A Preferred Shares) of
the portion of the evidences of the indebtedness or assets so distributed
applicable to a Common Share and the denominator shall be such current market
price of a Common Share, such adjustment to become effective immediately prior
to the opening of business on the day following the date fixed for the
determination of shareholders entitled to receive such distribution.
Notwithstanding the foregoing, in the event of a distribution to all holders of
Common Shares of rights to subscribe for additional shares of the corporation's
capital stock (other than rights described in subparagraph H(6)(e)(2)), the
corporation may, instead of making the adjustment in the Conversion Price set
forth in this subparagraph H(6)(e)(4), provide that each holder of Series A
Preferred Shares who converts such shares shall be entitled to receive upon such
conversion, in addition to the applicable number of Common Shares, the number of
such rights such holder would have been entitled to receive had such holder
converted such shares immediately prior to the record date applicable to such
distribution of rights.
(v) For the purposes of this subparagraph H(6)(e), the
reclassification of Common Shares into securities including securities other
than Common Shares (other than any reclassification upon a consolidation or
merger to which paragraph H(6)(g) applies) shall be deemed to involve (i) a
distribution of such securities other than Common Shares to all holders of
Common Shares (and the effective date of such reclassification shall be deemed
to be "the date fixed for the determination of shareholders entitled to receive
such distribution" and the "date fixed for such determination" within the
meaning of subparagraph (H)(6)(e)(4) above), and (ii) a subdivision or
combination, as the case may be, of the number of Common Shares outstanding
immediately prior to such reclassification into the number of Common Shares
outstanding immediately thereafter (and the effective date of such
reclassification shall be deemed to be "the day upon which such subdivision
became effective" and "the day upon which such subdivision or combination
becomes effective," as the case may be, within the meaning of subparagraph
H(6)(e)(3) above).
(vi) For the purpose of any computation under subparagraphs
H(6)(e)(2) and (4) above, the current market price of a Common Share on any day
shall be deemed to be the average of the daily closing prices for the 30
consecutive trading days commending 45 trading days before the day in question.
The closing price for each day shall be the reported last sale price or, in case
no such reported sale takes place on such day, the average of the reported
closing bid and asking prices, in either case on the NYSE, or, if the Common
Shares are no longer quoted on such exchange, on the principal national
securities exchange on which the Common Shares are then listed or admitted to
trading or, if the Common Shares are not quoted on any national securities
exchange, the closing sale price of the Common Shares or, in case no reported
sale takes place, average of the
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closing bid and asked prices on Nasdaq or any comparable system, or if the
Common Shares are not quoted on Nasdaq or any comparable system, the closing
sale price, or, in case no reported sale takes place, the average of the closing
bid and asked prices, as furnished by any New York Stock Exchange member firm
selected from time to time by the Board of Directors for that purpose.
(vii) Notwithstanding the foregoing, no adjustment in the
Conversion Price for the Series A Preferred Shares shall be required unless such
adjustment would require an increase or decrease of at least 1% in such price;
PROVIDED, HOWEVER, that any adjustments which by reason of this subparagraph (7)
are not required to be made shall be carried forward and taken into account in
any subsequent adjustment. All calculations under this subparagraph (7) shall be
made to the nearest cent or to the nearest one-hundredth of a share, as the case
may be.
(viii) In the event that, as a result of an adjustment made
pursuant to subparagraph H(6), the holder of any Series A Preferred Shares
thereafter surrendered for conversion shall become entitled to receive any
capital stock other than Common Shares, thereafter the number of shares of such
capital stock so received shall be subject to adjustment from time to time in a
manner and on terms equivalent as nearly as practicable to the provisions
relating to the Series A Preferred Shares contained in subparagraph H(6)(e).
(f) Whenever the Conversion Price shall be adjusted as herein
provided (i) the corporation shall forthwith make available at the office of the
transfer agent for the Series A Preferred Shares a statement describing in
reasonable detail the adjustment, the facts requiring such adjustment and the
method of calculation used; and (ii) the corporation shall cause to be mailed by
first class mail, postage prepaid, as soon as practicable to each holder of
record of Series A Preferred Shares a notice stating that the Conversion Price
has been adjusted and setting forth the adjusted Conversion Price.
(g) If any capital reorganization or reclassification of the
capital stock of the corporation, or any consolidation of the corporation with
or merger of the corporation into any other corporation, or a sale, transfer or
lease of the assets of the corporation as an entirety or substantially as an
entirety, shall be effected in such a way that holders of Common Shares shall be
entitled to receive stock, securities or other assets relating to or in exchange
for such Common Shares, then as a condition of such reorganization,
reclassification, merger, consolidation, sale, transfer or lease, any holder of
Series A Preferred Shares shall have the right to convert such shares into the
number and kind of shares or other securities and the amount and kind of
property which such holder would have owned or been entitled to receive
immediately after such reorganization, reclassification, consolidation, merger,
sale, transfer or lease if such holder had converted such shares immediately
prior to the effective date thereof. The provisions of this subparagraph H(6)(g)
shall similarly apply to successive reorganizations, reclassifications,
consolidations, mergers, sales, transfers or leases.
(h) The corporation shall pay any taxes that may be payable in
respect of the issuance of Common Shares upon conversion of Series A Preferred
Shares, but the corporation shall not be required to pay any taxes which may be
payable in respect of any transfer involved in the
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issuance of Common Shares in the name other than that in which the Series A
Preferred Shares so converted are registered, and the corporation shall not be
required to issue or deliver any such shares unless and until the person
requesting such issuance shall have paid to the corporation the amount of any
such taxes, or shall have established to the satisfaction of the corporation
that such taxes have been paid.
(i) The corporation may (but shall not be required to) make
such reductions in the Conversion Price, in addition to those required by
subparagraphs H(6)(e)(1) through (5), as it considers to be advisable in order
that any event treated for federal income tax purposes as a dividend of stock or
stock rights shall not be taxable to the recipients.
(j) The corporation shall at all times reserve and keep
available out of its authorized but unissued Common Shares the full number of
Common Shares issuable upon the conversion of all Series A Preferred Shares then
outstanding. All Common Shares which may be issued upon conversion of Series A
Preferred Shares shall be validly issued, fully paid and nonassessable, and the
corporation shall endeavor to list such shares on each securities exchange on
which the Common Shares are then listed.
(k) In the event that:
(i) the corporation shall take any action which would require
an adjustment of the conversion price pursuant to subparagraph H(6), or
(ii) any capital reorganization of the corporation,
reclassification of the capital stock of the corporation, consolidation or
merger of the corporation with or into another corporation, or sale, transfer or
lease of the assets of the corporation as an entirety or substantially as an
entirety to another corporation shall occur; or
(iii) the voluntary or involuntary dissolution, liquidation
or winding up of the corporation shall occur, the corporation shall cause to be
mailed to the holders of record of Series A Preferred Shares at least 15 days
prior to the applicable date hereinafter specified a notice stating the proposed
record or effective date of the transaction, as the case may be. Failure to give
such notice, or any defect therein, shall not affect the legality or validity of
such transaction.
7. Restrictions on Conversion to Common Shares. No Series A Preferred
Shares may be converted into Common Shares if such conversion would result in
any violation of the restrictions set forth in subparagraph B(4)(b) of Article
II, and holders of Series A Preferred Shares shall have no right to acquire
Common Shares (through conversion or otherwise) which would be prohibited under
subparagraph B(4)(b) of Article II, or elsewhere in these Articles of
Incorporation.
8. Restrictions on Ownership and Transfer to Preserve Tax Benefit;
Conversion and Exchange for Excess Series A Preferred Shares.
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(a) Restriction on Ownership and Transfer.
(i) Except as provided in subparagraph H(8)(h), prior to the
Restriction Termination Date, no Person shall Beneficially Own or Constructively
Own Series A Preferred Shares in excess of the Preferred Share Ownership Limit.
(ii) Except as provided in subparagraph H(8)(h), prior to the
Restriction Termination Date, any Transfer (whether or not such Transfer is the
result of a transaction entered into through the facilities of the NYSE), that,
if effective, would result in any Person Beneficially Owning Series A Preferred
Shares in excess of the Preferred Share Ownership Limit shall be void AB INITIO
as to the Transfer of such Series A Preferred Shares which would be otherwise
Beneficially Owned by such Person in excess of the Preferred Share Ownership
Limit; and the intended transferee shall acquire no rights in such Series A
Preferred Shares.
(iii) Except as provided in subparagraph H(8)(h), prior to
the Restriction Termination Date, any Transfer (whether or not such Transfer is
the result of a transaction entered into through the facilities of the NYSE)
that, if effective, would result in any Person Constructively Owning Series A
Preferred Shares in excess of the Preferred Share Ownership Limit shall be void
AB INITIO as to the Transfer of such Series A Preferred Shares which would be
otherwise Constructively Owned by such Person in excess of the Preferred Share
Ownership Limit; and the intended transferee shall acquire no rights in such
Series A Preferred Shares.
(iv) Notwithstanding any other provisions contained in this
Paragraph H (other than subparagraph (H)(11), or elsewhere in these Articles of
Incorporation, prior to the Restriction Termination Date, any Transfer (whether
or not such Transfer is the result of a transaction entered into through the
facilities of the NYSE) or other event that, if effective, would result in the
corporation being "closely held" within the meaning of Section 856(h) of the
Code, or would otherwise result in the corporation failing to qualify as a REIT
(including, but not limited to, a Transfer or other event that would result in
the corporation owning (directly or Constructively) an interest in a tenant that
is described in Section 856(d)(2)(B) of the Code if the income derived by the
Corporation from such tenant would cause the corporation to fail to satisfy any
of the gross income requirements of Section 856(c) of the Code), shall be void
AB INITIO as to the Transfer of the Series A Preferred Shares or other event
which would cause the corporation to be "closely held" within the meaning of
Section 856(h) of the Code or would otherwise result in the Corporation failing
to qualify as a REIT; and the intended transferee or owner or Constructive or
Beneficial Owner shall acquire or retain no rights in such Series A Preferred
Shares.
(b) Conversion Into and Exchange For Excess Series A Preferred
Shares.
(i) The provisions in this subparagraph H(8)(b) shall take
effect if and only if (1) the Corporation's Articles of Incorporation have been
amended to authorize the issuance of Excess Series A Preferred Shares, and (2)
the IRS Ruling Satisfactory To The Corporation has been obtained.
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(ii) Except to the extent that Series A Preferred Shares are
redeemed by the Corporation pursuant to subparagraph H(10), but notwithstanding
the other provisions contained in this Paragraph H, if at any time prior to the
Restriction Termination Date there is a purported Transfer (whether or not such
Transfer is the result of a transaction entered into through the facilities of
the NYSE), change in the capital structure of the corporation or other event
such that one or more of the restrictions on ownership and transfers described
in subparagraph H(8)(a) would have been violated, then the Series A Preferred
Shares being Transferred (or in the case of an event other than a Transfer, the
Series A Preferred Shares owned or Constructively Owned or Beneficially Owned)
which would cause one or more of the restrictions on ownership or transfer to be
violated (rounded up to the nearest whole share) shall be automatically
converted into an equal number of shares of Excess Series A Preferred Shares.
Such conversion shall be effective immediately prior to such Transfer or other
event.
(c) Remedies For Breach. If the Board of Directors or its
designees shall at any time determine in good faith that a Transfer or other
event has taken place in violation of subparagraph H(8)(a) or that a Person
intends to acquire, has purported to acquire or may acquire direct ownership,
beneficial ownership (determined without reference to any rules of attribution),
Beneficial Ownership or Constructive Ownership of any Series A Preferred Shares
in violation of subparagraph H(8)(a), the Board of Directors or its designees
shall take such action as it deems advisable to refuse to give effect to or to
prevent such Transfer or other event, including, but not limited to, (1) causing
the corporation to redeem such shares at the Market Price thereof determined on
the earlier of the date of such redemption or the date of such purported
acquisition or Transfer, and upon such other terms and conditions (including
limited notice or no notice, except as otherwise required by law) as may be
specified by the Board of Directors in its sole discretion, (2) refusing to give
effect to such Transfer or other event on the books of the corporation or (3)
instituting proceedings to enjoin such Transfer or other event; PROVIDED,
HOWEVER, that any Transfers (or, in the case of events other than a Transfer,
ownership or Constructive Ownership or Beneficial Ownership) in violation of
subparagraph H(8)(a), (i) if the requirements of subparagraph H(8)(b)(1) have
not been satisfied, shall be void AB INITIO or shall automatically result in the
redemption described in subparagraph H(10) (as applicable), or (ii) if the
requirements of subparagraph H(8)(b)(1) have been satisfied, shall automatically
result in the conversion described in subparagraph H(8)(b) or the redemption
described in subparagraph H(10) (as applicable), irrespective of any action (or
non-action) by the Board of Directors.
(d) Notice of Restricted Transfer. Any Person who acquires or
attempts to acquire Series A Preferred Shares or other securities in violation
of subparagraph H(8)(a) or any Person who owns or will own Excess Series A
Preferred Shares as a result of an event under subparagraph H(8)(b), or whose
shares of Series A Preferred Shares will be redeemed under subparagraph H(10),
shall immediately give written notice to the corporation of such event and shall
provide to the corporation such other information as the corporation may request
in order to determine the effect, if any, of such Transfer or attempted Transfer
or other event on the Corporation's status as a REIT.
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(e) Owners Required To Provide Information. Each Person who is
a beneficial owner or Beneficial Owner or Constructive Owner of Series A
Preferred Shares and each Person (including the stockholder of record) who is
holding Series A Preferred Shares for a Beneficial Owner or Constructive Owner
shall provide to the corporation such information that the corporation may
request, in good faith, in order to determine the corporation's status as a
REIT.
(f) Remedies Not Limited. Nothing contained in this Paragraph
H (but subject to subparagraph H(11)) shall limit the authority of the Board of
Directors to take such other action as it deems necessary or advisable to
protect the corporation and the interests of its shareholders by preservation of
the corporation's status as a REIT.
(g) Ambiguity. In the case of an ambiguity in the application
of any of the provisions of this Paragraph H, including any definition contained
in subparagraph H(1), the Board of Directors shall have the power to determine
the application of the provisions of this subparagraph H(8) with respect to any
situation based on the facts known to it (subject, however, to the provisions of
subparagraph H(11).
(h) Exceptions.
(i) Subject to subparagraph H(8)(a)(4), the Board of
Directors, in its sole and absolute discretion, may exempt a Person from the
limitation on a Person Beneficially Owning Series A Preferred Shares in excess
of the Preferred Share Ownership Limit if such Person is not an individual or
treated as the owner of stock for purposes of Section 542(a)(2) of the Code (as
modified by Section 856(h) of the Code) and the Board of Directors obtains such
representations and undertakings from such Person as are reasonably necessary to
ascertain that no individual's Beneficial Ownership of such Series A Preferred
Shares will violate the Preferred Share Ownership Limit and such Person agrees
that any violation of such representations or undertaking (or other action which
is contrary to the restrictions contained in this subparagraph H(8)) or
attempted violation will result in such Series A Preferred Shares being
exchanged for Excess Series A Preferred Shares in accordance with subparagraph
H(8)(b) or will result in such Series A Preferred Shares being redeemed by the
Corporation in accordance with subparagraph H(10).
(ii) Subject to subparagraph H(8)(a)(4), the Board of
Directors, in its sole and absolute discretion, may exempt a Person from the
limitation described in clause 4 of the definition of Preferred Share Ownership
Limit if such Person does not and represents that it will not own, directly or
constructively (by virtue of the application of Section 318 of the Code, as
modified by Section 856(d)(5) of the Code), more than a 9.8% interest (as set
forth in Section 856(d)(2)(B)) in a tenant of the corporation and the Board of
Directors obtains such representations and undertakings from such Person as are
reasonably necessary to ascertain this fact and such Person agrees that any
violation or attempted violation will result in such Series A Preferred Shares
in excess of the Preferred Share Ownership Limit being exchanged for Excess
Series A Preferred Shares in accordance with subparagraph H(8)(b) or will result
in such Series A Preferred Shares being redeemed by the Corporation in
accordance with subparagraph H(10).
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(iii) Prior to granting any exception pursuant to
subparagraph H(8)(h)(1) or (2), the Board of Directors may require a ruling from
the Internal Revenue Service, or an opinion of counsel, in either case in form
and substance satisfactory to the Board of Directors in its sole discretion as
it may deem necessary or advisable in order to determine or ensure the
Corporation's status as a REIT; PROVIDED, HOWEVER, that obtaining a favorable
ruling or opinion shall not be required for the Board of Directors to grant an
exception hereunder.
(i) Legend. Each certificate for Series A Preferred Shares
shall bear the following legend:
"Tanger Factory Outlet Centers, Inc. (the "Corporation") will
furnish, without charge, to any shareholder making a written request
therefor, a copy of the Corporation's Articles of Incorporation, as
amended from time to time, containing a statement of the preferences,
limitations and relative rights applicable to each class of stock of
the Corporation, including the Series A Preferred Shares represented
hereby. Such requests may be directed to Tanger Factory Outlet Centers,
Inc., 1400 West Northwood Street, P.O. Box 28168, Greensboro, NC 27429.
The Board of Directors is authorized to determine the preferences,
limitations and relative rights of Preferred Shares before the issuance
of any such Preferred Shares.
"The Series A Preferred Shares represented by this Certificate
are subject to restrictions on ownership and transfer for the purpose
of the Corporation's maintenance of its status as a Real Estate
Investment Trust under the Internal Revenue Code of 1986, as amended.
With certain further restrictions and exceptions set forth in the
Corporation's Articles of Incorporation, (i) no Person may own,
Beneficially Own or Constructively Own Series A Preferred Shares in
excess of the Preferred Share Ownership Limit and (ii) no Person may
own Common Shares in excess of the Ownership Limit. Any Person who
purports to own, Beneficially Own or Constructively Own Series A
Preferred Shares or Common Shares in excess of the above limitations
must immediately notify the Corporation. Transfers in violation of the
restrictions described above may be void AB INITIO. Subject to the
provisions contained in the Articles of Incorporation, the Corporation
may redeem such shares upon the terms and conditions specified by the
Board of Directors in its sole discretion if the Board of Directors
determines that a Transfer or other event would violate the
restrictions described above. All capitalized terms in this legend have
the meanings defined in the Corporation's Articles of Incorporation.
"In addition, upon the occurrence of an event that would
otherwise result in a violation of the Preferred Share Ownership Limit,
some or all of the Series A Preferred Shares evidenced hereby may be
(1) automatically redeemed by the Corporation or (2) under certain
circumstances, exchanged for Excess Series A Preferred Shares which
will be held in trust by the Corporation. The Corporation has an option
to acquire Excess Series A Preferred Shares under certain
circumstances. The Corporation will furnish to the holder hereof upon
request and without charge a copy of the Corporation's Articles of
Incorporation,
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as amended, containing a complete written statement of
the terms and conditions of the Excess Series A Preferred Shares. Such
requests may be directed to Tanger Factory Outlet Centers, Inc., 1400
West Northwood Street, P.O. Box 28168, Greensboro, NC 27429."
9. Excess Series A Preferred Shares.
(a) Ownership In Trust. Upon any purported Transfer (whether
or not such Transfer is the result of a transaction entered into through the
facilities of the NYSE) that results in the issuance of Excess Series A
Preferred Shares pursuant to subparagraph H(8)(b), such Excess Series A
Preferred Shares shall be deemed to have been transferred to the corporation, as
Trustee of a Trust for the exclusive benefit of such Beneficiary or
Beneficiaries to whom an interest in such Excess Series A Preferred Shares may
later be transferred pursuant to subparagraph H(9)(d). Excess Series A Preferred
Shares so held in trust shall be issued and outstanding stock of the
corporation. The Purported Record Transferee shall have no rights in such Excess
Series A Preferred Shares except the right to designate a transferee of such
Excess Series A Preferred Shares upon the terms specified in subparagraph
H(9)(d). The Purported Beneficial Transferee shall have no rights in such Excess
Series A Preferred Shares except as provided in subparagraph H(9)(d).
(b) Dividend Rights. Excess Series A Preferred Shares shall
not be entitled to any dividends. Any dividend or distribution paid prior to the
discovery by the corporation that shares of Series A Preferred Shares have been
converted into Excess Series A Preferred Shares shall be repaid to the
corporation upon demand.
(c) Rights Upon Liquidation. In the event of any voluntary or
involuntary liquidation, dissolution or winding up of, or any distribution of
the assets of, the corporation, each holder of Excess Series A Preferred Shares
shall be entitled to receive, ratably with each other holder of Series A
Preferred Equity Shares, that portion of the assets of the corporation available
for distribution to the holders of Series A Preferred Shares as the number
shares of Excess Series A Preferred Shares held by such holder bears to the
total number of shares of Series A Preferred Equity Shares then outstanding. The
corporation, as holder of the Excess Series A Preferred Shares in trust, or if
the corporation shall have been dissolved, any trustee appointed by the
corporation prior to its dissolution, shall distribute ratably to the
Beneficiaries of the Trust, when and if determined in accordance with
subparagraph H(9)(d), any such assets received in respect of the Excess Series A
Preferred Shares in any liquidation, dissolution or winding up of, or any
distribution of the assets of the corporation.
(d) Restrictions On Transfer; Designation of Beneficiary.
(i) Except as provided herein, Excess Series A Preferred
Shares shall not be transferable. Subject to the last sentence of this clause
(1), the Purported Record Transferee may freely designate a Beneficiary of an
interest in the Trust (representing the number of shares of Excess Series A
Preferred Shares held by the Trust attributable to a purported Transfer that
resulted in the issuance of Excess Series A Preferred Shares), if (i) the Excess
Series A Preferred Shares held in the
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Trust would not be Excess Series A Preferred Shares in the hands of such
Beneficiary and (ii) the Purported Beneficial Transferee does not receive a
price for the designation of such Beneficiary that reflects a price per share
for such Excess Series A Preferred Shares that exceeds (x) the price per share
such Purported Beneficial Transferee paid for the Series A Preferred Shares in
the purported Transfer that resulted in the issuance of Excess Series A
Preferred Shares, or (y) if the Transfer or other event that resulted in the
issuance of Excess Series A Preferred Shares was not a transaction in which the
Purported Beneficial Transferee gave full value for such Excess Series A
Preferred Shares, a price per share equal to the Market Price on the date of the
purported Transfer or other event that resulted in the issuance of Excess Series
A Preferred Shares. Upon such transfer of an interest in the Trust, the
corresponding shares of Excess Series A Preferred Shares in the Trust shall be
automatically exchanged for an equal number of shares of Series A Preferred
Shares and such Series A Preferred Shares shall be transferred of record to the
transferee of the interest in the Trust if such Series A Preferred Shares would
not be Excess Series A Preferred Shares in the hands of such transferee. Prior
to any transfer of any interest in the Trust, the Purported Record Transferee
must give advance notice to the corporation of the intended transfer and the
corporation must have waived in writing its purchase rights under subparagraph
H(9)(e).
(ii) Notwithstanding the foregoing, if a Purported Beneficial
Transferee receives a price for the designation of a Beneficiary of an interest
in the Trust that exceeds the amounts allowable under subparagraph H(9)(d)(1),
such Purported Beneficial Transferee shall pay, or cause such Beneficiary to
pay, such excess to the corporation.
(e) Purchase Right in Excess Series A Preferred Shares.
Notwithstanding the provisions of subparagraph H(9)(d), Excess Series A
Preferred Shares shall be deemed to have been offered for sale to the
corporation, or its designee, at a price per share equal to the lesser of (i)
the price per share in the transaction that required the issuance of such Excess
Series A Preferred Shares (or, if the Transfer or other event that resulted in
the issuance of Excess Series A Preferred Shares was not a transaction in which
the Purported Beneficial Transferee gave full value for such Excess Series A
Preferred Shares, a price per share equal to the Market Price on the date of the
purported Transfer or other event that resulted in the issuance of Excess Series
A Preferred Shares) and (ii) the Market Price on the date the corporation, or
its designee, accepts such offer. The corporation shall have the right to accept
such offer for a period of ninety days after the later of (i) the date of the
Transfer or other event which resulted in the issuance of such Excess Series A
Preferred Shares and (ii) the date the Board of Directors determines in good
faith that a Transfer or other event resulting in the issuance of Excess Series
A Preferred Shares has occurred, if the corporation does not receive a notice of
such Transfer or other event pursuant to subparagraph H(8)(d). The corporation
may appoint a special trustee of the Trust for the purpose of consummating the
purchase of Excess Series A Preferred Shares by the corporation.
10. Corporation Induced Events; Redemption of Series A Preferred
Shares in Certain Circumstances. Notwithstanding anything to the contrary in
subparagraph H(4):
(a) Prior to the Restriction Termination Date, if a purported
Transfer (whether or
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not such Transfer is the result of a transaction entered into through the
facilities of the NYSE), change in the capital structure of the corporation or
other event would result in a violation of the Preferred Share Ownership Limit
and such violation would not occur but for the occurrence of one or more
Corporation Induced Events then, immediately prior to the occurrence of such
Transfer, change in the capital structure of the corporation or other event, an
amount of Series A Preferred Shares (rounded up to the nearest one-tenth of a
share) shall be automatically redeemed by the corporation from the actual owner
of Series A Preferred Shares which is Beneficially or Constructively Owned by
any Person who (but for this subparagraph H(10)) would Beneficially or
Constructively Own Series A Preferred Shares in excess of the Preferred Share
Ownership Limit after the occurrence of the Transfer, change in the capital
structure of the Corporation or other event. The redemption price of each share
of Series A Preferred Shares automatically redeemed pursuant to this
subparagraph H(10) shall be (i) the price per share paid for the Series A
Preferred Shares in the purported Transfer that resulted in the redemption, or
(ii) if the Transfer or other event that resulted in the redemption was not a
transaction in which the full value was paid for such Series A Preferred Shares,
a price per share equal to the Market Price on the date of the purported
Transfer or other event that resulted in the redemption. In either case,
dividends which are accrued but unpaid with respect to the redeemed shares as of
the date of the purported Transfer or other event that resulted in the
redemption shall be paid (except as limited by the next succeeding sentence).
Although any such automatic redemption shall in all cases be consummated as
described above, the redemption price, including the principal amount thereof
and any dividend payable thereon, shall be payable only if and to the extent
that such payment could then be made under Section 55-6-40 of the North Carolina
Business Corporation Act. Any dividend or other distribution paid prior to the
discovery of the corporation that shares of Series A Preferred Shares have been
redeemed by the corporation shall be repaid to the corporation upon demand.
(b) Prior to the Restriction Termination Date, if (1) the
requirements of subparagraph H(8)(b)(1) have not yet been satisfied, (2) there
is a purported Transfer (whether or not such Transfer is the result of a
transaction entered into through the facilities of the NYSE), change in the
capital structure of the corporation or other event (a "Non-Voidable Event") to
which subparagraph H(10)(a) would not otherwise apply, and (3) one or more of
the restrictions on ownership and transfers described in subparagraph H(8)(a)
would be violated upon the occurrence of such Non-Voidable Event then, if and
only if such Non-Voidable Event cannot be voided pursuant to subparagraph
H(8)(a)(2), (3) or (4) (as applicable), subparagraph H(10)(a) shall apply to
such Non-Voidable Event as if it were a Corporation Induced Event.
11. Settlement. Nothing in this Paragraph H shall preclude the
settlement of any transaction entered into through facilities of the NYSE.
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12. Ranking. Any series of shares of the corporation shall be
deemed to rank:
(a) subject to subparagraph H(5)(a), senior to the Series A
Preferred Shares, as to dividends or as to distribution of assets upon
liquidation, dissolution or winding up, if the holders of such class shall be
entitled to the receipt of dividends or of amounts distributable upon
liquidation, dissolution or winding up, as the case may be, in preference or
priority to the holders of the Series A Preferred Shares;
(b) on a parity with the Series A Preferred Shares, as to
dividends or as to distribution of assets upon liquidation, dissolution or
winding up, whether or not the dividend rates, dividend payment dates or
redemption or liquidation prices per share thereof be different from those of
the Series A Preferred Shares, if the holders of such series of shares and the
Series A Preferred Shares shall be entitled to the receipt of dividends or of
amounts distributable upon liquidation, dissolution or winding up, as the case
may be, in proportion to their respective amounts of accrued and unpaid
dividends per share or liquidation prices, without preference or priority one
over the other; and
(c) junior to the Series A Preferred Shares, as to dividends
or as to distribution of assets upon liquidation, dissolution or winding up, if
such shares shall be Common Shares or if the holders of Series A Preferred
Shares shall be entitled to receipt of dividends or of amounts distributable
upon liquidation, dissolution or winding up, as the case may be, in preference
or priority to the holders of such shares.
13. Exclusion of Other Rights.
Except as may otherwise be required by law, the Series A Preferred
Shares shall not have any voting powers, preferences and relative,
participating, optional or other special rights, other than those specifically
set forth in this Paragraph H (as may be amended from time to time). The Series
A Preferred Shares shall have no preemptive or subscription rights.
14. Headings of Subdivisions.
The headings of the various subdivisions hereof are for convenience of
reference only and shall not affect the interpretation of any of the provisions
hereof.
15. Severability of Provisions.
If any voting powers, preferences and relative, participating, optional
and other special rights of the Series A Preferred Shares and qualifications,
limitations and restrictions thereof set forth in this Paragraph H (as may be
amended from time to time) is invalid, unlawful or incapable of being enforced
by reason of any rule of law or public policy, all other voting powers,
preferences and relative, participating, optional and other special rights of
Series A Preferred Shares and qualifications, limitations and restrictions
thereof set forth in this Paragraph H (as so amended)
38
<PAGE>
which can be given effect without the invalid, unlawful or unenforceable voting
powers, preferences and relative, participating, optional and other special
rights of Series A Preferred Shares and qualifications, limitations and
restrictions thereof shall, nevertheless, remain in full force and effect, and
no voting powers, preferences and relative, participating, optional or other
special rights of Series A Preferred Shares and qualifications, limitations and
restrictions thereof herein set forth shall be deemed dependent upon any other
such voting powers, preferences and relative, participating, optional or other
special rights of Series A Preferred Shares and qualifications, limitations and
restrictions thereof unless so expressed herein.
ARTICLE III
The corporation is organized for the purpose of engaging in any lawful
business and the corporation shall have all of the powers which corporations
organized under the North Carolina Business Corporation Act are permitted to
have, whether such powers are permitted or granted by specific statutory
authority or by construction of law.
ARTICLE IV
The business and affairs of the corporation shall be managed by a Board
of Directors. The number of directors shall not be less than three nor more than
fifteen. The number of directors may be fixed or changed, from time to time,
within such minimum and maximum, by the shareholders or by the Board of
Directors. After shares are issued, only the shareholders may change the range
for the size of the Board of Directors or change the Board from a variable-range
number of directors to a fixed number of directors or vice versa.
ARTICLE V
No person who is serving or who has served as a director of the
corporation shall be personally liable to the corporation or any of its
shareholders for monetary damages for breach of duty as a director, except for
liability with respect to (i) acts or omissions that the director at the time of
such breach knew or believed were clearly in conflict with the best interests of
the corporation, (ii) any transaction from which the director derived an
improper personal benefit, (iii) acts or omissions occurring prior to the
effective date of this Article or (iv) acts or omissions with respect to which
the North Carolina Business Corporation Act does not permit the limitation of
liability. As used herein, the term "improper personal benefit" does not include
a director's reasonable compensation or other reasonable incidental benefit for
or on account of his service as a director, officer, employee, independent
contractor, attorney, or consultant of the corporation. No amendment or repeal
of this Article, nor the adoption of any provision to these Articles of
Incorporation inconsistent with this article, shall eliminate or reduce the
protection granted herein with respect to any matter that occurred prior to
such amendment, repeal, or adoption.
If the North Carolina Business Corporation Act hereafter is amended to
authorize the further elimination or limitation of the liability of the
directors, then the liability of a director shall be
39
<PAGE>
eliminated or limited to the fullest extent permitted by the amended North
Carolina Business Corporation Act.
ARTICLE VI
A. Persons Indemnified. The corporation shall, to the fullest extent permitted
by the provisions of the North Carolina Business Corporation Act, as the same
may be amended and supplemented, indemnify officers and directors whom it shall
have power to indemnify under said provisions from and against any and all of
the fees, expenses, charges, liabilities or obligations referred to in or
covered by said provisions, and the indemnification provided for herein shall
not be deemed exclusive of any other rights to which those indemnified may be
entitled under any Bylaw, vote of shareholders or disinterested directors, or
otherwise, both as to action in his official capacity and as to action in
another capacity while holding such office, and shall continue as to a person
who has ceased to be a director or officer and shall inure to the benefit of the
heirs, executors, and administrators of such a person.
Without limiting the foregoing, the corporation shall indemnify and
hold harmless each of the following described persons, including the estate or
personal representative of such person, against any and all of the liabilities
and expenses described below:
1. Any person who serves or has served as a director or officer shall
be indemnified against (i) any liability for or obligation to pay expenses,
including attorneys' fees (including the costs of investigation and
preparation), as incurred by such person in connection with any proceeding
arising out of his status as a director or officer or any activities of such
person in his capacity as a director or officer and (ii) any liability for or
obligation to pay any judgment, settlement, penalty or fine (including an excise
tax assessed with respect to an employee benefit plan) in any such proceeding;
PROVIDED that the corporation shall not be required to indemnify any officer for
any proceeding by such officer against the corporation unless such proceeding
was authorized by the Board of Directors; and
2. Any person who serves or has served as a director or officer and
who, at the request of the corporation, serves or has served as a director,
officer, partner, trustee, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise or as a trustee or
administrator under an employee benefit plan shall be indemnified against (i)
any liability for or obligation to pay expenses, including attorneys' fees
(including the costs of investigation and preparation), as incurred by such
person in connection with any proceeding arising out of his status as a director
or officer of the corporation and\or as a director, officer, partner, trustee,
employee or agent of such other corporation, partnership, joint venture, trust
or other enterprise and\or as a trustee or administrator under an employee
benefit plan or any activities of such person in any of such capacities and
(ii) any liability for or obligation to pay any judgment, settlement, penalty
or fine (including an excise tax assessed with respect to an employee benefit
plan) in any such proceeding.
Provided however, such indemnification will not extend to any liability
or expense such
40
<PAGE>
person may incur on account of his activities which, at the time
taken, were known or believed by him to be clearly in conflict with the best
interests of the corporation.
The term "proceeding" as used herein includes any threatened, pending
or completed civil, criminal, administrative or investigative action, suit or
proceeding (and any appeal therein), whether formal or informal and whether or
not brought by or on behalf of the corporation.
B. Board Assistance. The Board of Directors shall take all such action as may be
necessary and appropriate to authorize the corporation to pay, and to have the
corporation pay, the indemnification required by this Article. To the extent
required by law, the Board shall give notice to, and obtain approval by, the
shareholders of the corporation for any decision to indemnify.
C. Contract Right; Reliance Upon Corporation's Indemnification. Any person who
at any time after the effective date of these Articles of Incorporation serves
or has served in a capacity that would entitle him to be indemnified under the
foregoing provisions of this Article shall be deemed to be serving, or to have
served, in such capacity in reliance upon, and as consideration for, the
corporation's agreement to provide the indemnification described in this
Article. Any such person, or his legal representative, shall have a right to
require the corporation to provide the indemnification described herein. The
rights provided in this Article shall be contract rights fully enforceable by
each beneficiary thereof, and shall be in addition to, and not exclusive of, any
other right to indemnification provided by contract or under applicable law.
D. Expenses of Enforcing Indemnification. The corporation agrees to and shall
reimburse and shall advance (against notice) any person for whom indemnification
is provided pursuant to this Article for all costs, expenses and attorneys' fees
(including the costs of investigation and preparation) as incurred by such
person in connection with the enforcement of such person's right to the
indemnification granted hereunder. Such reimbursable amounts shall be
recoverable in any action brought to enforce the right to the indemnification
granted by this Article.
ARTICLE VII
The street address of the initial registered office of the corporation
in the State of North Carolina is 1400 West Northwood Street, Greensboro, North
Carolina 27408. The county in which said registered office is located is the
County of Guilford. The mailing address of such registered office is P.O. Box
29168, Greensboro, North Carolina 27429. The name of the initial registered
agent of the corporation at such address is Stanley K. Tanger.
ARTICLE VIII
The name of the incorporator is Stanley K. Tanger and his address is
1400 West Northwood Street, Greensboro, North Carolina 27408.
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<PAGE>
ARTICLES OF AMENDMENT
OF
TANGER FACTORY OUTLET CENTERS, INC.
The undersigned corporation hereby submits these Articles of Amendment
for the purpose of amending its Amended and Restated Articles of Incorporation.
1. The name of the corporation is TANGER FACTORY OUTLET CENTERS, INC.
2. The following amendments to the Amended and Restated Articles of
Incorporation of the corporation were adopted by its shareholders on May 9, 1996
in the manner prescribed by law:
Paragraph "A" of Article II of the Corporation's Amended and Restated
Articles of Incorporation shall be amended to read as follows:
A. The number of shares that the corporation is
authorized to issue is 100 million shares, divided into
classes, as follows: 50 million Common Shares with a par value
of $0.01 per share (the "Common Shares"); 25 million Excess
Shares with a par value of $0.01 per share (the "Excess
Shares"); one million Preferred Shares with a par value of
$0.01 per share (the "Class A Preferred Shares"); eight
million Class B Preferred Shares with a par value of $0.01 per
share (the "Class B Preferred Shares"); eight million Class C
Preferred Shares with a par value of $0.01 per share (the
"Class C Preferred Shares"); and eight million Class D
Preferred Shares with a par value of $0.01 per share (the
"Class D Preferred Shares"). The preferences, limitations and
relative rights of each class of shares are as set forth in
succeeding paragraphs of this Article II.
Paragraph "D" of Article II of the Corporation's Amended and Restated
Articles of Incorporation shall be amended to read as follows:
D. Preferred Shares. The Class A Preferred Shares
shall have the preferences, limitations and relative rights
set forth in Paragraph H of this Article II. Prior to the
issuance of Class B, C or D Preferred Shares, the Board of
Directors of the corporation shall determine, in whole or in
part, the preferences, limitations and relative rights of the
shares in that class subject to the following limitations: (1)
the shares of any such other class of preferred shares may
rank on a parity with or junior to Class A Preferred Shares
with respect to payment of dividends or the distribution of
assets upon liquidation, dissolution or winding up
-1-
<PAGE>
but may not have rights or preferences with respect to
distributions or to dissolution that are prior or superior to
the Class A Preferred Shares and (2) the preferences,
limitations and relative rights of such other class of
preferred shares shall not otherwise alter or abolish a
preferential right of the Class A Preferred Shares.
This the 29th day of May, 1996.
TANGER FACTORY OUTLET CENTERS, INC.
BY: /s/ Rochelle Simpson
ROCHELLE SIMPSON, VICE PRESIDENT
-2-
<PAGE>
THIRD AMENDMENT
TO
THE PARTNERSHIP UNIT OPTION PLAN
FOR EXECUTIVE AND KEY EMPLOYEES
OF
TANGER PROPERTIES, L.P.
THIS THIRD AMENDMENT to the Partnership Unit Option Plan for Executive
and Key Employees of Tanger Properties, L.P., dated February 26, 1996, is
adopted by Tanger Properties, L.P.
The Partnership Unit Option Plan for Executive and Key Employees of Tanger
Properties, L.P. is hereby amended in the following manner:
1. The text of Section 2.1 is amended and restated as follows:
SECTION 2.1 - UNITS SUBJECT TO PLAN
The aggregate number of Units of Partnership Interest which may be
issued upon exercise of Options shall not exceed 1,000,000; provided that such
aggregate number shall be reduced by one for each share of Common Stock that is
issued pursuant to the exercise of an option under the Stock Option Plan of
Tanger Factory Outlet Centers, Inc.
2. In all other respects, the Partnership Unit Option Plan for
Executive and Key Employees of Tanger Properties, L.P., shall continue in full
force and effect.
<PAGE>
I hereby certify that the foregoing Third Amendment was duly adopted by
the Tanger Properties, L.P. on February 26, 1996.
Executed on this 26th day of February, 1996.
/s/ Rochelle G. Simpson
--------------------------
Secretary
I hereby certify that the foregoing Third Amendment was duly approved
by the shareholders of Tanger Factory Outlet Centers, Inc. on May 9, 1996.
Executed on this 9th day of May, 1996.
/s/ Rochelle G. Simpson
--------------------------
Secretary
<PAGE>
THIRD AMENDMENT
TO
THE STOCK OPTION PLAN
FOR DIRECTORS AND EXECUTIVE AND KEY EMPLOYEES
OF
TANGER FACTORY OUTLET CENTERS, INC.
THIS THIRD AMENDMENT to the Stock Option Plan for Directors and
Executive and Key Employees of Tanger Factory Outlet Centers, Inc. dated
February 26, 1996, is adopted by resolution of the Board of Directors of Tanger
Factory Outlet Centers, Inc. (the "Company"), a North Carolina corporation.
The Stock Option Plan for Directors and Executive and Key Employees of Tanger
Factory Outlet Centers, Inc. is hereby amended in the following manner:
1. The text of Section 2.1 is amended and restated as follows:
SECTION 2.1 - SHARES SUBJECT TO PLAN
The shares of stock subject to Options shall be shares of the Company's
no par value Common Stock. The aggregate number of such shares which may be
issued upon exercise of Options shall not exceed 1,000,000; provided that such
aggregate amount shall be reduced by one for each Unit of Partnership Interest
that is issued pursuant to the Partnership Unit Option Plan of Tanger Properties
Limited Partnership.
2. In all other respects, the Stock Option Plan of Tanger Factory
Outlet Centers, Inc., as amended, shall continue in full force and effect.
<PAGE>
I hereby certify that the foregoing Third Amendment was duly adopted by
the Board of Directors of Tanger Factory Outlet Centers, Inc. on February 26,
1996.
Executed on this 26th day of February, 1996.
/s/ Rochelle G. Simpson
------------------------
Secretary
I hereby certify that the foregoing Third Amendment was duly approved
by the shareholders of Tanger Factory Outlet Centers, Inc. on May 9, 1996.
Executed on this 9th day of May, 19976
/s/ Rochelle G. Simpson
------------------------
Secretary
<PAGE>
AMENDED AND RESTATED
EMPLOYMENT AGREEMENT
THIS AMENDED AND RESTATED EMPLOYMENT AGREEMENT is entered into and made
effective as of January 1, 1996 by and among Tanger Properties Limited
Partnership a North Carolina limited partnership (the "Partnership"), Tanger
Factory Outlet Centers, Inc. (the "Company"), a North Carolina corporation and
Stanley K. Tanger (the "Executive").
RECITALS:
A. The Executive is the Chief Executive Officer of the Partnership, an
officer of the Company and Chairman of the Board of Directors of the Company
under the terms of an Amended and Restated Employment Agreement dated as of
January 1, 1995 between the Executive, the Partnership and the Company (the
"Original Employment Contract"). The term of the Original Employment Contract
ends on June 30, 1996.
B. The Company, the Partnership and the Executive intend to
modify and amend the Original Employment Contract and to extend its term as
provided herein.
NOW, THEREFORE, in consideration of the foregoing and of the respective
covenants and agreements set forth below the parties hereto agree as follows:
1. Certain Definitions.
(a) "Annual Base Salary" is defined in Section 7(a).
(b) "Annual Bonus" is defined in Section 7(d).
(c) "Benefits" is defined in Section 7(b)(iii).
(d) "Cause": For purposes of this Agreement, the Partnership
or the Company shall have "Cause" to terminate the Executive's employment
hereunder upon (i) the Executive causing material harm to the Company through a
material act of dishonesty in the performance of his duties hereunder, (ii) his
conviction of a felony involving moral turpitude, fraud or embezzlement, or
(iii) his willful failure to perform his material duties under this Agreement
(other than a failure due to disability) after written notice specifying the
failure and a reasonable opportunity to cure (it being understood that if his
failure to perform is not of a type requiring a single action to cure fully,
that he may commence the cure promptly after such written notice and thereafter
diligently prosecute such cure to completion).
(e) "Change of Control" shall mean (A) the sale, lease,
exchange or other transfer (other than pursuant to internal reorganization) by
the Company or the Partnership of more than 50% of its assets to a single
purchaser or to a group of associated purchasers; (B) a merger, consolidation
or similar transaction in which the Company or the Partnership does not survive
as an independent,
<PAGE>
publicly owned corporation or the Company ceases to be the sole general partner
of the Partnership; or (C) the acquisition of securities of the Company or the
Partnership in one or a related series of transactions (other than pursuant to
an internal reorganization) by a single purchaser or a group of associated
purchasers (other than the Executive or any of his lineal descendants, lineal
ancestors or siblings) which results in their ownership of thirty-five (35%)
percent or more of the number of Common Shares of the Company (treating any
Partnership Units or Preferred Shares acquired by such purchaser or purchasers
as if they had been converted to Common Shares) that would be outstanding if all
of the Partnership Units and Preferred Shares were converted into Common Shares;
or (E) a majority of the members of the Company's Board of Directors are
replaced during any twelve month period by directors whose appointment or
election is not endorsed by a majority of the members of the Board prior to the
date of the appointment or election.
(f) "Disability" shall mean the absence of the
Executive from the Executive's duties to the Partnership and/or the Company on
a full-time basis for a total of 16 consecutive weeks during any 12 month period
as a result of incapacity due to mental or physical illness which is determined
to be total and permanent by a physician selected by the Partnership or the
Company and acceptable to the Executive or the Executive's legal representative
(such agreement as to acceptability not to be withheld unreasonably).
(g) A "Contract Year" shall be a calendar year.
(h) "Funds From Operations" or "FFO", with respect to a
Contract Year or a calendar quarter, shall be equal to the Company's
consolidated Funds From Operations before the minority interest of the limited
partners of the Partnership as reported in the Company's relevant filings with
the Securities and Exchange Commission, or if not so reported, as determined by
the Company's Board of Directors in good faith, after deduction of any Annual
Bonus paid to the Executive or Stanley K. Tanger under similar provisions of his
employment agreement for such period.
(i) "Funds From Operations Per Share" or "FFO Per Share" for
any Contract Year or for any calendar quarter shall equal the amount of the
Funds From Operations for such period, divided by the Weighted Average Number of
Shares Outstanding for such period.
(j) "Good Reason": The Executive shall have Good Reason
to terminate his employment upon the occurrence of any of the following events:
(1) any material adverse change in his job titles,
duties, responsibilities, perquisites granted hereunder, or authority
without his consent;
(2) the relocation of the Company and/or the
Partnership headquarters outside of the Greensboro, North Carolina
metropolitan area without his consent;
2
<PAGE>
(3) a material breach of this Employment Agreement
by the Partnership or Company, including without limitation, the
failure to pay compensation or benefits when due hereunder if such
failure is not cured within 30 days after delivery to the Company and
the Partnership of the Executive's written demand for payment thereof;
(4) if the Executive elects to terminate his
employment by written notice to the Company and the Partnership within
the 180 day period following a Change of Control; or
(5) if the Executive is removed, or is not
re-elected as a Director of the Company.
(k) Target FFO Per Share.
(1) The "Target FFO Per Share" or "Target" for any
Contract Year beginning prior to December 31, 1996 shall be the average
FFO Per Share for the calendar quarters beginning with the calendar
quarter beginning on July 1, 1993 and ending with the last calendar
quarter in the immediately preceding Contract Year multiplied by 4;
provided however the Target FFO Per Share shall not be less than
$1.5520.
(2) The "Target FFO Per Share" or "Target" for any
Contract Year beginning after December 31, 1996 shall be the average
FFO Per Share for the previous three Contract Years; provided however
the Target FFO Per Share shall not be less than $1.5520.
(l) "Contract Term " is defined in Section 2(b).
(m) The "Weighted Average Number of Shares Outstanding" for a
Contract Year or for a calendar quarter shall be the weighted average number of
the Company's total shares of common stock outstanding during such period as
determined by the Company's outside auditors pursuant to generally accepted
accounting principles; provided that for the purposes of this calculation, the
conversion features of the Company's preferred stock and the Partnership's units
shall both be deemed exercised.
2. Employment.
(a) The Partnership and the Company shall continue to employ
the Executive and the Executive shall remain in the employ of the Partnership
and the Company during the Contract Term (as defined in this Section 2) in the
positions set forth in Section 3 and upon the other terms and conditions herein
provided, unless the Executive's employment is terminated earlier as provided in
Section 8 hereof.
(b) The initial Contract Term of this Amended and Restated
Employment Agreement shall begin as of January 1, 1996 (the "Commencement Date")
and shall end on December
3
<PAGE>
31, 1998 (the "Initial Contract Term"). On January 1, 1997 and on the first day
of January of each calendar year thereafter (an "Extension Date"), the Contract
Term shall be automatically extended by one year unless (i) the Executive's
employment has been earlier terminated as provided in Section 8 or (ii) either
the Partnership or the Company gives written notice to the Executive prior to
the Extension Date that the Contract Term shall not be automatically extended.
For purposes of illustration, if the Executive's employment has not been
terminated as provided in Section 8 and if neither the Company nor the
Partnership has given written notice that the Contract Term will not be
extended, on January 1, 1997, the Contract Term will be extended to and
including December 31, 1999 and on January 1, 1998, the Contract Term shall be
automatically extended until December 31, 2000.
If the Contract Term is extended as provided herein, the Executive's employment
may be terminated (other than upon expiration) only as provided in Section 8.
References herein to the "Contract Term" shall refer to the Initial Contract
Term as extended pursuant to this Section 2.
3. Position and Duties. The Executive shall serve in the following manner:
(a) During the Executive's employment hereunder, he
shall serve as:
(1) an executive employee of the Partnership
and shall have such duties, functions, responsibilities and authority
as are consistent with the Executive's position,
(2) the Chief Executive Officer and Chairman of the
Board of Directors of the Company and shall have such duties,
functions, responsibilities and authority as are consistent with the
Executive's position as the senior executive officer in charge of the
general management, business and affairs of the Company (and the
Partnership, through the Company's capacity as general partner of the
Partnership), and
(3) if elected or appointed thereto, as a
Director and Chairman of the Board of directors of the Company.
(b) The Executive shall serve as manager of the Factory Outlet
Center in Commerce, Georgia and shall have such duties, functions,
responsibilities and authority as are consistent with the Executive's position
thereas and the Executive's activities as manager of such property prior to the
date of this Agreement. Notwithstanding any other provision of the Employment
Agreement, the Executive's obligations under this subsection 3(b) shall not be
terminated without the prior consent of New York Life Insurance Annuity
Corporation ("New York Life") but, in any event, shall terminate on the later of
(i) the payment of the Liabilities and (ii) the satisfaction of all the
Partnership's obligations under the terms of the Loan Documents under the
Guaranty of Payment and Performance by Stanley K. Tanger, dated May , 1993 (the
"Guaranty"), pursuant to which, in consideration for certain consent by New York
Life, Executive agrees to guarantee certain obligations of the Partnership.
4
<PAGE>
If the Executive's employment is otherwise terminated under the
Employment Agreement, the Partnership and the Company shall allow the Executive
to continue his duties under this subsection 3(b) until they are terminated in
accordance with this subsection 3(b) or until the death or Disability of the
Executive, provided that no additional compensation shall be paid to the
Executive.
For purposes of this subsection 3(b), the terms "Liabilities",
"Property" and "Loan Documents" shall be defined as in the Guaranty.
The Executive's position, duties and responsibilities may not be
changed and the Executive's Annual Base Salary may not be reduced during his
employment hereunder.
4. Competition.
(a) The Executive shall be permanently prohibited from
engaging in Competition (as defined in subsection 4(b) below) with the
Partnership or the Company.
(b) The term "Competition" for purposes of this
Agreement shall mean the engagement outside the Partnership and the Company
(1) in any material commercial real estate
activities, with the exception of
(i) the development or ownership of
properties (or replacement properties) which were owned collectively or
individually by the Executive, by members of his family or by any
entity in which any of them owned an interest or which was for the
benefit of any of them prior to June 30, 1993 (including the three
factory outlet centers in which the Executive is a 50% partner, the
shopping center on West Market Street in Greensboro, North Carolina
(such four properties defined herein as the "Excluded Properties") and
the interests of the
Tanger Family Limited Partnership),
(ii) the direct or indirect passive
investment in commercial real estate, and
(iii) service on the board of directors
of any publicly traded company, whether or not such company engages in
Competition as defined in this subsection
4(b); provided however that,
(2) "Competition" shall include management,
development or construction of any factory outlet centers or competing
retail commercial property or any other active or passive investment in
property connected with a factory outlet center or a competing retail
commercial property, with the exception of
(i) the activities permitted in
subparagraph 4(b)(i)(A) with respect to the Excluded Properties,
5
<PAGE>
(ii) the ownership of up to 1% of any class
of securities of any publicly traded company, and
(iii) the employment under this
Agreement.
(c) The Executive covenants that a breach of subsection 4 (a)
above would immediately and irreparably harm the Partnership and the Company and
that a remedy at law would be inadequate to compensate the Partnership and the
Company for their losses by reason of such breach and therefore that the
Partnership and/or the Company shall, in addition to any other rights and
remedies available under this Agreement, at law or otherwise, be entitled to an
injunction to be issued by any court of competent jurisdiction enjoining and
restraining the Executive from committing any violation of subsection 4(a)
above, and the Executive hereby consents to the issuance of such injunction.
5. Registration Rights. The Executive shall have registration rights
pursuant to the Registration Rights Agreement attached hereto as Exhibit A.
6. Place of Performance. During his employment hereunder, the Executive
shall be based at the Partnership's principal executive offices and the
Company's principal executive offices located in Greensboro, North Carolina.
7. Compensation and Related Matters. During the Executive's
employment hereunder, the Executive shall be paid the compensation and shall be
provided with the benefits described below:
(a) Annual Base Salary. The Executive's annual base
compensation ("Annual Base Salary") with respect to the Contract Year ending
December 31, 1995 was $250,000. The amount of Annual Base Salary payable to the
Executive with respect to each Contract Year thereafter shall be an amount
negotiated between and agreed upon by the Executive and the Board of Directors
of the Company (in its capacity as general partner and in its own behalf) but in
no event less than the Executive's Annual Base Salary for the prior Contract
Year increased by the Consumer Price Index adjustment described in the following
paragraph.
If the FFO Per Share for the Contract Year ending December 31, 1995 or
for any succeeding Contract Year equals or exceeds the Target for that Contract
Year, the Executive's Annual Base Salary for the next Contract Year shall be
increased to reflect any increase in the Consumer Price Index for All Urban
Consumers (CPI-U), U.S. City Average for All Items as determined by the United
States Department of Labor, Bureau of Labor Statistics using 1982-84=100 as the
standard reference base or, if there be no such Consumer Price Index, then by
the successor or the most nearly comparable successor index thereto
(appropriately adjusted to the 1982-84=100 standard reference base). For the
purpose of determining such increased Annual Base Salary for a Contract Year,
the Basic Index Figure ("BIF") shall be such Consumer Price Index for the month
of October in the second preceding Contract Year. The Current Index Figure
("CIF") shall be the corresponding
6
<PAGE>
Consumer Price Index for the month of October in the immediately preceding
Contract Year. The Annual Base Salary payable for a Contract Year beginning
after December 31, 1995 shall be no less than an amount arrived at by
multiplying the Annual Base Salary for the preceding Contract Year by a
fraction, of which the numerator shall be the Current Index Figure ("CIF") and
the denominator shall be the Basic Index Figure ("BIF"):
ABS for preceding Contract Year X CIF = ABS for the Contract Year
BIF
(b) Benefits. The Executive shall be entitled to
(1) receive stock options (incentive or
nonqualified) under the Company's
Stock Option Plan and the Partnership's Unit Option Plan;
(2) participate in the Partnership's 401(k)
Savings Plan, and
(3) participate in or receive benefits under any
employee benefit plan or other arrangement made available by the
Partnership or the Company to any of its employees (collectively
"Benefits"),on terms at least as favorable as those on which any
other employee of the Partnership or the Company shall
participate; provided, however, that the Executive shall be
entitled to four weeks of paid vacation during each Contract Year,
exclusive of Partnership holidays.
Without the Executive's prior written consent, the Company
and/or the Partnership will not terminate or reduce any benefits paid
to the Executive under this Section 7(b) unless the Executive is
furnished with a benefit that is substantially equivalent.
(c) Automobile. In addition to the other compensation
and benefits described in this Section 7, the Executive shall be entitled to
receive a monthly automobile allowance of $800, payable at the same times Base
Salary is payable hereunder. The Executive may apply such allowance in any
manner, and shall be entitled to retain any portion of such allowance not
applied towards his automobile expense. The Executive shall be responsible for
all automobile costs and expenses in excess of the allowance provided hereunder.
(d) Annual Bonus. As additional compensation for services
rendered, for each Contract Year in which the FFO Per Share shall equal or
exceed the Target, the Executive shall receive an annual bonus ("Annual Bonus)
equal to the sum of (A) $100,000 and (B) the product of (x) the Executive's
Annual Base Salary for such Contract Year and (y) a fraction (which shall not
exceed 1.0) the numerator of which shall be the percentage by which the FFO Per
Share shall exceed the Target for such Contract Year, and the denominator of
which shall be ten percent (10%).
Each Annual Bonus shall be paid no later than 30 days after the
information sufficient to calculate it has been delivered to the Company and the
Partnership by the Company's outside auditors,
7
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unless the Executive shall elect to defer the receipt of such Annual Bonus
pursuant to the Executive Deferred Compensation Plan.
(e) Expenses. The Partnership and the Company shall promptly
reimburse the Executive for all reasonable travel and other business expenses
incurred by the Executive in the performance of his duties to the Partnership
and the Company, respectively, hereunder.
(f) Payment of Compensation. For each Contract Year or portion
thereof covered by this Agreement, the Company shall be liable for the
percentage described below (the "Company Percentage") of the cost of the
Executive's Annual Base Salary, and for any options granted to the Executive
pursuant to the Company's Stock Option Plan, and the Partnership shall be liable
for the remainder of the cost of the Executive's total compensation (including
options granted to the Executive pursuant to the Partnership's Unit Option
Plan).
The Company Percentage for each Contract Year shall be determined by the Board
of Directors of the Company (in its capacity as general partner and in its own
behalf), excluding the Executive, as the reasonable allocation of the benefits
for the Executive's services.
8. Termination. The Executive's employment hereunder may be
terminated prior to the end of the Contract Term by the Partnership, the
Company or the Executive, as applicable, without any breach of this Agreement
only under the following circumstances:
(a) Death. The Executive's employment hereunder
shall terminate upon his death.
(b) Disability. If the Disability of the Executive has
occurred during the Contract Term, the Partnership or the Company, respectively,
may give the Executive written notice in accordance with Section 15(c) of its
intention to terminate the Executive's employment. In such event, the
Executive's employment with the Partnership and the Company shall terminate
effective on the 30th day after receipt of such notice by the Executive,
provided that within the 30 days after such receipt, the Executive shall not
have returned to full-time performance of his duties.
(c) Cause. The Partnership or the Company may
terminate the Executive's employment hereunder for Cause.
(d) Good Reason. The Executive may terminate his
employment for Good Reason.
(e) Without Cause. The Partnership or the Company
may terminate the Executive's employment hereunder without Cause upon 30 days
notice.
(f) Resignation without Good Reason. The Executive
may resign his employment without Good Reason upon 90 days written notice to the
Partnership and the Company.
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(g) Notice of Termination. Any termination of the
Executive's employment hereunder by the Partnership, the Company or the
Executive (other than by reason of the Executive's death) shall be communicated
by a notice of termination to the other parties hereto. For purposes of this
Agreement, a "notice of termination" shall mean a written notice which (i)
indicates the specific termination provision in the Agreement relied upon, (ii)
sets forth in reasonable detail any facts and circumstances claimed to provide
a basis for termination of the Executive's employment under the provision
indicated and (iii) specifies the effective date of the termination.
9. Severance Benefits.
(a) Termination without Cause or for Good Reason: If the
Executive's employment shall be terminated (i) by the Company or the Partnership
other than for Cause (as defined above) or (ii) by the Executive for Good Reason
(as defined above) and subject to the limitation in Section 10, the Partnership
and the Company shall pay a lump sum cash payment (the "Severance Payment") to
the Executive within thirty (30) days after such termination of the Executive's
employment in an amount equal to 300% of the sum of (A) his Annual Base Salary,
(B) his Deemed Annual Bonus for the Contract Year in which the termination
occurs and (C) his automobile allowance under Section 7(c) hereof. In addition,
the Partnership and the Company shall continue to provide all Benefits to the
Executive under this Agreement for each Contract Year through the end of the
Contract Term. For these purposes, the Executive's Deemed Annual Bonus for any
Contract Year shall be the greater of (i) the Executive's Average Annual Bonus
for that Contract Year and (ii) Executive's Annual Bonus for the prior Contract
Year. The Executive's Average Annual Bonus for a Contract Year shall be an
amount equal to the sum of all Annual Bonuses earned by the Executive for the
Contract Years immediately preceding the Contract Year for which the calculation
is being made (not exceeding three (3) Contract Years) divided by the number of
such Annual Bonuses.
(b) Termination by Death or Disability. Upon the termination
of the Executive's employment by reason of his death or Disability, the Company
shall pay to the Executive or to the personal representatives of his estate (i)
within thirty (30) days after the termination, a lump-sum amount equal to the
amount of Annual Base Salary that would have been due through the end of the
Contract Term assuming no early termination had occurred and assuming no
increases or decreases in Annual Base Salary and (ii) on or before the day on
which the Executive's Annual Bonus for the Contract Year in which the
termination occurs would have been payable if the termination had not occurred,
an amount equal to the Annual Bonus the Executive would have received for that
Contract Year if the termination had not occurred multiplied by a fraction the
numerator of which is the number of days in that Contract Year before the date
of termination and the denominator of which is 365. This subsection 9(b) shall
not limit the entitlement of the Executive, his estate or beneficiaries to any
disability or other benefits then available to the Executive under any life,
disability insurance or other benefit plan or policy which is maintained by the
Partnership or the Company for the Executive's benefit.
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(c) Termination for Cause or Without Good Reason. If the
Executive's employment is terminated by the Company for Cause or by the
Executive without Good Reason, the Executive shall be entitled to all Annual
Base Salary and all Benefits accrued through the date of termination and to any
accrued but unpaid Annual Bonus for a Contract Year prior to the Contract Year
in which the Executive's employment was terminated.
(d) Assignment of Life Insurance. Upon any termination
of the Executive's employment hereunder, the Partnership and the Company shall,
at Executive's option (exercisable at any time during the period commencing upon
the termination of his employment and ending 90 days thereafter), transfer the
life insurance policy described in such Section 11(b) to Executive, for no
consideration. In addition, notwithstanding any provision of the Partnership's
Executive Deferred Compensation Plan to the contrary, all amounts in the
Executive's account under such Plan (if there is such a Plan) shall be
immediately payable to him.
(e) Survival. Neither the termination of the Executive's
employment hereunder nor the expiration of the Contract Term shall impair the
rights or obligations of any party hereto which shall have accrued hereunder
prior to such termination or expiration.
(f) Mitigation of Damages. In the event of any termination of
the Executive's employment by the Partnership or the Company, the Executive
shall not be required to seek other employment to mitigate damages, and any
income earned by the Executive from other employment or self-employment shall
not be offset against any obligations of the Partnership or the Company
to the Executive under this Agreement.
10. Limitation on Severance Benefits.
(a) Notwithstanding any other provision of this Agreement, and
except as provided in paragraph 10(b) below, payments and benefits to which
Executive would otherwise be entitled under the provisions of this Agreement
will be reduced (or the Executive shall make reimbursement of amounts previously
paid) to the extent necessary to prevent the Executive from having any liability
for the federal excise tax levied on certain "excess parachute payments" under
section 4999 of the Internal Revenue Code as it exists as of the date of this
Agreement.
(b) The Executive may determine the amount (if any) of
reduction for each payment or benefit that he would otherwise be entitled to
receive. The extent to which the payments or benefits to the Executive are to be
reduced pursuant to paragraph 10(a) will be determined by the accounting firm
servicing the Company on the date that the Executive's employment is terminated.
The Company shall pay the cost of such determination.
(c) If the final determination of any reduction in any benefit
or payment pursuant to this Section has not been made at the time that the
Executive is entitled to receive such benefit or payment, the Company shall pay
or provide an estimated amount based on a recommendation by the accounting firm
making the determination under subparagraph 10(b). When the final determination
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is made, the Company shall pay the Executive any additional amounts that may be
due or the Executive shall reimburse the Company for any estimated amounts paid
to the Executive that were in excess of the amount payable hereunder.
11. Insurance.
(a) Officers and Directors Fiduciary Liability Insurance:
During the Executive's employment hereunder, the Company shall maintain, at its
expense, officers and directors fiduciary liability insurance that would cover
the Executive in an amount of no less than $3 million per year.
(b) Term Life Insurance or Other Employee Benefit: During the
Executive's employment hereunder, the Company shall maintain in force a term
life insurance policy on the Executive or shall provide Executive with another
employee benefit selected by the Executive at an annual cost to the Company of
no more than $17,150. If the Executive's employment is terminated prior to the
expiration of the Contract Term (other than by reason of the Executive's death,
a termination by the Company for Cause or a termination by the Executive without
Good Reason), the Company shall pay, prior to the expiration of the ninety (90)
period described in the preceding sentence, either to the Executive or, on
behalf of the Executive, to the issuer(s) of such life insurance policy(ies) (if
any), an amount sufficient to pay the premiums to maintain such policy(ies) in
force for the remainder of the Contract Term but in no event more than $17,150
each Contract Year.
The Company shall be liable for the Company Percentage (as
described in Section 7(f)) of the annual premium for any such term life
insurance policy and the Partnership shall be liable for the remainder of such
premium. The beneficiary of any such insurance shall be designated, from time to
time, by the Executive in his sole and absolute discretion.
12. Disputes and Indemnification.
(a) Any dispute or controversy arising under, out of, in
connection with or in relation to this Agreement shall, at the election and upon
written demand of any party to this Agreement, be finally determined and settled
by arbitration in the City of Greensboro, North Carolina in accordance with the
rules and procedures of the American Arbitration Association, and judgment upon
the award may be entered in any court having jurisdiction thereof.
(b) The Partnership and/or the Company shall promptly pay
pursuant to Section 7(e) as incurred, to the full extent permitted by law, all
legal fees and expenses which the Executive may reasonably incur as a result of
any contest (regardless of the outcome thereof) by the Partnership, the Company,
the Executive or others of the validity or enforceability of, or liability
under, any provision of this Agreement.
(c) The Company and the Partnership agree that if the
Executive is made a party, or is threatened to be made a party, to any action,
suit or proceeding, whether civil, criminal, administrative or investigative (a
"Proceeding"), by reason of the fact that he is or was a director,
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officer or employee of the Company or the Partnership or is or was serving at
the request of the Company or the Partnership as a director, officer, member,
employee or agent of another corporation, partnership, joint venture, trust or
other enterprise, including service with respect to employee benefit plans,
whether or not the basis of such Proceeding is the Executive's alleged action
in an official capacity while serving as a director, officer, member, employee
or agent, the Executive shall be indemnified and held harmless by the Company
and the Partnership to the fullest extent legally permitted, against all cost,
expense, liability and loss (including, without limitation, attorney's fees,
judgements, fines, ERISA excise taxes or penalties and amounts paid or to be
paid in settlement) reasonably incurred or suffered by the Executive in
connection therewith, and such indemnification shall continue as to the
Executive even if he has ceased to be a director, officer, member, employee or
agent of the Company or the Partnership or other entity and shall inure to the
benefit of Executive's heirs, executors and administrators. The Company and/or
the Partnership shall advance to the Executive all reasonable costs and expenses
incurred by him in connection with a Proceeding within 20 days after receipt by
them of a written request for such advance. Such request shall include an
undertaking by the Executive to repay the amount of such advance, without
interest, if it shall ultimately be determined that he is not entitled to be
indemnified against such costs and expenses.
13. Binding on Successors. This Agreement shall be binding upon and inure
to the benefit of the Partnership, the Company, the Executive and their
respective successors, assigns, personal and legal representatives, executors,
administrators, heirs, distributees, devisees, and legatees, as applicable.
14. Governing Law. This Agreement is being made and executed in and is intended
to be performed in the State of North Carolina, and shall be governed,
construed, interpreted and enforced in accordance with the substantive laws of
the State of North Carolina without any reference to principles of conflicts or
choice of law under which the law of any other jurisdiction would apply.
15. Validity. The invalidity or unenforceability of any provision or
provisions of this Agreement shall not affect the validity or enforceability of
any other provision of this Agreement, which shall remain in full force and
effect.
16. Notices. Any notice, request, claim, demand, document and
other communication hereunder to any party shall be effective upon receipt (or
refusal of receipt) and shall be in writing and delivered personally or sent by
telex, telecopy, or certified or registered mail, postage prepaid, as follows:
(a) If to the Partnership, to:
Ms. Rochelle Simpson
Tanger Properties Limited Partnership
P.O. Box 29168
1400 West Northwood Street
Greensboro, NC 27408
(b) If to the Company, to:
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Ms. Rochelle Simpson
Tanger Factory Outlets Centers, Inc.
P.O. Box 29168
1400 West Northwood Street
Greensboro, NC 27408
(c) If to the Executive, to:
Mr. Stanley K. Tanger
P.O. Box 29168
1400 West Northwood Street
Greensboro, NC 27408
or at any other address as any party shall have specified by notice in writing
to the other parties.
17. Counterparts. This Agreement may be executed in several
counterparts, each of which shall be deemed to be an original, but all of which
together will constitute one and the same Agreement.
18. Entire Agreement. The terms of this Agreement are intended by the parties to
be the final expression of their agreement with respect to the employment of the
Executive by the Partnership and the Company and may not be contradicted by
evidence of any prior or contemporaneous agreement. The parties further intend
that this Agreement shall constitute the complete and exclusive statement of its
terms and that no extrinsic evidence whatsoever may be introduced in any
judicial, administrative, or other legal proceeding to vary the terms of this
Agreement.
19. Amendments; Waivers. This Agreement may not be modified, amended, or
terminated except by an instrument in writing, signed by the Executive, a member
of the Partnership and a disinterested director of the Company. By an instrument
in writing similarly executed, the Executive or the Company and the Partnership
may waive compliance by the other party or parties with any provision of this
Agreement that such other party was or is obligated to comply with or perform,
provided, however, that such waiver shall not operate as a waiver of , or
estoppel with respect to, any other or subsequent failure. No failure to
exercise and no delay in exercising any right, remedy, or power hereunder
preclude any other or further exercise of any other right , remedy, or power
provided herein or by law or in equity.
20. No Effect on Other Contractual Rights. Notwithstanding Section 8, the
provisions of this Agreement, and any other payment provided for hereunder,
shall not reduce any amounts otherwise payable to the Executive under any other
agreement between the Executive and the Partnership and the Company, or in any
way diminish the Executive's rights under any employee benefit plan, program or
arrangement of the Partnership or the Company to which he may be entitled as an
employee of the Partnership or the Company.
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21. No Inconsistent Actions. The parties hereto shall not voluntarily undertake
or fail to undertake any action or course of action inconsistent with the
provisions or essential intent of this Agreement. Furthermore, it is the intent
of the parties hereto to act in a fair and reasonable manner with respect to the
interpretation and application of the provisions of this Agreement.
22. Legal Fees. The Company and/or the Partnership agree to pay all legal
fees and expenses incurred by the Executive in negotiating this Agreement
promptly upon receipt of appropriate statements therefor.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date and year first above written.
EXECUTIVE
Stanley K. Tanger
TANGER FACTORY OUTLET CENTERS, INC.,
a North Carolina corporation
By:
ROCHELLE SIMPSON, Sr. Vice President
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TANGER PROPERTIES LIMITED PARTNERSHIP
By: Tanger Factory Outlet Centers, Inc.
its general partner
By:
ROCHELLE SIMPSON, Sr. Vice President
The Partnership and the Company hereby jointly and severally guarantee to the
Executive the prompt payment in full of the compensation owed hereunder by the
other.
TANGER PROPERTIES LIMITED PARTNERSHIP
By: Tanger Factory Outlet Centers, Inc.,
its general partner
By:
ROCHELLE SIMPSON, Sr. Vice President
TANGER FACTORY OUTLET CENTERS, INC.,
a North Carolina corporation
By:
ROCHELLE SIMPSON, Sr. Vice President
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AMENDED AND RESTATED
EMPLOYMENT AGREEMENT
THIS AMENDED AND RESTATED EMPLOYMENT AGREEMENT is entered into
and made effective as of January 1, 1996 by and among Tanger Properties Limited
Partnership, a North Carolina limited partnership (the "Partnership"), Tanger
Factory Outlet Centers, Inc. (the "Company"), a North Carolina corporation and
Steven B. Tanger (the "Executive").
RECITALS:
A. The Executive is the Chief Operating Officer of the Partnership and
an officer and director of the Company under the terms of an Amended and
Restated Employment Agreement dated as of January 1, 1995 between the Executive,
the Partnership and the Company (the "Original Employment Contract"). The term
of the Original Employment Contract ends on June 30, 1996.
B. The Company, the Partnership and the Executive intend modify and
amend the Original Employment Contract and to extend its term as provided
herein.
NOW, THEREFORE, in consideration of the foregoing and of the respective
covenants and agreements set forth below the parties hereto agree as follows:
1. Certain Definitions.
(a) "Annual Base Salary" is defined in Section 7(a).
(b) "Annual Bonus" is defined in Section 7(d).
(c) "Benefits" is defined in Section 7(b)(iii).
(d) "Cause": For purposes of this Agreement, the Partnership
or the Company shall have "Cause" to terminate the Executive's employment
hereunder upon (i) the Executive causing material harm to the Company through a
material act of dishonesty in the performance of his duties hereunder, (ii) his
conviction of a felony involving moral turpitude, fraud or embezzlement, or
(iii) his willful failure to perform his material duties under this Agreement
(other than a failure due to disability) after written notice specifying the
failure and a reasonable opportunity to cure (it being understood that if his
failure to perform is not of a type requiring a single action to cure fully,
that he may commence the cure promptly after such written notice and thereafter
diligently prosecute such cure to completion).
(e) "Change of Control" shall mean (A) the sale, lease,
exchange or other transfer (other than pursuant to internal reorganization) by
the Company or the Partnership of more than 50% of its assets to a single
purchaser or to a group of associated purchasers; (B) a merger, consolidation or
similar transaction in which the Company or the Partnership does not
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survive as an independent, publicly owned corporation or the Company ceases to
be the sole general partner of the Partnership; or (C) the acquisition of
securities of the Company or the Partnership in one or a related series of
transactions (other than pursuant to an internal reorganization) by a single
purchaser or a group of associated purchasers (other than the Executive or any
of his lineal descendants, lineal ancestors or siblings) which results in their
ownership of thirty-five (35%) percent or more of the number of Common Shares of
the Company (treating any Partnership Units or Preferred Shares acquired by such
purchaser or purchasers as if they had been converted to Common Shares) that
would be outstanding if all of the Partnership Units and Preferred Shares were
converted into Common Shares; or (D) a majority of the members of the Company's
Board of Directors are replaced during any twelve month period by directors
whose appointment or election is not endorsed by a majority of the members of
the Board prior to the date of the appointment or election.
(f) "Disability" shall mean the absence of the Executive from
the Executive's duties to the Partnership and/or the Company on a full-time
basis for a total of 16 consecutive weeks during any 12 month period as a result
of incapacity due to mental or physical illness which is determined to be total
and permanent by a physician selected by the Partnership or the Company and
acceptable to the Executive or the Executive's legal representative (such
agreement as to acceptability not to be withheld unreasonably).
(g) A "Contract Year" shall be a calendar year.
(h) "Funds From Operations" or "FFO", with respect to a
Contract Year or a calendar quarter, shall be equal to the Company's
consolidated Funds From Operations before the minority interest of the limited
partners of the Partnership as reported in the Company's relevant filings with
the Securities and Exchange Commission, or if not so reported, as determined by
the Company's Board of Directors in good faith, after deduction of any Annual
Bonus paid to the Executive or Stanley K. Tanger under similar provisions of his
employment agreement for such period.
(i) "Funds From Operations Per Share" or "FFO Per Share" for
any Contract Year or for any calendar quarter shall equal the amount of the
Funds From Operations for such period, divided by the Weighted Average Number of
Shares Outstanding for such period.
(j) "Good Reason": The Executive shall have Good Reason to
terminate his employment upon the occurrence of any of the following events:
(1) any material adverse change in his job titles, duties,
responsibilities, perquisites granted hereunder, or authority without
his consent;
(2) a material breach of this Employment Agreement by the
Partnership or Company, including without limitation, the failure to
pay compensation or benefits when due hereunder if such failure is not
cured within 30 days after delivery to the Company and the Partnership
of the Executive's written demand for payment thereof;
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(3) if the Executive elects to terminate his employment by
written notice to the Company and the Partnership within the 180 day
period following a Change of Control; or
(4) if the Executive is removed, or is not re-elected as a
Director of the Company.
(k) Target FFO Per Share.
(1) The "Target FFO Per Share" or "Target" for any
Contract Year beginning prior to December 31, 1996 shall be the average
FFO Per Share for the calendar quarters beginning with the calendar
quarter beginning on July 1, 1993 and ending with the last calendar
quarter in the immediately preceding Contract Year multiplied by 4;
provided however the Target FFO Per Share shall not be less than
$1.5520.
(2) The "Target FFO Per Share" or "Target" for any
Contract Year beginning after December 31, 1996 shall be the average
FFO Per Share for the previous three Contract Years; provided however
the Target FFO Per Share shall not be less than $1.5520.
(l) "Contract Term" is defined in Section 2(b).
(m) The "Weighted Average Number of Shares Outstanding" for a
Contract Year or for a calendar quarter shall be the weighted average
number of the Company's total shares of common stock outstanding during
such period as determined by the Company's outside auditors pursuant to
generally accepted accounting principles; provided that for the
purposes of this calculation, the conversion features of the Company's
preferred stock and the Partnership's units shall both be deemed
exercised.
2. Employment.
(a) The Partnership and the Company shall continue to employ
the Executive and the Executive shall remain in the employ of the Partnership
and the Company during the Contract Term (as defined in this Section 2) in the
positions set forth in Section 3 and upon the other terms and conditions herein
provided, unless the Executive's employment is terminated earlier as provided in
Section 8 hereof.
(b) The initial Contract Term of this Amended and Restated
Employment Agreement shall begin as of January 1, 1996 (the "Commencement Date")
and shall end on December 31, 1998 (the "Initial Contract Term"). On January 1,
1997 and on the first day of January of each calendar year thereafter (an
"Extension Date"), the Contract Term shall be automatically extended by one year
unless (i) the Executive's employment has been earlier
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terminated as provided in Section 8 or (ii) either the Partnership or the
Company gives written notice to the Executive prior to the Extension Date that
the Contract Term shall not be automatically extended. For purposes of
illustration, if the Executive's employment has not been terminated as provided
in Section 8 and if neither the Company nor the Partnership has given written
notice that the Contract Term will not be extended, on January 1, 1997, the
Contract Term will be extended to and including December 31, 1999 and on January
1, 1998, the Contract Term shall be automatically extended until December 31,
2000.
If the Contract Term is extended as provided herein, the Executive's employment
may be terminated (other than upon expiration) only as provided in Section 8.
References herein to the "Contract Term" shall refer to the Initial Contract
Term as extended pursuant to this Section 2.
3. Position and Duties. During the Executive's employment hereunder, he shall
serve as:
(a) an executive employee of the Partnership and shall have
such duties, functions, responsibilities and authority as are consistent with
the Executive's position,
(b) the President and Chief Operating Officer of the Company
and shall have such duties, functions, responsibilities and authority as are
consistent with the Executive's position as an executive officer with respect to
the general management, business and affairs of the Company (and the
Partnership, through the Company's capacity as general partner of the
Partnership), and
(c) if elected or appointed thereto, as a Director of the
Company.
The Executive's position, duties and responsibilities may not be
changed and the Executive's Annual Base Salary may not be reduced during the his
employment hereunder.
4. Competition.
(a) Subject to the limitations and conditions in Section 4(e)
hereof, the Executive shall be prohibited from engaging in Competition (as
defined in subsection 4(b) below) with the Partnership or the Company during the
following described periods: (i) during the period beginning on the date hereof
and extending through the date on which the Executive's employment hereunder is
terminated; (ii) if the Executive's employment is terminated by the Company for
Cause or by the Executive without Good Reason, from the date of such termination
through the date of the first anniversary of such termination date and (iii) if
the Executive receives the Severance Payment described in Section 9(a) because
of a termination of his employment by the Company without Cause or by the
Executive for Good Reason, from the date of such termination through the date of
the third anniversary of such termination date.
(b) During the period prior to the termination of the
Executive's employment hereunder, the term "Competition" for purposes of this
Agreement shall mean the Executive's management, development or construction of
any factory outlet centers or competing retail
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<PAGE>
commercial property outside the Partnership and the Company or any other active
or passive investment in property connected with a factory outlet center or a
competing retail commercial property outside the Partnership and Company, with
the exception of
(1) the development or ownership of properties (or
replacement properties) which were owned collectively or individually
by the Executive, by members of his family or by any entity in which
any of them owned an interest or which was for the benefit of any of
them prior to June 30, 1993 (including the three factory outlet centers
in which Stanley K. Tanger is a 50% partner, the shopping center on
West Market Street in Greensboro, North Carolina (such four properties
defined herein as the "Excluded Properties") and the interests of the
Tanger Family Limited Partnership),
(2) the ownership of up to 1% of any class of securities of
any publicly traded company, and
(3) service on the board of directors of any publicly traded
company, whether or not such company engages in Competition as defined
in this subsection 4(b).
Provided however, for any period following the termination of the Executive's
employment, the Executive shall be considered as engaging in "Competition"
prohibited by this Section only if the Executive engages in the prohibited
activities with respect to a property that is within a fifty (50) mile radius of
the site of any commercial property owned, leased or operated by the Company
and/or the Partnership on the date the Executive's employment terminated or with
respect to a property that is within a fifty (50) mile radius of any commercial
property which the Company and/or Partnership actively negotiated to acquire,
lease or operate within the six (6) month period ending on the date of the
termination of the Executive's employment.
(c) The Executive covenants that a breach of subsection 4(a)
above would immediately and irreparably harm the Partnership and the Company and
that a remedy at law would be inadequate to compensate the Partnership and the
Company for their losses by reason of such breach and therefore that the
Partnership and/or the Company shall, in addition to any other rights and
remedies available under this Agreement, at law or otherwise, be entitled to an
injunction to be issued by any court of competent jurisdiction enjoining and
restraining the Executive from committing any violation of subsection 4(a)
above, and the Executive hereby consents to the issuance of such injunction.
5. Registration Rights. The Executive shall have registration rights pursuant to
the Registration Rights Agreement attached hereto as Exhibit A.
6. Place of Performance. During his employment hereunder, the Executive shall be
based at the Partnership's principal executive offices and the Company's
principal executive offices located in Greensboro, North Carolina or New York
City, at the Executive's choice.
7. Compensation and Related Matters. During the Executive's employment
hereunder, the
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Executive shall be paid the compensation and shall be provided with the benefits
described below:
(a) Annual Base Salary. The Executive's annual base
compensation ("Annual Base Salary") payable with respect to the Contract Year
ending December 31, 1995 was $200,000. The amount of Annual Base Salary payable
to the Executive with respect to each Contract Year thereafter shall be an
amount negotiated between and agreed upon by the Executive and the Board of
Directors of the Company (in its capacity as general partner and in its own
behalf) but in no event less than the Executive's Annual Base Salary for the
prior Contract Year increased by the Consumer Price Index adjustment described
in the following paragraph.
If the FFO Per Share for the Contract Year ending December 31, 1995 or
for any succeeding Contract Year equals or exceeds the Target for that Contract
Year, the Executive's Annual Base Salary for the next Contract Year shall be
increased to reflect any increase in the Consumer Price Index for All Urban
Consumers (CPI-U), U.S. City Average for All Items as determined by the United
States Department of Labor, Bureau of Labor Statistics using 1982- 84=100 as the
standard reference base or, if there be no such Consumer Price Index, then by
the successor or the most nearly comparable successor index thereto
(appropriately adjusted to the 1982-84=100 standard reference base). For the
purpose of determining such increased Annual Base Salary for a Contract Year,
the Basic Index Figure ("BIF") shall be such Consumer Price Index for the month
of October in the second preceding Contract Year. The Current Index Figure
("CIF") shall be the corresponding Consumer Price Index for the month of October
in the immediately preceding Contract Year. The Annual Base Salary payable for a
Contract Year beginning after December 31, 1995 shall be no less than an amount
arrived at by multiplying the Annual Base Salary for the preceding Contract Year
by a fraction, of which the numerator shall be the Current Index Figure ("CIF")
and the denominator shall be the Basic Index Figure ("BIF"):
ABS for preceding Contract Year X CIF = ABS for the Contract Year
---
BIF
(b) Benefits. The Executive shall be entitled to
(1) receive stock options (incentive or nonqualified) under
the Company's Stock Option Plan and the Partnership's Unit Option Plan;
(2) participate in the Partnership's 401(k) Savings Plan,
and
(3) participate in or receive benefits under any employee
benefit plan or other arrangement made available by the Partnership or
the Company to any of its employees (collectively "Benefits"),on terms
at least as favorable as those on which any other employee of the
Partnership or the Company shall participate; provided, however, that
the Executive shall be entitled to four weeks of paid vacation during
each Contract
-6-
<PAGE>
Year, exclusive of Partnership holidays.
Without the Executive's prior written consent, the Company and/or the
Partnership will not terminate or reduce any benefits paid to the Executive
under this Section 7(b) unless the Executive is furnished with a benefit that is
substantially equivalent.
(c) Automobile. In addition to the other compensation and
benefits described in this Section 7, the Executive shall be entitled to receive
a fixed monthly automobile allowance of $800, payable at the same times that
Base Salary is payable hereunder. The allowance shall be in lieu of
reimbursement by the Company of any expense incurred by Executive to purchase or
lease a vehicle that will be available for use by the Executive on Company
business. The Executive shall not be required to provide the Company with
supporting documentation to substantiate any such expenses and the allowance
shall be payable whether or not the Executive actually incurs such automobile
expenses in the amount of the allowance. The Executive shall be responsible for
the expenses of leasing or purchasing an automobile which are in excess of the
allowance provided hereunder.
(d) Annual Bonus. As additional compensation for services
rendered, for each Contract Year in which the FFO Per Share shall equal or
exceed the Target, the Executive shall receive an annual bonus ("Annual Bonus)
equal to the sum of (A) $100,000 and (B) the product of (x) the Executive's
Annual Base Salary for such Contract Year and (y) a fraction (which shall not
exceed 1.0) the numerator of which shall be the percentage by which the FFO Per
Share shall exceed the Target for such Contract Year, and the denominator of
which shall be ten percent (10%).
Each Annual Bonus shall be paid no later than 30 days after the
information sufficient to calculate it has been delivered to the Company and the
Partnership by the Company's outside auditors, unless the Executive shall elect
to defer the receipt of such Annual Bonus pursuant to the Executive Deferred
Compensation Plan.
(e) Expenses. The Partnership and the Company shall promptly
reimburse the Executive for all reasonable travel and other business expenses
incurred by the Executive in the performance of his duties to the Partnership
and the Company, respectively hereunder.
(f) Payment of Compensation. For each Contract Year or portion
thereof covered by this Agreement, the Company shall be liable for the
percentage described below (the "Company Percentage") of the cost of the
Executive's Annual Base Salary, and for any options granted to the Executive
pursuant to the Company's Stock Option Plan, and the Partnership shall be liable
for the remainder of the cost of the Executive's total compensation (including
options granted to the Executive pursuant to the Partnership's Unit Option
Plan).
The Company Percentage for each Contract Year shall be determined by
the Board of Directors of the Company (in its capacity as general partner and in
its own behalf), excluding the Executive, as the reasonable allocation of the
benefits for the Executive's services.
-7-
8. Termination. The Executive's employment hereunder may be terminated prior to
the end of the Contract Term by the Partnership, the Company or the Executive,
as applicable, without any breach of this Agreement only under the following
circumstances:
(a) Death. The Executive's employment hereunder shall
terminate upon his death.
(b) Disability. If the Disability of the Executive has
occurred during the Contract Term, the Partnership or the Company, respectively,
may give the Executive written notice in accordance with Section 15(c) of its
intention to terminate the Executive's employment. In such event, the
Executive's employment with the Partnership and the Company shall terminate
effective on the 30th day after receipt of such notice by the Executive,
provided that within the 30 days after such receipt, the Executive shall not
have returned to full-time performance of his duties.
(c) Cause. The Partnership or the Company may terminate the
Executive's employment hereunder for Cause.
(d) Good Reason. The Executive may terminate his employment
for Good Reason.
(e) Without Cause. The Partnership or the Company may
terminate the Executive's employment hereunder without Cause upon 30 days
notice.
(f) Resignation without Good Reason. The Executive may resign
his employment without Good Reason upon 90 days written notice to the
Partnership and the Company.
(g) Notice of Termination. Any termination of the Executive's
employment hereunder by the Partnership, the Company or the Executive (other
than by reason of the Executive's death) shall be communicated by a notice of
termination to the other parties hereto. For purposes of this Agreement, a
"notice of termination" shall mean a written notice which (i) indicates the
specific termination provision in the Agreement relied upon, (ii) sets forth in
reasonable detail any facts and circumstances claimed to provide a basis for
termination of the Executive's employment under the provision indicated and
(iii) specifies the effective date of the termination.
9. Severance Benefits.
(a) Termination without Cause or for Good Reason: If the
Executive's employment shall be terminated (i) by the Company or the Partnership
other than for Cause (as defined above) or (ii) by the Executive for Good Reason
(as defined above) and subject to the limitation in Section 10, the Partnership
and the Company shall pay a lump sum cash payment (the "Severance Payment") to
the Executive within thirty (30) days after such termination of the
-8-
<PAGE>
Executive's employment in an amount equal to 300% of the sum of (A) his Annual
Base Salary, (B) his Deemed Annual Bonus for the Contract Year in which the
termination occurs and (C) his annual automobile allowance under Section 7(c)
hereof. In addition, the Partnership and the Company shall continue to provide
all Benefits to the Executive under this Agreement for each Contract Year
through the end of the Contract Term. For these purposes, the Executive's Deemed
Annual Bonus for any Contract Year shall be the greater of (i) the Executive's
Average Annual Bonus for that Contract Year and (ii) Executive's Annual Bonus
for the prior Contract Year. The Executive's Average Annual Bonus for a Contract
Year shall be an amount equal to the sum of all Annual Bonuses earned by the
Executive for the Contract Years immediately preceding the Contract Year for
which the calculation is being made (not exceeding three (3) Contract Years)
divided by the number of such Annual Bonuses.
(b) Termination by Death or Disability. Upon the termination
of the Executive's employment by reason of his death or Disability, the Company
shall pay to the Executive or to the personal representatives of his estate (i)
within thirty (30) days after the termination, a lump-sum amount equal to the
amount of Annual Base Salary that would have been due through the end of the
Contract Term assuming no early termination had occurred and assuming no
increases or decreases in Annual Base Salary and (ii) on or before the day on
which the Executive's Annual Bonus for the Contract Year in which the
termination occurs would have been payable if the termination had not occurred,
an amount equal to the Annual Bonus the Executive would have received for that
Contract Year if the termination had not occurred multiplied by a fraction the
numerator of which is the number of days in that Contract Year before the date
of termination and the denominator of which is 365. This subsection 9(b) shall
not limit the entitlement of the Executive, his estate or beneficiaries to any
disability or other benefits then available to the Executive under any life,
disability insurance or other benefit plan or policy which is maintained by the
Partnership or the Company for the Executive's benefit.
(c) Termination for Cause or Without Good Reason. If the
Executive's employment is terminated by the Company for Cause or by the
Executive without Good Reason, the Executive shall be entitled to all Annual
Base Salary and all Benefits accrued through the date of termination and to any
accrued but unpaid Annual Bonus for a Contract Year prior to the Contract Year
in which the Executive's employment was terminated.
(d) Assignment of Life Insurance. Upon any termination of the
Executive's employment hereunder, the Partnership and the Company shall, at
Executive's option (exercisable at any time during the period commencing upon
the termination of his employment and ending 90 days thereafter), transfer the
life insurance policy described in such Section 11(b) to Executive, for no
consideration. In addition, notwithstanding any provision of the Partnership's
Executive Deferred Compensation Plan to the contrary, all amounts in the
Executive's account under such Plan (if there is such a Plan) shall be
immediately payable to him.
(e) Survival. Neither the termination of the Executive's
employment hereunder nor the expiration of the Contract Term shall impair the
rights or obligations of any
-9-
<PAGE>
party hereto which shall have accrued hereunder prior to such termination or
expiration.
(f) Mitigation of Damages. In the event of any termination of
the Executive's employment by the Partnership or the Company, the Executive
shall not be required to seek other employment to mitigate damages, and any
income earned by the Executive from other employment or self-employment shall
not be offset against any obligations of the Partnership or the Company to the
Executive under this Agreement.
10. Limitation on Severance Benefits.
(a) Notwithstanding any other provision of this Agreement, and
except as provided in paragraph 10(b) below, payments and benefits to which
Executive would otherwise be entitled under the provisions of this Agreement
will be reduced (or the Executive shall make reimbursement of amounts previously
paid) to the extent necessary to prevent the Executive from having any liability
for the federal excise tax levied on certain "excess parachute payments" under
section 4999 of the Internal Revenue Code as it exists as of the date of this
Agreement.
(b) The Executive may determine the amount (if any) of
reduction for each payment or benefit that he would otherwise be entitled to
receive. The extent to which the payments or benefits to the Executive are to be
reduced pursuant to paragraph 10(a) will be determined by the accounting firm
servicing the Company on the date that the Executive's employment is terminated.
The Company shall pay the cost of such determination.
(c) If the final determination of any reduction in any benefit
or payment pursuant to this Section has not been made at the time that the
Executive is entitled to receive such benefit or payment, the Company shall pay
or provide an estimated amount based on a recommendation by the accounting firm
making the determination under subparagraph 10(b). When the final determination
is made, the Company shall pay the Executive any additional amounts that may be
due or the Executive shall reimburse the Company for any estimated amounts paid
to the Executive that were in excess of the amount payable hereunder.
11. Insurance.
(a) Officers and Directors Fiduciary Liability Insurance:
During the Executive's employment hereunder, the Company shall maintain, at its
expense, officers and directors fiduciary liability insurance that would cover
the Executive in an amount of no less than $3 million per year.
(b) Term Life Insurance: During the Executive's employment
hereunder and for a period of ninety (90) days thereafter, the Company shall
maintain in force a term life insurance policy on the Executive in the face
amount of $10 million. If the Executive's employment is terminated prior to the
expiration of the Contract Term (other than by reason of the Executive's death,
a termination by the Company for Cause or a termination by the
-10-
<PAGE>
Executive without Good Reason), the Company shall pay, prior to the expiration
of the ninety (90) period described in the preceding sentence, either to the
Executive or, on behalf of the Executive, to the issuer(s) of such life
insurance policy(ies), an amount sufficient to pay the premiums to maintain such
policy(ies) in force for the remainder of the Contract Term.
The Company shall be liable for the Company Percentage (as
described in Section 7(f)) of the annual premium for such term life insurance
policy and the Partnership shall be liable for the remainder of such premium.
The beneficiary of such insurance shall be designated, from time to time, by the
Executive in his sole and absolute discretion.
12. Disputes and Indemnification.
(a) Any dispute or controversy arising under, out of, in
connection with or in relation to this Agreement shall, at the election and upon
written demand of any party to this Agreement, be finally determined and settled
by arbitration in the City of New York, New York in accordance with the rules
and procedures of the American Arbitration Association, and judgment upon the
award may be entered in any court having jurisdiction thereof.
(b) The Partnership and/or the Company shall promptly pay
pursuant to Section 7(e) as incurred, to the full extent permitted by law, all
legal fees and expenses which the Executive may reasonably incur as a result of
any contest (regardless of the outcome thereof) by the Partnership, the Company,
the Executive or others of the validity or enforceability of, or liability
under, any provision of this Agreement.
(c) The Company and the Partnership agree that if the
Executive is made a party, or is threatened to be made a party, to any action,
suit or proceeding, whether civil, criminal, administrative or investigative (a
"Proceeding"), by reason of the fact that he is or was a director, officer or
employee of the Company or the Partnership or is or was serving at the request
of the Company or the Partnership as a director, officer, member, employee or
agent of another corporation, partnership, joint venture, trust or other
enterprise, including service with respect to employee benefit plans, whether or
not the basis of such Proceeding is the Executive's alleged action in an
official capacity while serving as a director, officer, member, employee or
agent, the Executive shall be indemnified and held harmless by the Company and
the Partnership to the fullest extent legally permitted, against all cost,
expense, liability and loss (including, without limitation, attorney's fees,
judgements, fines, ERISA excise taxes or penalties and amounts paid or to be
paid in settlement) reasonably incurred or suffered by the Executive in
connection therewith, and such indemnification shall continue as to the
Executive even if he has ceased to be a director, officer, member, employee or
agent of the Company or the Partnership or other entity and shall inure to the
benefit of Executive's heirs, executors and administrators. The Company and/or
the Partnership shall advance to the Executive all reasonable costs and expenses
incurred by him in connection with a Proceeding within 20 days after receipt by
them of a written request for such advance. Such request shall include an
undertaking by the Executive to repay the amount of such advance, without
interest, if it shall ultimately be determined that he is not entitled to be
indemnified against such costs and expenses.
-11-
<PAGE>
13. Binding on Successors. This Agreement shall be binding upon and inure to the
benefit of the Partnership, the Company, the Executive and their respective
successors, assigns, personal and legal representatives, executors,
administrators, heirs, distributees, devisees, and legatees, as applicable.
14. Governing Law. This Agreement shall be governed, construed, interpreted and
enforced in accordance with the substantive laws of the State of North Carolina,
without reference to principles of conflicts or choice of law under which the
law of any other jurisdiction would apply.
15. Validity. The invalidity or unenforceability of any provision or provisions
of this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement, which shall remain in full force and effect.
16. Notices. Any notice, request, claim, demand, document and other
communication hereunder to any party shall be effective upon receipt (or refusal
of receipt) and shall be in writing and delivered personally or sent by telex,
telecopy, or certified or registered mail, postage prepaid, as follows:
(a) If to the Partnership, to:
Ms. Rochelle Simpson
Tanger Properties Limited Partnership
P.O. Box 29168
1400 West Northwood Street
Greensboro, NC 27408
(b) If to the Company, to:
Ms. Rochelle Simpson
Tanger Factory Outlets Centers, Inc.
P.O. Box 29168
1400 West Northwood Street
Greensboro, NC 27408
(c) If to the Executive, to:
Mr. Steven B. Tanger
158 East 58th Street
New York, NY 10022
or at any other address as any party shall have specified by notice in writing
to the other parties.
17. Counterparts. This Agreement may be executed in several counterparts, each
of which shall be deemed to be an original, but all of which together will
constitute one and the same Agreement.
-12-
<PAGE>
18. Entire Agreement. The terms of this Agreement are intended by the parties to
be the final expression of their agreement with respect to the employment of the
Executive by the Partnership and the Company and may not be contradicted by
evidence of any prior or contemporaneous agreement. The parties further intend
that this Agreement shall constitute the complete and exclusive statement of its
terms and that no extrinsic evidence whatsoever may be introduced in any
judicial, administrative, or other legal proceeding to vary the terms of this
Agreement.
19. Amendments; Waivers. This Agreement may not be modified, amended, or
terminated except by an instrument in writing, signed by the Executive, a member
of the Partnership and a disinterested director of the Company. By an instrument
in writing similarly executed, the Executive or the Company and the Partnership
may waive compliance by the other party or parties with any provision of this
Agreement that such other party was or is obligated to comply with or perform,
provided, however, that such waiver shall not operate as a waiver of, or
estoppel with respect to, any other or subsequent failure. No failure to
exercise and no delay in exercising any right, remedy, or power hereunder
preclude any other or further exercise of any other right, remedy, or power
provided herein or by law or in equity.
20. No Effect on Other Contractual Rights. Notwithstanding Section 8, the
provisions of this Agreement, and any other payment provided for hereunder,
shall not reduce any amounts otherwise payable to the Executive under any other
agreement between the Executive and the Partnership and the Company, or in any
way diminish the Executive's rights under any employee benefit plan, program or
arrangement of the Partnership or the Company to which he may be entitled as an
employee of the Partnership or the Company.
21. No Inconsistent Actions. The parties hereto shall not voluntarily undertake
or fail to undertake any action or course of action inconsistent with the
provisions or essential intent of this Agreement. Furthermore, it is the intent
of the parties hereto to act in a fair and reasonable manner with respect to the
interpretation and application of the provisions of this Agreement.
22. Legal Fees. The Company and/or the Partnership agree to pay all legal fees
and expenses incurred by the Executive in negotiating this Agreement promptly
upon receipt of appropriate statements therefor.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date and year first above written.
EXECUTIVE
/s/ Steven B. Tanger
--------------------
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<PAGE>
TANGER FACTORY OUTLET CENTERS, INC.,
a North Carolina corporation
By: __________________________________
TANGER PROPERTIES LIMITED PARTNERSHIP
By: Tanger Factory Outlet Centers, Inc.
its general partner
By: ___________________________________
The Partnership and the Company hereby jointly and severally guarantee to the
Executive the prompt payment in full of the compensation owed hereunder by the
other.
TANGER PROPERTIES LIMITED PARTNERSHIP
By: Tanger Factory Outlet Centers, Inc.,its general partner
By: ___________________________________
TANGER FACTORY OUTLET CENTERS, INC.,
a North Carolina corporation
By: ___________________________________
-14-
<PAGE>
AMENDED AND RESTATED EMPLOYMENT AGREEMENT
THIS AMENDED AND RESTATED AGREEMENT is executed and made effective as
of January 1, 1996 between TANGER PROPERTIES LIMITED PARTNERSHIP, a North
Carolina Limited Partnership, whose address is P.O. Box 29168, Greensboro, N.C.
27408 (the "Employer") and WILLARD ALBEA CHAFIN, JR., a resident of North
Carolina, whose address is P.O. Box 1124, Kernersville, North Carolina 27285
(the "Employee").
RECITALS
A. Employer and Employee entered into an Employment Agreement dated March 7,
1990 which was amended and restated as of October 11, 1993.
B. The parties intend to modify, amend and restate their Agreement upon the
terms and conditions set forth herein
Now therefore, in consideration of the promises contained herein and
other valuable consideration the parties agree as follows:
1. EMPLOYMENT. Employer agrees to employ Employee during the term of this
Agreement. Employee agrees to devote substantial time and attention and his best
efforts to the business affairs of the Employer. During the term of his
employment hereunder, Employee shall not perform services for others as a
consultant, employee or otherwise and shall not engage in the conduct of any
other trade or business.
Employer is engaged in the development and operation of retail shopping
centers. The Employee will serve as a Senior Vice President of the Employer and
will perform duties assigned to him by the Employer in all phases of the
Employer's business. Employee's major responsibilities will include site
selection for new shopping centers to be developed and leasing space in new and
existing shopping centers as manufacturer's outlets. Employee will be directly
involved in the management of existing and new centers. Other responsibilities
will include assisting in the promotion, advertising and marketing of all
Employer's shopping centers and the development of a good communications program
between Employer and its tenants. Employee will be required to engage in
extensive travel and Employee will work out of Employer's Greensboro, North
Carolina office.
2. TERM. The term of this Agreement began on April 1, 1990 and shall end on
December 31, 1998 (the "Initial Term") unless sooner terminated as herein
provided. The twelve calendar month period beginning on January 1, 1996 and
ending December 31, 1996 and each calendar year thereafter through 1998 is
sometimes herein referred to as a "Contract Year".
By mutual written agreement, the parties may extend the term of
employment for an additional period of three years (an "Extended Term") upon
such terms and conditions as the parties
<PAGE>
may agree.
This Agreement shall survive any merger, acquisition or cessation of
business by the Employer and shall remain binding upon any successor of the
Employer or transferee of the Employer's business.
3. COMPENSATION. For each Contract Year beginning on or after
January 1, 1996, Employer will pay Employee for services performed pursuant
to this Agreement an annual Base Salary as follows:
Contract Year Annual Base Salary
1996 $175,000.00
1997 $185,000.00
1998 $195,000.00
The Base Annual Salary shall be paid in equal installments in arrears
in accordance with Employer's regular pay schedule.
The Employer will provide the Employee with any medical, disability or
life insurance benefits in accordance with any such plans provided by the
Employer for other employees and for which Employee is eligible.
Employee will be reimbursed for any necessary and reasonable expense
incurred by the Employee in performing the services requested of him by the
Employer during the term of employment. At least monthly, the Employee will
submit such records and paid bills supporting the amount of the expenses
incurred and to be reimbursed as the Employer shall reasonably require.
Employer will pay and/or withhold for FICA, income and other employee
taxes on compensation payable to Employee hereunder as required by law.
4. VACATION. Employee shall be entitled to four (4) weeks of vacation during
each Contract Year for the term of employment hereunder.
5. TERMINATION. The Employee's employment by the Employer hereunder shall be
terminated upon the occurrence of any of the following events:
A. If the Employer and Employee mutually agree to terminate the
employment;
B. Upon the disability of the Employee. "Disability" for these purposes
shall mean the Employee's inability through physical or mental illness or other
cause to perform any of the material duties assigned to him by the Employer for
a period of one hundred and eighty (180) days or more within any twelve
consecutive calendar months. Employee will be paid during any sickness or
disability period;
-2-
<PAGE>
C. By either party in the event of a material breach by the other party
of any of that other party's obligations under this Agreement;
D. By Employer, if Employee is convicted of a felony or engages in
conduct or activity that has, or in the Employer's reasonably held belief, will
have a material adverse effect upon Employer's business or future prospects;
E. Upon the Employee's death.
Upon termination of the Employee's employment the Employee shall be
entitled to receive only the compensation accrued but unpaid for the period of
employment prior to the date of such termination of employment and shall not be
entitled to additional compensation except that (i) if the employment is
terminated by reason of Employee's death or disability during the Initial Term
or the Extended Term (if any) or (ii) if the term is not extended for an
additional three year period as provided in the second paragraph of Section 2,
the Employer will pay Employee (or the personal representatives of his estate,
in the event of his death) as severance pay, the sum of One Hundred and
Twenty-Five Thousand Dollars ($125,000.00) in 12 equal monthly installments of
Ten Thousand Four Hundred Sixteen Dollars and Sixty-Seven Cents ($10,416.67)
each beginning with the first calendar month after the month in which the
employment is terminated.
Provided further, if employer materially breaches this Agreement and
this Agreement is terminated or rescinded by employee, in addition to the
compensation due employee under paragraph three (3) hereinabove, employer shall
pay employee as additional compensation the sum of One Hundred Twenty-Five
Thousand Dollars ($125,000.00) in twelve (12) equal monthly installments of
$10,416.67 each on the first of each month beginning the first day of the first
month after employee shall terminate or rescind this Agreement in writing.
6. COVENANT AGAINST COMPETITION AND NON-DISCLOSURE.
A. Covenant Against Competition. Employee covenants and agrees that
during Employee's employment and for a period of one year after he ceases to be
employed by Employer, Employee shall not, directly or indirectly, as an
employee, employer, shareholder, proprietor, partner, principal, agent,
consultant, advisor, director, officer, or in any other capacity, engage in the
development or operation of a retail shopping facility within a radius of one
hundred (100) miles of any retail shopping facility owned or operated by the
Employer at any time during the Employee's employment hereunder or in any state
in which the Employer owns or operates a retail shopping facility or within the
radius of one hundred (100) miles of any site for which Employer has made an
offer to purchase for the development of a retail shopping facility by the
Employer prior to the date of the termination of the Employee's employment.
B. Disclosure of Information. Employee acknowledges that in and as a
result of his employment hereunder, he will be making use of, acquiring and/or
adding to confidential information of a special and unique nature and value
relating to such matters as financial information, terms of leases, terms of
financing, financial condition of tenants and potential tenants,
-3-
<PAGE>
sales and rental income of shopping centers and other specifics about Employer's
development, financing, construction and operation of retail shopping
facilities. Employee covenants and agrees that he shall not, at any time during
or following the term of his employment, directly or indirectly, divulge or
disclose for any purpose whatsoever any such confidential information that has
been obtained by, or disclosed to, him as a result of his employment by
Employer.
C. Reasonableness of Restrictions.
1. Employee has carefully read and considered the foregoing
provision of this Item, and, having done so, agrees that the
restrictions set forth in these paragraphs, including but not limited
to the time period of restriction set forth in the covenant against
competition are fair and reasonable and are reasonably required for the
protection of the interests of Employer and its officers, directors and
other employees.
2. In the event that, notwithstanding the foregoing, any of
the provisions of this Item shall be held invalid or unenforceable, the
remaining provisions thereof shall nevertheless continue to be valid
and enforceable as though the invalid or unenforceable parts had not
been included herein. In the event that any provision of this Item
relating to the time period and/or the areas of restriction shall be
declared by a court of competent jurisdiction to exceed the maximum
time period or areas such court deems reasonable and enforceable, the
time period and/or areas of restriction deemed reasonable and
enforceable by the court shall become and thereafter be the maximum
time period and/or areas.
D. Consideration. The covenants against competition and non-disclosure
by the Employee in this Item are made in consideration of the Employer's
agreement to employ the Employee upon the terms and conditions set forth herein.
Such covenants against competition and of non-disclosure by the Employee in this
Item constitute the material inducement to Employer to enter into this
Agreement, to make confidential information developed by Employer available to
Employee and to pay the salary and bonuses provided for Employee herein.
E. Employer's Remedies. Employee covenants and agrees that if he shall
violate any of his covenants or agreements contained in this Item, then Employer
shall, in addition to any other rights and remedies available to it at law or in
equity, have the following rights and remedies against Employee:
1. Employer shall be relieved of any further obligation to
Employee under the terms of this agreement; and
2. Employer shall be entitled to an accounting and repayment
of all profits, compensation, commissions, remunerations or other
benefits that Employee, directly or indirectly, has realized and/or may
realize as a result of, growing out of or in connection with, any such
violation.
-4-
<PAGE>
The foregoing rights and remedies of the Employer shall be cumulative
and the election by the Employer to exercise any one or more of them shall not
preclude the Employer's exercise of any other rights described above or
otherwise available under applicable principals of law or equity.
7. NOTICES.
Any notice required or permitted to be given pursuant to this Agreement
shall be hand delivered or sent by certified mail, return receipt requested, to
the address of the party to whom it is directed as set forth below:
Employer: Tanger Properties Limited Partnership
c/o Stanley K. Tanger
P.O. Box 29168
Greensboro, N.C. 27402
Employee: Willard Albea Chafin, Jr.
P.O.Box 1124
Kernersville, N.C. 27285
IN WITNESS WHEREOF, the parties have executed or caused this Agreement
to be executed as of the day and year first above written.
EMPLOYER:
TANGER PROPERTIES LIMITED PARTNERSHIP, a
North Carolina Limited Partnership
By: TANGER FACTORY OUTLET CENTERS, INC.,
it's sole general partner
(CORPORATE
SEAL)
By: (sig of Stanley K. Tanger)
STANLEY K. TANGER, Chief Executive Officer
ATTEST:
(sig of Rochelle G. Simpson)
Secretary
EMPLOYEE:
(sig of Willard Albea Chafin, Jr.)
WILLARD ALBEA CHAFIN, JR.
-5-
<PAGE>
AMENDED AND RESTATED EMPLOYMENT AGREEMENT
THIS AMENDED AND RESTATED AGREEMENT is executed and made effective as
of January 1, 1996 between TANGER PROPERTIES LIMITED PARTNERSHIP, a North
Carolina Limited Partnership, whose address is P.O. Box 29168, Greensboro, N.C.
27408 (the "Company") and ROCHELLE SIMPSON, a resident of North Carolina, whose
address is 4800 Archwood Drive, Greensboro, North Carolina 27406 (the
"Simpson").
RECITALS
A. The Company and Simpson entered into an employment agreement dated February
28, 1994.
B. The Parties intend to modify, amend and restate the employment contract as
provided herein.
Now therefore, in consideration of the promises contained herein and
other valuable consideration, the parties agree as follows:
1. EMPLOYMENT. Company agrees to employ Simpson during the term of this
Agreement. Simpson agrees to devote substantial time and attention and her best
efforts to the business affairs of the Company. During the term of her
employment hereunder, Simpson shall not perform services for others as a
consultant, employee or otherwise and shall not engage in the conduct of any
other trade or business.
Company is engaged in the development and operation of retail shopping
centers. Simpson will serve as a Senior Vice-President of the Company and will
perform duties assigned to her by the Company in all phases of the Company's
business. Simpson will have overall responsibility for the administration of the
Company's day to day operations and such other duties as the Chief Executive
Officer shall assign to her from time to time. Simpson will report directly to
the Chief Executive Officer of the Company.
2. TERM. The term of this Agreement began on July 1, 1994 and shall end December
31, 1998 (the "Initial Term") unless sooner terminated as herein provided. The
twelve calendar month period beginning on January 1, 1996 and ending December
31, 1996 and each calendar year thereafter through 1998 is sometimes herein
referred to as a "Contract Year".
By mutual written agreement, the parties may extend the term of
employment for an additional period of three years (an "Extended Term") upon
such terms and conditions as the parties may agree.
This Agreement shall survive any merger, acquisition or cessation of
business by the Company and shall remain binding upon any successor of the
Company or transferee of the Company's business.
3. COMPENSATION. For each Contract Year beginning on or after January 1, 1996,
Company will pay Simpson for services performed pursuant to this Agreement an
annual Base
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Salary as follows:
Contract Year Annual Base Salary
1996 $165,000.00
1997 $175,000.00
1998 $185,000.00
The Base Annual Salary shall be paid in equal monthly or bi-weekly
installments in arrears in accordance with Company's regular pay schedule.
The Company will provide Simpson with any medical, disability or life
insurance benefits in accordance with any such plans provided by the Company for
other employees and for which Simpson is eligible.
Simpson will be reimbursed for any necessary and reasonable expense
incurred by Simpson in performing the services requested of her by the Company
during the term of employment. At least monthly, Simpson will submit such
records and paid bills supporting the amount of the expenses incurred and to be
reimbursed as the Company shall reasonably require.
Company will pay and/or withhold for FICA, income and other employee
taxes on compensation payable to Simpson hereunder as required by law.
4. VACATION. Simpson shall be entitled to four (4) weeks of vacation during each
Contract Year for the term of employment hereunder.
5. TERMINATION. Simpson's employment by the Company hereunder shall be
terminated upon the occurrence of any of the following events:
A. If the Company and Simpson mutually agree to terminate the employment;
B. Upon the disability of Simpson. "Disability" for these purposes shall
mean Simpson's inability through physical or mental illness or other cause to
perform any of the material duties assigned to her by the Company for a period
of one hundred and eighty (180) days or more within any twelve consecutive
calendar months. Simpson will be paid during any sickness or disability period;
C. By either party in the event of a material breach by the other party of
any of that other party's obligations under this Agreement;
D. By Company, if Simpson is convicted of a felony or engages in conduct or
activity that has, or in the Company's reasonably held belief, will have a
material adverse effect upon Company's business or future prospects;
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<PAGE>
E. Upon Simpson's death.
Upon termination of Simpson's employment Simpson shall be entitled to
receive only the compensation accrued but unpaid for the period of employment
prior to the date of such termination of employment and shall not be entitled to
additional compensation except that (i) if the employment is terminated by
reason of Simpson's death or disability during the Initial Term or the Extended
Term (if any) or (ii) if the term is not extended for an additional three year
period as provided in the second paragraph of Section 2, the Company will pay
Simpson (or her husband, William B. Simpson, in the event of her death) as
severance pay, the sum of One Hundred and Twenty-Five Thousand Dollars
($125,000.00) in 12 equal monthly installments of Ten Thousand Four Hundred
Sixteen Dollars and Sixty-Seven Cents ($10,416.67) each beginning with the first
calendar month after the month in which the employment is terminated.
Provided further, if Company materially breaches this Agreement and
this Agreement is terminated or rescinded by employee, in addition to the
compensation due employee under paragraph three (3) hereinabove, Company shall
pay employee as additional compensation the sum of One Hundred Twenty-Five
Thousand Dollars ($125,000.00) in twelve (12) equal monthly installments of
$10,416.67 each on the first of each month beginning the first day of the first
month after employee shall terminate or rescind this Agreement in writing.
6. COVENANT AGAINST COMPETITION AND NON-DISCLOSURE.
A. Covenant Against Competition. Simpson covenants and agrees that during
Simpson's employment and for a period of one year after she ceases to be
employed by Company, Simpson shall not, directly or indirectly, as an employee,
employer, shareholder, proprietor, partner, principal, agent, consultant,
advisor, director, officer, or in any other capacity, engage in the development
or operation of a retail shopping facility within a radius of one hundred (100)
miles of any retail shopping facility owned or operated by the Company at any
time during Simpson's employment hereunder or in any state in which the Company
owns or operates a retail shopping facility or within a radius of one hundred
(100) miles of any site for which Company has made an offer to purchase for the
development of a retail shopping facility by the Company prior to the date of
the termination of Simpson's employment.
B. Disclosure of Information. Simpson acknowledges that in and as a result
of her employment hereunder, she will be making use of, acquiring and/or adding
to confidential information of a special and unique nature and value relating to
such matters as financial information, terms of leases, terms of financing,
financial condition of tenants and potential tenants, sales and rental income of
shopping centers and other specifics about Company's development, financing,
construction and operation of retail shopping facilities. Simpson covenants and
agrees that she shall not, at any time during or following the term of her
employment, directly or indirectly, divulge or disclose for any purpose
whatsoever any such confidential information that has been obtained by, or
disclosed to, her as a result of her employment by Company.
C. Reasonableness of Restrictions.
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1. Simpson has carefully read and considered the foregoing
provision of this Item, and, having done so, agrees that the
restrictions set forth in these paragraphs, including but not limited
to the time period of restriction set forth in the covenant against
competition are fair and reasonable and are reasonably required for the
protection of the interests of Company and its officers, directors and
other employees.
2. In the event that, notwithstanding the foregoing, any of
the provisions of this Item shall be held invalid or unenforceable, the
remaining provisions thereof shall nevertheless continue to be valid
and enforceable as though the invalid or unenforceable parts had not
been included herein. In the event that any provision of this Item
relating to the time period and/or the areas of restriction shall be
declared by a court of competent jurisdiction to exceed the maximum
time period or areas such court deems reasonable and enforceable, the
time period and/or areas of restriction deemed reasonable and
enforceable by the court shall become and thereafter be the maximum
time period and/or areas.
D. Consideration. The covenants against competition and non-disclosure
by Simpson in this Item are made in consideration of the Company's agreement to
employ Simpson upon the terms and conditions set forth herein. Such covenants
against competition and of non-disclosure by Simpson in this Item constitute the
material inducement to Company to enter into this Agreement, to make
confidential information developed by Company available to Simpson and to pay
the salary and bonuses provided for Simpson herein.
E. Company's Remedies. Simpson covenants and agrees that if she shall
violate any of her covenants or agreements contained in this Item 6, then the
Company shall, in addition to any other rights and remedies available to it at
law or in equity, have the following rights and remedies against Simpson:
1. The Company shall be relieved of any further obligation to
Simpson under the terms of this agreement; and
2. The Company shall be entitled to an accounting and
repayment of all profits, compensation, commissions, remunerations or
other benefits that Simpson, directly or indirectly, has realized
and/or may realize as a result of, growing out of or in connection
with, any such violation.
The foregoing rights and remedies of the Company shall be cumulative
and the election by the Company to exercise any one or more of them shall not
preclude the Company's exercise of any other rights described above or otherwise
available under applicable principals of law or equity.
7. NOTICES.
Any notice required or permitted to be given pursuant to this Agreement
shall be hand
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delivered or sent by certified mail, return receipt requested, to the address of
the party to whom it is directed as set forth below:
Company: Tanger Properties Limited Partnership
c/o Stanley K. Tanger
P.O. Box 29168
Greensboro, N.C. 27402
Simpson: Rochelle Simpson
4800 Archwood Drive
Greensboro, N.C. 27406
IN WITNESS WHEREOF, the parties have executed or caused this Agreement
to be executed as of the day and year first above written.
COMPANY:
TANGER PROPERTIES LIMITED PARTNERSHIP, a
North Carolina Limited Partnership
By: TANGER FACTORY OUTLET CENTERS, INC.,
it's sole general partner
(CORPORATE
SEAL)
By: /s/ Stanley K. Tanger
_________________________________
STANLEY K. TANGER, Chief Executive Officer
ATTEST:
Rochelle G. Simpson
- ---------------------
Secretary
/s/ Rochelle G. Simpson
_______________________________ (SEAL)
ROCHELLE SIMPSON
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EMPLOYMENT AGREEMENT
THIS AGREEMENT is executed and made effective as of January 1, 1995
between TANGER PROPERTIES LIMITED PARTNERSHIP, a North Carolina Limited
Partnership, whose address is P.O. Box 29168, Greensboro, N.C. 27408 (the
"Company") and JOSEPH NEHMEN, ("Nehmen") a resident of North Carolina, whose
address is 7404 York Drive, Clayton, Missouri 63105.
RECITALS
A. Nehmen is not presently employed by the Company and has a business and lives
with his family in St. Louis, Missouri. The Company has asked Nehmen to accept
an executive position with the firm. Nehmen's acceptance of the position will
require him to dispose of his business interests in St. Louis and to move his
family to the Greensboro area.
B. The terms and conditions of Nehmen's employment by the Company pursuant to
this Agreement are intended as an inducement to Nehmen to accept the Company's
offer of employment.
Now therefore, in consideration of the promises contained herein and
other valuable consideration, the parties agree as follows:
1. EMPLOYMENT. Company agrees to employ Nehmen during the term of this
Agreement. Nehmen agrees to devote full time and attention and his best efforts
to the business affairs of the Company. Except as provided in the last paragraph
of this Section, during the term of his employment hereunder, Nehmen shall not
perform services for others as a consultant, employee or otherwise and shall not
engage in the conduct of any other trade or business.
Company is engaged in the development and operation of retail shopping
centers. Nehmen will serve as the Company's Vice President of Operations and
will perform duties assigned to him by the Company in all phases of the
Company's business which are generally performed by executives holding similar
positions.
Notwithstanding the foregoing provisions of this Section, Nehmen may
perform consulting or employment services which do not materially interfere with
the performance of his duties as a full time employee of the Company as follows:
A. For a purchaser of any of the assets or capital stock of Merchants
Wholesalers of Missouri, Inc. (the company in which he is part owner and with
whom he is currently employed) in connection with the purchaser's conduct of a
business for the wholesale and retail sale of cigarettes, candy, tobacco and
similar items and so long as the purchaser is not engaged in activities which
are in competition with the business currently conducted by the Company; and
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B. For Dolgin & Associates (a firm in which Nehmen owns an interest) in
connection with that firm's conduct of the business of providing tax
consultation and advice and so long as that firm is not engaged in activities
which are in competition with the business currently conducted by the Company.
2. TERM. The term of Nehmen's employment pursuant to this Agreement will begin
on the first day of the first calendar month in 1995 after the calendar month in
which Nehmen completes the move of himself and his family to the Greensboro area
(the "Commencement Date") and shall extend for a period of three (3) years until
the third anniversary of the Commencement Date (the "Initial Term") unless
sooner terminated or extended as herein provided. Each twelve calendar month
period beginning on the Commencement Date and on each anniversary of the
Commencement Date during the Initial Term or any extension of the term is
sometimes herein referred to as a "Contract Year". The parties anticipate that
Nehmen will be able to complete his move to Greensboro and begin full time
employment with the Company in early 1995. In any event Nehmen agrees to
commence full time employment in Greensboro hereunder prior to December 31,
1995.
On each anniversary of the Commencement Date, the term of the Agreement
shall be automatically extended by one year (but not beyond the 10th anniversary
of the Commencement Date) unless Nehmen's employment has been terminated on or
prior to that Anniversary Date as herein provided. For purposes of illustration,
if the Commencement Date is January 1, 1995, the Initial Term will extend to
December 31, 1997. On January 1, 1996, the term shall be automatically extended
until December 31, 1998.
This Agreement shall survive any merger, acquisition or cessation of
business by the Company and shall remain binding upon any successor of the
Company or transferee of the Company's business.
3. COMPENSATION. Company will pay Nehmen for services performed pursuant to this
Agreement an annual Base Salary for each Contract Year of not less than
$150,000.00. The Base Annual Salary shall be paid in equal monthly or bi-weekly
installments in arrears in accordance with Company's regular pay schedule.
The Company will provide Nehmen with any medical, disability or life
insurance benefits in accordance with any such plans provided by the Company for
other employees and for which Nehmen is eligible.
Nehmen will be reimbursed for any necessary and reasonable expense
incurred by him in performing the services requested of him by the Company
during the term of employment. At least monthly, Nehmen will submit such records
and paid bills supporting the amount of the expenses incurred and to be
reimbursed as the Company shall reasonably require.
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<PAGE>
Company will pay and/or withhold for FICA, income and other employee
taxes on compensation payable to Nehmen hereunder as required by law.
4. VACATION. Nehmen shall be entitled to a vacation during each Contract Year
for the term of employment hereunder of similar length and taken under similar
circumstances as the vacation taken by other members of the Company's senior
management team.
5. TERMINATION; SEVERANCE BENEFITS.
A. Termination. Nehmen's employment by the Company hereunder shall be
terminated as follows:
1. Death. Nehmen's employment hereunder shall terminate upon
his death.
2. Disability. Nehmen's employment hereunder shall terminate
upon his "Disability". "Disability" for these purposes shall mean Nehmen's
inability through physical or mental illness or other cause to perform any of
the material duties assigned to him by the Company for a period of one hundred
and eighty (180) days or more within any twelve consecutive calendar months.
Nehmen will receive the compensation provided for hereunder during any period of
sickness or disability prior to the termination of his employment;
3. For Cause. The Company may terminate Nehmen's employment
hereunder for "Cause". For purposes of this Agreement, the Company shall have
"Cause" to terminate Nehmen's employment hereunder upon (i) a finding by the
Board that he has materially harmed the Company through a material act of
dishonesty in the performance of his duties hereunder, (ii) his conviction of a
felony involving moral turpitude, fraud or embezzlement, or (iii) a finding by
the Board of Directors that Nehmen has failed to perform his material duties
under this Agreement (other than a failure due to disability) after written
notice specifying the failure and a reasonable opportunity to cure (it being
understood that if his failure to perform is not of a type requiring a single
action to cure fully, that he may commence the cure promptly after such written
notice and thereafter diligently prosecute such cure to completion).
4. Good Reason. Nehmen may terminate his employment hereunder
for "Good Reason". Nehmen shall have "Good Reason" to terminate his employment
in the event of any material adverse change in his job title, duties,
responsibilities, perquisites granted hereunder, or authority without his
consent, the relocation of the Company headquarters outside of the Greensboro,
North Carolina metropolitan area without his consent, or a material breach of
this Employment Agreement by the Company.
5. Without Cause. With Board approval, the Company may
terminate Nehmen's employment hereunder without Cause upon 30 days notice.
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<PAGE>
6. Resignation without Good Reason. Nehmen may terminate his employment
without Good Reason upon 90 days written notice to the Company.
B. Notice of Termination. Any termination of Nehmen's employment
hereunder by the Company or Nehmen (other than by reason of Nehmen's death)
shall be communicated by a notice of termination to the other party hereto. For
purposes of this Agreement, a "notice of termination" shall mean a written
notice which (i) indicates the specific termination provision in the Agreement
relied upon, (ii) sets forth in reasonable detail any facts and circumstances
claimed to provide a basis for termination of Nehmen's employment under the
provision indicated and (iii) specifies the effective date of the termination.
C. Severance Benefits. Upon termination of Nehmen's employment, Nehmen
shall be entitled to receive only the compensation accrued but unpaid for the
period of employment prior to the date of such termination of employment and
shall not be entitled to additional compensation except as follows:
1. Termination Without Cause or For Good Reason. If Nehmen's
employment shall be terminated by the Company without Cause (pursuant to Section
5.A.5) or by Nehmen for Good Reason (pursuant to Section 5.A.4), the Company
shall continue to pay Nehmen his Annual Base Salary and to provide all Benefits
to Nehmen provided for under this Agreement until the date that his employment
is terminated. In addition, the Company shall pay Nehmen as liquidated damages
an amount equal to three (3) times the Annual Base Salary payable to him for the
Contract Year in which his employment is terminated. Such amount shall be paid
at the same time and in the same manner as the Annual Base Salary would have
been paid if Nehmen's employment had not terminated.
2. Termination by Death or Disability. If Nehmen's employment
is terminated by reason of his death or Disability, the Company will pay Nehmen
(or, in the event of his death, his wife, Susan Nehmen or, if she is not living,
his estate) as severance pay, an amount equal to his Base Annual Salary that he
was receiving when his employment was terminated. Such amount shall be paid in
12 equal monthly installments beginning with the first calendar month after the
month in which the employment is terminated. If Nehmen's employment is
terminated after the tenth anniversary of the Commencement Date because of his
death or disability during any extension of the term, the death or disability
severance benefit provided in this paragraph shall not be paid.
3. Termination For Cause of Without Good Reason. If Nehmen's
employment hereunder is terminated by the Company for Cause or by Nehmen without
Good Reason, Nehmen shall not be paid any severance compensation.
6. CONSULTING SERVICES. Prior to the Commencement Date, Nehmen will provide
consulting services for the Company as requested for a per diem payment of
$750.00 for any portion of any day in which Nehmen is required to spend more
than 5 hours in performing such
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<PAGE>
consulting services. The Company will also pay or reimburse Nehmen for the
necessary and reasonable expenses incurred in performing such consulting
services in the same manner as provided in Section 3 of this Agreement
7. COVENANT AGAINST COMPETITION AND NON-DISCLOSURE.
A. Covenant Against Competition. Nehmen covenants and agrees that
during Nehmen's employment and for a period of one year after he ceases to be
employed by Company, Nehmen shall not, directly or indirectly, as an employee,
employer, shareholder, proprietor, partner, principal, agent, consultant,
advisor, director, officer, or in any other capacity, engage in the development
or operation of a retail shopping facility within a radius of one hundred (100)
miles of any retail shopping facility owned or operated by the Company at any
time during Nehmen's employment hereunder or in any state in which the Company
owns or operates a retail shopping facility or within a radius of one hundred
(100) miles of any site for which Company has made an offer to purchase for the
development of a retail shopping facility by the Company prior to the date of
the termination of Nehmen's employment. Notwithstanding the foregoing, Nehmen
may continue to perform the consulting services permitted by the third paragraph
of Section 1 of this Agreement.
B. Disclosure of Information. Nehmen acknowledges that in and as a
result of his employment hereunder, he will be making use of, acquiring and/or
adding to confidential information of a special and unique nature and value
relating to such matters as financial information, terms of leases, terms of
financing, financial condition of tenants and potential tenants, sales and
rental income of shopping centers and other specifics about Company's
development, financing, construction and operation of retail shopping
facilities. Nehmen covenants and agrees that he shall not, at any time during or
following the term of his employment, directly or indirectly, divulge or
disclose for any purpose whatsoever any such confidential information that has
been obtained by, or disclosed to, him as a result of his employment by Company.
C. Reasonableness of Restrictions.
1. Nehmen has carefully read and considered the foregoing
provision of this Item, and, having done so, agrees that the
restrictions set forth in these paragraphs, including but not limited
to the time period of restriction set forth in the covenant against
competition are fair and reasonable and are reasonably required for the
protection of the interests of Company and its officers, directors and
other employees.
2. In the event that, notwithstanding the foregoing, any of
the provisions of this Item shall be held invalid or unenforceable, the
remaining provisions thereof shall nevertheless continue to be valid
and enforceable as though the invalid or unenforceable parts had not
been included herein. In the
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<PAGE>
event that any provision of this Item relating to the time period
and/or the areas of restriction shall be declared by a court of
competent jurisdiction to exceed the maximum time period or areas such
court deems reasonable and enforceable, the time period and/or areas of
restriction deemed reasonable and enforceable by the court shall become
and thereafter be the maximum time period and/or areas.
D. Consideration. The covenants against competition and non-disclosure
by Nehmen in this Item are made in consideration of the Company's agreement to
employ Nehmen upon the terms and conditions set forth herein. Such covenants
against competition and of non-disclosure by Nehmen in this Item constitute the
material inducement to Company to enter into this Agreement, to make
confidential information developed by Company available to Nehmen and to pay the
salary and bonuses provided for Nehmen herein.
E. Company's Remedies. Nehmen covenants and agrees that if he
shall violate any of his covenants or agreements contained in this Item 6, then
the Company shall, in addition to any other rights and remedies available to it
at law or in equity, have the following rights and remedies against Nehmen:
1. The Company shall be relieved of any further obligation to
Nehmen under the terms of this agreement; and
2. The Company shall be entitled to an accounting and
repayment of all profits, compensation, commissions, remunerations or
other benefits that Nehmen, directly or indirectly, has realized and/or
may realize as a result of, growing out of or in connection with, any
such violation.
The foregoing rights and remedies of the Company shall be cumulative
and the election by the Company to exercise any one or more of them shall not
preclude the Company's exercise of any other rights described above or otherwise
available under applicable principals of law or equity.
8. NOTICES.
Any notice required or permitted to be given pursuant to this Agreement
shall be hand delivered or sent by certified mail, return receipt requested, to
the address of the party to whom it is directed as set forth below:
Company: Tanger Properties Limited Partnership
c/o Stanley K. Tanger
P.O. Box 29168
Greensboro, N.C. 27402
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<PAGE>
Nehmen: Joe Nehmen
7404 York Drive
Clayton, Missouri 63105
IN WITNESS WHEREOF, the parties have executed or caused this Agreement
to be executed as of the day and year first above written.
TANGER PROPERTIES LIMITED PARTNERSHIP, a
North Carolina Limited Partnership
By: TANGER FACTORY OUTLET CENTERS, INC.,
it's sole general partner
By: ____________________________
STANLEY K. TANGER, Chief
Executive officer
_______________________________ (SEAL)
JOSEPH NEHMEN
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AMENDMENT NO. 2 TO CREDIT AGREEMENT
AMENDMENT NO. 2 TO CREDIT AGREEMENT (this "Second Amendment'), dated as
of May 31, 1996, among TANGER PROPERTIES LIMITED PARTNERSHIP, a North Carolina
limited partnership, as the Borrower (the "Borrower"), TANGER FACTORY OUTLET
CENTERS, INC., a North Carolina corporation and the sole general partner of the
Borrower (the "General Partner"), NATIONAL WESTMINSTER BANK Plc., a bank
organized under the laws of England, acting through its New York branch, as the
Agent and Issuing Bank, and NATIONAL WESTMINSTER BANK Plc., a bank organized
under the laws of England, acting through its New York and Nassau branches, and
the other Lenders listed on Exhibit A attached to the Original Agreement
(defined below) as amended from time to time (collectively, the "Lenders").
Unless otherwise defined herein, capitalized terms used in this Second Amendment
shall have the meanings assigned to those terms in the Agreement.
W I T N E S S E T H
WHEREAS, the parties have entered into that certain Credit Agreement,
dated as of January 15, 1996 (the "Original Agreement") as amended by that
certain Amendment No. 1 to Credit Agreement, dated as of February 20, 1996 (the
"First Amendment;" and together with the Original Agreement referred to herein
as the "Agreement");
WHEREAS, the parties hereto desire to amend the Agreement to revise the
covenants contained therein, all on the terms set forth herein;
NOW, THEREFORE, the parties hereto agree as follows:
ARTICLE I
Amendment
Section 1.1 The following definitions are added to Section 1.1 of the
Agreement:
"Annual Service Charge" as of any date means the
amount which is expensed or capitalized in the
immediately preceding four fiscal quarter period for
interest on Indebtedness, excluding amounts relating
to the amortization of deferred financing costs.
"Consolidated Income Available for Debt Service" for
any period means the Consolidated Net Income of the
Borrower and its Subsidiaries (i) plus amounts which
have been deducted for (a) interest on Indebtedness
of the Borrower and its Subsidiaries, (b) provision
for taxes of the Borrower and it Subsidiaries, (c)
amortization of debt discount, (d) depreciation and
amortization, (e) the effect of any noncash charge
resulting from a change in accounting principles in
determining Consolidated Net Income for such period,
(f) amortization of deferred charges, and (g)
provisions for or realized losses on Properties and
(ii) less amounts which have been included for gains
on Properties.
"Consolidated Net Income" for any period means the
amount of consolidated net income (or loss) of the
Borrower and its Subsidiaries for such period
determined on a consolidated basis in accordance with
GAAP.
"Net Cash Proceeds" means the proceeds of any
issuance or sale of Capital Stock or options,
warrants or rights to purchase Capital Stock, in the
form of cash or cash equivalents, including payments
in respect of deferred payment obligations when
received in the form of, or stock or other assets
when disposed
1
<PAGE>
for, cash or cash equivalents (except
to the extent that such obligations are financed or
sold with recourse to the Borrower or any
Subsidiary), net of attorney's fees, accountant's
fees and brokerage, consultation, underwriting and
other fees and expenses actually incurred in
connection with such issuance or sale and net of
taxes paid or payable as a result thereof.
"Permitted Indebtedness" means Indebtedness of the
Borrower, the General Partner or any Subsidiary owing
to any Subsidiary, the General Partner or the
Borrower pursuant to an intercompany note, provided
that such Indebtedness is expressly subordinated in
right of payment to the Agreement; PROVIDED FURTHER
that any disposition, pledge or transfer of such
Indebtedness to a Person (other than the Borrower or
another Subsidiary) shall be deemed to be an
incurrence of such Indebtedness by the Borrower, the
General Partner or a Subsidiary, as the case may be,
and not be Permitted Indebtedness as defined herein.
"Secured Indebtedness" means any Indebtedness secured
by any mortgage, pledge, lien, charge, encumbrance or
security interest of any kind upon any Properties of
the Borrower or any Subsidiary.
"Total Assets" as of any date means the sum of (i)
the Undepreciated Real Estate Assets and (ii) all
other assets of the Borrower and its Subsidiaries on
a consolidated basis determined in accordance with
GAAP (but excluding intangibles and accounts
receivable).
"Undepreciated Real Estate Assets" as of any date
means the cost (original cost plus capital
improvements) of real estate assets of the Borrower
and its Subsidiaries on such date, before
depreciation and amortization, determined on a
consolidated basis in accordance with GAAP.
To the extent, if any, terms defined in the Agreement
are inconsistent with the definitions set forth
above, the definitions set forth above shall control.
Section 1.2 Section 5.3 (b) of the Agreement is hereby deleted and
replaced in its entirety by the following:
(b) Limitations on Incurrence of Indebtedness.
(i) Create, incur, assume or suffer to exist any
Indebtedness, other than Permitted Indebtedness,
if, immediately after giving effect to the
incurrence of such additional Indebtedness, the
aggregate principal amount of all outstanding
Indebtedness of the Borrower, the General
Partner and its Subsidiaries on a consolidated
basis determined in accordance with GAAP is
greater than 60% of the sum of (i) Total Assets
as of the end of the calendar quarter covered in
the Borrower's Annual Report on Form 10-K or
Quarterly Report on Form 10-Q, as the case may
be, most recently filed with the SEC prior to
the incurrence of such additional Indebtedness
and (ii) any increase in Total Assets since the
end of such quarter, including, without
limitation, any increase in Total Assets
resulting from the incurrence of such additional
Indebtedness (such increase together with the
Total Assets being referred to as the "Adjusted
Total Assets').
(ii) Create, incur, assume or suffer to exist
any Indebtedness if, for the period consisting
of the four consecutive fiscal quarters most
recently
2
<PAGE>
ended prior to the date on which such
additional Indebtedness is to be incurred, the
ratio of Consolidated Income Available for Debt
Service to the Annual Service Charge shall have
been less than 2.0 to 1, on a pro forma basis
after giving effect to the incurrence of such
Indebtedness and to the application of the
proceeds therefrom, and calculated on the
assumption that (i) such Indebtedness and any
other Indebtedness incurred by the Borrower, the
General Partner or its Subsidiaries since the
first day of such four-quarter period and the
application of the proceeds therefrom, including
to refinance other Indebtedness, had occurred at
the beginning of such period, (ii) the repayment
or retirement of any other Indebtedness by the
Borrower, the General Partner or its
Subsidiaries since the first day of such
four-quarter period had been incurred, repaid or
retired at the beginning of such period (except
that, in making such computation, the amount of
Indebtedness under any revolving credit facility
shall be computed based upon the average daily
balance of such Indebtedness during such
period), (iii) any income earned as a result of
any increase in Adjusted Total Assets since the
end of such four-quarter period had been earned,
on an annualized basis, during such period, and
(iv) in the case of an acquisition or
disposition by the Borrower, the General Partner
or any Subsidiary of any asset or group of
assets since the first day of such four-quarter
period, including, without limitation, by
merger, stock purchase or sale, or asset
purchase or sale, such acquisition or
disposition or any related repayment of
Indebtedness had occurred as of the first day of
such period with the appropriate adjustments
with respect to such acquisition or disposition
being included in such pro forma calculation.
(iii)In addition to the other limitation set forth
in this Section 5.3 (b), create, incur, assume
or suffer to exist any Secured Indebtedness,
whether owned at the date hereof or hereafter
acquired, if, immediately after giving effect
to the incurrence of such additional Secured
Indebtedness, the aggregate principal amount of
all outstanding Secured Indebtedness of the
Borrower, the General Partner and its
Subsidiaries on a consolidated basis is greater
than 40% of the Adjusted Total Assets.
(iv) For the purposes of this Section 5.3(b),
Indebtedness shall be deemed to be "incurred"
by the Borrower, the General Partner or its
Subsidiaries on a consolidated basis whenever
the Borrower, the General Partner and its
Subsidiaries on a consolidated basis shall
create, assume, guarantee or otherwise become
liable in respect thereof.
Section 1.3 Section 5.3 (c) of the Agreement is hereby deleted
in its entirety.
Section 1.4 Section 5.3 (e) of the Agreement is hereby deleted
and replaced in its entirety by the following:
(e) Restriction on Dividends and Other Distributions.
Make any distribution, by reduction of capital or
otherwise (other than distributions payable in
securities evidencing interests in the Borrower's
capital for the purposes of acquiring interests in
real property or otherwise) unless, immediately after
giving pro forma effect to such distribution, (a) no
default hereunder or event of default hereunder or
under any mortgage, indenture or instrument under
which there may be issued, or by which there may be
secured
3
<PAGE>
or evidenced, any Indebtedness of the Borrower, the
General Partner or any Subsidiary shall have occurred
and be continuing and (b) the aggregate sum of all
distributions made after the date hereof shall not
exceed the sum of (i) 95% of the aggregate cumulative
Funds from Operations of the Borrower accrued on a
cumulative basis from the date hereof until the end
of the last fiscal quarter prior to the contemplated
payment, and (ii) the aggregate Net Cash Proceeds
received by the Borrower after the date hereof from
the issuance and sale of Capital Stock of the
Borrower, the General Partner or any Subsidiary to
the extent such proceeds are contributed to the
Borrower; provided, however, that the foregoing
limitation shall not apply to any distribution or
other action which is necessary to maintain the
General Partner's status as a REIT under the Code, if
the aggregate principal amount of all outstanding
Indebtedness of the General Partner and the Borrower
on a consolidated basis at such time is less than 60%
of Adjusted Total Assets.
Notwithstanding the foregoing, the Borrower will not
be prohibited from making the payment of any
distribution within 30 days of the declaration
thereof if at such date of declaration such payment
would have complied with the provisions of the
immediately preceding paragraph.
Section 1.5 Except as expressly set forth herein, all terms, conditions
and provisions of the Agreement shall remain unchanged and in full force and
effect and are ratified and reaffirmed in all respects.
ARTICLE II
Miscellaneous
Section 2.1 This Second Amendment may be executed in any number of
counterparts and by the different parties hereto on separate counterparts, each
of which when executed and delivered shall be an original, but all of which
shall together constitute one and the same instrument.
Section 2.2 This Second Agreement and the Agreement and the other Loan
Documents constitute the entire agreement of the parties with respect to the
subject matter hereof and thereof, and all prior discussions, negotiations, term
sheets, commitment letters, agreements, correspondence and document drafts with
respect to such matters are merged herein and therein. Neither the Lenders nor
any employee of the Lenders has been authorized to make any representation or
agreement upon which the Borrower or General Partner or their respective
Affiliates may rely unless such matter is set forth in this Second Agreement or
the other Loan Documents.
Section 2.3 The Borrower hereby agrees to, promptly upon the request of
the Lenders, execute and deliver to the Lenders such additional documents and to
provide such additional information as the lenders may reasonably require to
carry out or confirm the terms of this Second Amendment or the other Loan
Documents.
IN WITNESS WHEREOF, the parties hereto have caused their duly
authorized officers to execute and deliver this Second Amendment as of the date
first written above.
4
<PAGE>
TANGER PROPERTIES LIMITED
PARTNERSHIP
By its General Partner, Tanger Factory
Outlet Centers, Inc.
By: /s/ Stanley K. Tanger
Name: Stanley K. Tanger
Title: Chairman of the Board and
Chief Executive Officer
TANGER FACTORY OUTLET CENTERS, INC.
By: /s/ Stanley K. Tanger
Name: Stanley K. Tanger
Title: Chairman of the Board and
Chief Executive Officer
NATIONAL WESTMINSTER BANK Plc.,
New York Branch,
individually and as the
Agent and Issuing Bank
By: /s/ Craig A. Braun
Name: Craig A. Braun
Title: Vice President
NATIONAL WESTMINSTER BANK Plc.,
Nassau Branch
By: /s/ Craig A. Braun
Name: Craig A. Braun
Title: Vice President
5
<PAGE>
=================================================================
LOAN AGREEMENT
dated as of
October 14, 1996
Between
TANGER PROPERTIES LIMITED PARTNERSHIP
and
FIRST NATIONAL BANK OF COMMERCE
=================================================================
1
LOAN AGREEMENT
THIS LOAN AGREEMENT dated as of October 14, 1996, by and between TANGER
PROPERTIES LIMITED PARTNERSHIP, a North Carolina limited partnership (which,
together with its Subsidiaries from time to time, is referred to as the
"Debtor"), FIRST NATIONAL BANK OF COMMERCE (sometimes herein referred to as
"First NBC"), a national banking association (the "Agent"), as Agent for Banks,
and FIRST NATIONAL BANK OF COMMERCE, a national banking association and the
other lenders listed on Exhibit "A" attached hereto, as amended from time to
time (each a "Bank" and collectively the "Banks").
W I T N E S S E T H:
WHEREAS, Debtor applied for the issuance of a commitment for a line of
credit, and Banks have agreed to provide such credit facility to Debtor subject
to the terms and conditions of this Agreement.
NOW, THEREFORE, in consideration of the mutual covenants hereunder set
forth, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
Section 1.1. Defined Terms. As used in this Agreement, and unless the
context requires a different meaning, the following terms have the meanings
indicated:
"Adjusted Unencumbered Assets" shall mean 100% of Debtor's
non-operating cash and cash equivalents which are not subject
to any lien, or security interest, plus 60% of Debtor's income
earning Undepreciated Real Estate Assets which are not subject
to any Encumbrance.
"Affiliate" of any specified Person means (i) any other Person
directly or indirectly controlling or controlled by or under
direct or indirect common control with such specified Person
or (ii) any other Person that owns, directly or indirectly,
10% or more of such specified Person's Voting Stock or any
executive officer, director, manager or trustee of any such
specified Person or other Person or, with respect to any
natural person, any person having a relationship with such
person by blood, marriage or adoption not more remote than
first cousin. For the purposes of this definition, "control",
when used with respect to any specified Person, means the
power to direct
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the management and policies of such Person, directly or
indirectly, whether through the ownership of Voting Stock, by
contract or otherwise; and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.
"Agency Fee" shall mean an annual sum as set forth on Exhibit
"B" hereto, as amended or modified from time to time.
"Agent" shall mean First National Bank of Commerce, a national
banking association, and its successors as agent for the Banks
hereunder.
"Agreement" shall mean this Loan Agreement, as the same may
from time to time be amended, modified or supplemented and in
effect.
"Applicable Increment" shall mean, with respect to the
applicable Interest Period, the number of basis points to be
added to the LIBOR Rate to calculate the LIBOR Adjusted Rate,
as determined under Section 2.14.
"Applicable Percentage" shall mean, as to each Bank, the
percentage obtained by dividing (a) the sum specified in the
Commitment of that Bank by (b) the Commitment Amount, and
multiplying the resulting quotient by 100, as such percentage
may be adjusted by assignments permitted by Section 9.8 or by
amendments to this Agreement to change such Bank's Commitment
or the aggregate of all Banks' Commitments. The initial
Applicable Percentage of each Bank is set forth opposite the
name of that Bank on Exhibit "A".
"Banks" shall mean the banks and other financial institutions
now or hereafter parties to this Agreement for whom Agent
serves as Agent in accordance with the terms of this
Agreement.
"Business Day" means a day other than a Saturday, Sunday or
legal holiday for commercial banks under the laws of the State
of Louisiana or a day on which national banks are authorized
to be closed in New Orleans, Louisiana, and if such day
relates to a Conversion to, or Continuation of, or Advance
subject to, the LIBOR Adjusted Rate, shall also be a day on
which dealings in Dollar deposits are carried out in the
interbank market selected by Agent for purposes of setting the
LIBOR Rate.
"Centers" shall mean Tanger Factory Outlet Centers, Inc., a
North Carolina corporation, the sole general partner of
Debtor.
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<PAGE>
"Commitment" shall mean the agreement by each Bank to Debtor
to make Loans in accordance with the provisions of Article II
hereof in an aggregate principal amount not to exceed such
Bank's Applicable Percentage of the Commitment Amount, and the
term "Commitments" shall mean the aggregate amount specified
in the Commitment of all Banks.
"Commitment Amount" shall mean the amount not less than
$15,000,000.00 as set forth on Exhibit "C" hereto, as amended
from time to time.
"Continue", "Continuation" and "Continued" shall mean the
continuation pursuant to Section 2.7 hereof of the LIBOR
Adjusted Rate or the Prime Rate accruing on the Notes from one
Interest Period to the next Interest Period.
"Convert", "Conversion" and "Converted" shall mean a
conversion pursuant to Section 2.7 hereof of the interest rate
then accruing on the Notes to the LIBOR Adjusted Rate or to
the Prime Rate.
"Debt" shall mean any indebtedness, whether or not contingent,
in respect of (i) borrowed money evidenced by bonds, notes,
debentures or similar instruments, (ii) indebtedness secured
by any Encumbrance existing on property, (iii) the
reimbursement obligations, contingent or otherwise, in
connection with any letters of credit actually issued or
amounts representing the balance deferred and unpaid of the
purchase price of any property except any such balance that
constitutes an accrued expense or trade payable or (iv) any
lease of property which would be reflected on a consolidated
balance sheet as a capitalized lease in accordance with GAAP,
in the case of items of indebtedness under (i) through (iii)
above to the extent that any such items (other than letters of
credit) would appear as a liability on a consolidated balance
sheet in accordance with GAAP, and also includes, to the
extent not otherwise included, any obligation to be liable
for, or to pay, as obligor, guarantor or otherwise (other than
for purposes of collection in the ordinary course of
business), indebtedness of another person.
"Debt Service" shall mean regularly scheduled principal and
interest payments, exclusive of balloon maturity payments on
all Liabilities, and the current portion of all long-term
leases or lease agreements required to be capitalized under
GAAP.
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<PAGE>
"Debt Service Coverage Ratio" as calculated quarterly for the
most recent four quarters then ending shall mean (a) EBITDA
divided by (b) Debt Service.
"Debtor" shall mean Tanger Properties Limited Partnership, a
North Carolina limited partnership, together with its
successors and assigns and together with its Subsidiaries from
time to time.
"Default" shall mean an event which with the giving of notice
or the lapse of time (or both) would constitute an Event of
Default hereunder.
"Dollars" and "$" shall mean lawful money of the United States
of America.
"EBITDA" shall mean Debtor's income before minority interest
plus interest, taxes, depreciation, and amortization, all
determined in accordance with GAAP consistently applied,
calculated quarterly on a rolling four-quarters basis
"Encumbrances" shall mean individually, collectively and
interchangeably any and all presently existing and/or future
mortgages or liens (other than those that are fully bonded by
deposit of cash or by commercial surety reasonably acceptable
to Agent) or similar charges, contractual and/or statutory
charges on real property.
"Environmental Laws" shall mean the Comprehensive
Environmental Response, Compensation, and Liability Act of
1980, as amended, 42 U.S.C. Section 9601, et seq. ("CERCLA"),
the Superfund Amendments and Reauthorization Act of 1986, Pub.
L. No. 99-499 ("SARA"), the Hazardous Materials Transportation
Act, 49 U.S.C. Section 1801, et seq., the Resource
Conservation and Recovery Act, 49 U.S.C. Section 6901, et
seq., any similar laws or laws relating to the environment
enacted in any State in which Debtor owns real properties, and
any applicable Governmental Requirements or regulations
adopted pursuant to any of the foregoing.
"ERISA" shall mean the Employee Retirement Income Security Act
of 1974, as amended from time to time.
"Eurocurrency Liabilities" shall have the meaning assigned to
that term in Regulation D of the Board of Governors of the
Federal Reserve System, as in effect from time to time.
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<PAGE>
"Eurodollar Rate Reserve Percentage" of each Bank for any
Interest Period means the reserve percentage applicable during
such Interest Period (or if more than one such percentage
shall be so applicable, the daily average of such percentages
for those days in such Interest Period during which any such
percentage shall be so applicable) under regulations issued
from time to time by the Board of Governors of the Federal
Reserve System (or any successor) for determining the maximum
reserve requirement (including, without limitation, any
emergency, supplemental or other marginal reserve requirement)
for member banks of the Federal Reserve System with deposits
exceeding $1,000,000,000 with respect to liabilities or assets
consisting of or including Eurocurrency Liabilities having a
term equal to such Interest Period.
"Event of Default" shall mean individually, collectively and
interchangeably any of the Events of Default set forth below
in Section 7.1 hereof.
"Funds from Operations" for any period shall mean the Net
Income of the Debtor and its Subsidiaries for such period
before giving effect to depreciation and amortization uniquely
significant to real estate, gains or losses from extraordinary
items, gains or losses on sales of real estate, gains or
losses with respect to the disposition of investments in
marketable securities and any provision/benefit for income
taxes for such period, plus the allocable portion, based on
the Debtor's ownership interest, of funds from operations of
unconsolidated joint ventures, all determined on a consistent
basis.
"GAAP" shall mean, at any time, accounting principles
generally accepted in the United States as then in effect.
"Governmental Requirement" shall mean any applicable state,
federal or local law, statute, ordinance, code, rule,
regulation, order or decree.
"Guaranty" shall mean an unconditional continuing guaranty of
the Indebtedness executed by Centers.
"Hazardous Materials" shall mean
(i) any "hazardous waste" in quantities as defined by either
the Resource Conservation and Recovery Act of 1976 (42 U.S.C.
ss. 6901 et seq.), or any similar laws or laws relating to the
environment enacted in any State in which Debtor owns real
property, as amended from time to time, and regulations
promulgated thereunder;
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<PAGE>
(ii) any "hazardous substance" in quantities as defined by
either the Comprehensive Environmental Response, Compensation
and Liability Act of 1980 (42 U.S.C. ss. 9601 et seq.)
("CERCLA") or any similar laws or laws relating to the
environment enacted in any State in which Debtor owns real
property, as amended from time to time, and regulations
promulgated thereunder;
(iii) any "regulated substance" as that term is defined
under the Resource Conservation and Recovery Act, 42 U.S.C.
ss. 6991 et seq.;
(iv) asbestos in violation of Governmental Requirement;
(v) polychlorinated biphenyls in violation of Governmental
Requirement;
(vi) any substance the presence of which on Debtor's
properties is prohibited by Governmental Requirement from time
to time in force and effect relating to such properties; and
(vii) any other substance which by any such rule or
regulation requires special handling in its collection,
storage, treatment or disposal.
"Hazardous Materials Contamination" shall mean the
contamination in quantities in violation of any applicable
Governmental Requirement (whether presently existing or
hereafter occurring) in, on, or under any of the Debtor's
properties, including the improvements thereon, by Hazardous
Materials.
"Indebtedness" shall mean, at any time, the indebtedness of
Debtor evidenced by the Notes in principal, interest, costs,
expenses and reasonable attorneys' fees and all other fees and
charges, together with all other indebtedness and costs and
expenses for which Debtor is responsible under this Agreement
or any of the Related Documents.
"Interest Period" shall mean in connection with each Advance
for which the LIBOR Adjusted Rate is applicable, a period of
one, two, three, four or six months as selected by the Debtor
in the notice of borrowing, or to Continue, or to Convert for
such Advance subject to the following:
(i) the initial Interest Period for any Advance shall
commence on
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the date of such Advance;
(ii) if any Interest Period would otherwise expire on a
day which is not a Business Day, such Interest Period shall
expire on the next succeeding Business Day, provided that if
any Interest Period in respect of an Advance would otherwise
expire on a day that is not a Business Day but is a day of the
month after which no further Business Day occurs in such
month, such Interest Period shall expire on the next preceding
Business Day;
(iii) any Interest Period in respect of an Advance which
begins on the last Business Day of a calendar month (or on a
day for which there is no numerically corresponding day in the
calendar month at the end of such Interest Period) shall,
subject to clause (iv) below, end on the last Business Day of
a calendar month;
(iv) no Interest Period shall extend beyond the Termination
Date.
"LIBOR Event" shall have the meaning specified in Section
2.8(a) hereof.
"LIBOR Adjusted Rate" shall mean with respect to the
applicable Interest Period, the per annum rate of interest
equal to the Applicable Increment added to the LIBOR Rate.
"LIBOR Rate" shall mean with respect to the applicable
Interest Period, the annual rate of interest (rounded upward
to the nearest whole multiple of 1/100 of 1%, if such rate is
not such a multiple) determined by Agent, at or before 10:00
a.m. New Orleans time on the first day of such Interest
Period, to be the annual rate of interest at which deposits of
Dollars are offered by prime banks in whatever London
interbank market may be selected by Agent in its sole
discretion, acting in good faith, at the time of determination
and in accordance with the then existing practice in such
market for delivery on the first day of such Interest Period
in immediately available funds and having a maturity equal to
such Interest Period in an amount equal (or as nearly equal as
may be) to the applicable Loans.
"LIBOR Rate Loans" shall mean the portion of the Loans bearing
interest calculated on the basis of the LIBOR Adjusted Rate.
"Loans" shall mean collectively and individually the loans
made by Banks to Debtor pursuant to this Agreement.
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<PAGE>
"Majority Banks" shall mean Banks whose combined Applicable
Percentages is greater than or equal to fifty percent (50%) of
the aggregate amount of Commitments.
"Material Adverse Change" shall mean, with respect to Debtor,
an event which causes a material adverse effect on the
business, assets, operations or condition (financial or
otherwise) of Debtor.
"Net Income" for any period shall mean the amount of
consolidated net income (or loss) of the Debtor and its
Subsidiaries for such period determined on a consolidated
basis in accordance with GAAP.
"Net Operating Income" for any period shall mean Net Income of
the Debtor (i) plus amounts which have been deducted for (a)
interest on Debt of the Debtor (b) provision for taxes of the
Debtor based on income, (c) amortization of debt discount, (d)
depreciation and amortization, (e) the effect of any noncash
charge resulting from a change in accounting principles in
determining Net Income for such period, (f) amortization of
deferred charges and (g) provisions for or realized losses on
properties and (ii) less amounts which have been included for
gains on properties.
"Net Worth" shall mean, at any time, the sum obtained by
subtracting Total Liabilities from Total Assets.
"Notes" shall mean those certain promissory notes made by
Debtor evidencing the Loans, in the form of Exhibit "D"
hereto, together with any and all extensions, renewals,
modifications and substitutions therefor.
"Person" means any individual, partnership, firm, corporation,
association, joint venture, joint stock company, trust,
unincorporated organization or other entity, or any
governmental or political subdivision or agency, department,
or instrumentality thereof.
"Prime Rate" shall mean the per annum rate of interest equal
to 1/4% less than the annual rate of interest established from
time to time by Citibank, N.A. as its "prime" or "base"
lending rate, whether or not that rate is published, and which
is not necessarily the lowest rate charged by such bank, such
rate to be adjusted automatically on and as of the effective
date of any change in such Prime Rate. In the event Citibank,
N.A. fails or ceases to publish a prime or base rate or is
dissolved, merged, or otherwise is not in existence, Agent
shall select another large bank in New York City as the basis
for computation of
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<PAGE>
the Prime Rate.
"Prime Rate Loans" shall mean the portion of the Loans bearing
interest calculated on the basis of the Prime Rate.
"Related Documents" shall mean and include individually,
collectively, interchangeably and without limitation the
Notes, the Guaranty, and all promissory notes, credit
agreements, loan agreements, guaranties, and all other
instruments and documents, whether now or hereafter existing,
executed in connection with the Indebtedness.
"Secured Debt" shall mean any Debt secured by any Encumbrance
or by any security interest, lien, privilege, or charge on any
personal property.
"Subsidiaries" shall mean at any date with respect to any
Person all the corporations of which such Person at such date,
directly or indirectly, owns 50% or more of the outstanding
capital stock (excluding directors' qualifying shares) and all
partnerships, limited liability companies, or other entities
of which such Person at such date, directly or indirectly,
owns 50% or more of the partnership, limited liability
company, or other equity interests.
"TL/TA Ratio" shall mean, at any time, the ratio of Total
Liabilities to Total Assets.
"Termination Date" shall mean the earlier to occur of (i) the
date set forth on Exhibit "E" hereto, as amended from time to
time, or (ii) the date of termination of the Loans pursuant to
Article VII hereof.
"Total Assets" shall mean, at any date, the sum of (i)
Undepreciated Real Estate Assets and (ii) all other assets of
Debtor determined in accordance with GAAP (but excluding
intangibles and accounts receivables).
"Total Committed Unsecured Debt" shall mean, at any time, all
of Debtor's unsecured Debt that is outstanding and all Debt
which Debtor has the option (whether or not such option is
subject to the satisfaction of conditions) to borrow or
request be advanced.
"Total Liabilities" shall mean, at any date, the sum, after
eliminating inter-company items, of all liabilities
(including, without limitation, deferred taxes) other than
minority interests, of Debtor at such date,
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determined in accordance with GAAP consistently applied.
"Undepreciated Real Estate Assets" as of any date shall mean
the cost (original cost plus capital improvements) of real
estate assets of the Debtor on such date, before depreciation
and amortization determined in accordance with GAAP.
"Voting Stock" means stock having general voting power under
ordinary circumstances to elect at least a majority of the
board of directors, managers or trustees (or persons
performing similar functions), provided that stock that
carries only the right to vote conditionally on the happening
of an event shall not be considered Voting Stock.
Section 1.2. Accounting Terms. All accounting terms not specifically
defined herein shall be construed in accordance with GAAP, and all financial
data submitted pursuant to this Agreement shall be prepared in accordance with
GAAP.
ARTICLE II
LOANS
Section 2.1. The Commitments. Subject to the terms and conditions of
this Agreement, each Bank agrees, severally but not jointly, to extend credit to
Debtor during the period from the date hereof until the Termination Date by
making Loans (each funding of which is herein referred to as an "Advance", and
collectively as "Advances") pro rata in accordance with such Bank's Applicable
Percentage to Debtor from time to time during the period from the date hereof to
and including the Termination Date; provided, that in the event, at any time,
and from time to time, the sum of outstanding Loans exceeds the Commitment
Amount, Debtor shall prepay the Loans by such an amount to cause the sum of the
Loans outstanding to equal the Commitment Amount. Within the limits of the
Commitments to Debtor hereunder and subject to the terms and conditions of this
Agreement, Debtor may borrow Advances, repay Advances, and reborrow Advances,
and each Bank shall only be obligated to lend Debtor an amount which will not
cause its Applicable Percentage of the Commitment Amount to be exceeded and
which will not cause all Loans to exceed the Commitment Amount.
Section 2.2. The Loans. Debtor's obligation to repay the Loans made by
Banks shall be evidenced by the Notes, one of which shall be payable to the
order of each Bank in the principal sum of its Applicable Percentage of the
Commitment Amount, with a final maturity of the Termination Date and bearing
interest at the applicable LIBOR Adjusted Rate, or the Prime Rate, as set forth
herein as in effect from time to time, and which shall be substantially in the
form of Exhibit "D" hereto.
Section 2.3. Interest. Interest on the Notes shall be payable in
arrears on the fifteenth day of
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each calendar month commencing November 15, 1996, and on the Termination Date.
Interest on the Notes will be computed on a 365/360 simple interest basis.
Interest shall accrue on the unpaid principal amount of the Loans for the period
from and including the Closing Date to the date the Loans shall be paid in full
at the following rates per annum:
(a) during each period a portion of the Loan is subject
to a Prime Rate election by Debtor, at the Prime Rate
from time to time in effect computed on the
outstanding balance of such portion;
(b) during each period a portion of the Loan is subject
to a LIBOR Rate election by Debtor, the LIBOR
Adjusted Rate for such Interest Period computed on
the outstanding balance of such portion.
Notwithstanding the foregoing, Debtor will pay to Banks interest at the
applicable Post-Default Rate as defined in the Notes on any principal of the
Loans, or on any other amount payable by Debtor hereunder to Banks, which shall
not be paid in full when due (whether at stated maturity, by acceleration or
otherwise), for the period from and including the due date thereof to the date
the same is paid in full, which interest shall be due and payable on demand.
Section 2.4. Principal Repayment. Principal and all accrued and unpaid
interest shall be payable on the Termination Date; provided, however, in the
event at any time the aggregate outstanding principal amounts of the Loans to
Debtor causes the Commitment Amount to be exceeded, Debtor shall immediately
prepay the Notes in an amount necessary to cause the aggregate principal amount
of its unpaid Loans to not exceed equal the Commitment Amount.
Section 2.5. Apportionment of Payments.
(a) Aggregate principal and interest payments on Loans shall
be apportioned among all outstanding Loans, in each case proportionately to each
Bank's respective Applicable Percentage. Agent shall promptly distribute to each
Bank, at its address set forth opposite its name on Exhibit "A" hereto or at
such other address as such Bank may request in writing, its Applicable
Percentage of all payments received by Agent and the commitment fees and credit
fees of such Bank when received by Agent pursuant to Section 2.13.
(b) If a Bank shall obtain payment of any principal of or
interest on any Loans made by it under this Agreement, or on other Indebtedness
then due to Bank hereunder, through the exercise of any right of set-off,
banker's lien, counterclaim or similar right, or otherwise, (it being understood
that no such right is granted herein) it shall promptly purchase from the other
Banks participations in the Loans made or other Indebtedness held by the other
Banks in such amounts, and make such other adjustments from time to time as
shall be equitable to the end that all the Banks shall share the benefit of such
payment (net of any expenses which may be incurred by such Bank in obtaining or
preserving such benefit) pro rata, based on said
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Bank's Applicable Percentage in accordance with the unpaid principal and
interest on the Indebtedness then due to each of them. To such end all the Banks
shall make appropriate adjustments among themselves (by the resale of
participations sold or otherwise) if such payment is rescinded or must otherwise
be restored. The Debtor agrees, to the fullest extent it may effectively do so
under applicable law, that any Bank so purchasing a participation in the Loans
made or other Indebtedness held by other Banks may exercise all rights with
respect to such participation as fully as if such Bank were a direct holder of
Loans or other Indebtedness in the amount of such participation. Nothing
contained herein shall require any Bank to exercise any such right or shall
affect the right of any Bank to exercise, and retain the benefits of exercising,
any such right with respect to any obligation of the Debtor other than the
Indebtedness.
Section 2.6. Additional Interest. Debtor shall pay to Banks, so long as
Banks shall be required under regulations of the Board of Governors of the
Federal Reserve System to maintain reserves with respect to liabilities or
assets consisting of or including Eurodollar Liabilities, additional interest on
the unpaid principal amount of the LIBOR Rate Loans which shall be determined
based on reserves actually maintained by Banks pursuant to the requirements
imposed by Regulation D of such Board of Governors with respect to Eurocurrency
Liabilities, for so long as any LIBOR Rate Loans are outstanding at an interest
rate per annum equal at all times to the remainder obtained by subtracting (i)
the LIBOR Rate for the Interest Period in effect from (ii) the rate obtained by
dividing such LIBOR Rate by a percentage equal to 100% minus the Eurodollar Rate
Reserve Percentage of Banks for such Interest Period, payable promptly, and in
any event within 10 Business Days after Debtor receives notice of such
additional interest from Agent as provided below. Such additional interest
payable to Banks shall be determined by Agent after the end of each Interest
Period and Agent shall notify Debtor of such additional amount (such notice to
include the calculation of such additional interest, which calculation shall be
conclusive in the absence of error). Notwithstanding the above, such additional
interest shall be no greater than the amount which would be payable if Agent
were the sole participant in the Loans for the Commitment Amount.
Section 2.7. Rate and Interest Period Elections. Not later than 3:00
p.m. (New Orleans time) on the day before the date of Debtor's request for an
Advance, Debtor shall provide Agent with a written notice specifying the Prime
Rate or the LIBOR Adjusted Rate as the applicable interest rate to accrue under
portions of the Loan in an amount not less than that set forth on Exhibit "F".
In the event Debtor chooses the LIBOR Adjusted Rate it shall also designate the
applicable Interest Period of one, two, three, four, or six months. If for any
reason Debtor fails to select an interest rate for all or any portion of the
Loan or fails to continue the LIBOR Adjusted Rate beyond the Interest Period
selected, such portion or portions shall bear interest at the Prime Rate from
time to time in effect.
From time to time, Debtor shall have the right to convert to the LIBOR
Adjusted Rate, provided (i) Debtor may not select an Interest Period having a
maturity as of the date of Conversion later than the Termination Date, and (ii)
the LIBOR Adjusted Rate shall remain in effect, and may not be Converted, until
the end of the applicable Interest Period selected.
Notices by Debtor to Agent of Conversions and Continuations and of the
duration of
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subsequent Interest Periods shall be irrevocable and binding on Debtor and
shall be effective only
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if received by Agent not later than 3:00 p.m. (New Orleans time) on the day
before the first day of such Interest Period. Each such notice of Conversion or
Continuation shall specify (a) the dollar amount of the portion of the Loan
(which shall be not less than the applicable minimum set forth on Exhibit "F"
hereto) to be Converted or Continued; (b) whether the applicable interest rate
on such portion of the Loan is to be Converted or Continued to the Prime Rate or
the LIBOR Adjusted Rate; (c) the effective date of Conversion or Continuation
(which shall be a Business Day); and (d) the Interest Period, if the LIBOR
Adjusted Rate is chosen. In the event that Debtor fails to properly or timely
Convert or Continue, such portion of the Loan will be automatically Converted to
the Prime Rate at the end of the then current Interest Period (if LIBOR Adjusted
Rate is in effect). Notwithstanding the above, so long as First NBC is the sole
Bank, requests for Advances made no later than 10:00 a.m. (New Orleans time)
shall be funded on the same Business Day, provided the Prime Rate election is
made with respect to such Advances.
Section 2.8. Change in Law; Increased Costs; Etc.
(a) Change of Law. If at any time Agent determines in good faith
(which ------------- determination shall be conclusive
absent manifest error) that any change in any applicable
law, rule or regulation or in the interpretation,
application or administration thereof makes it unlawful, or
any Governmental Authority asserts that it is unlawful, for
Banks to fund or maintain the Loans at the LIBOR Adjusted
Rate (any of the foregoing determinations being a "LIBOR
Event"), then the obligation of Banks hereunder to fund or
maintain LIBOR Rate Loans shall be suspended as long as such
LIBOR Event shall continue. Upon the occurrence of any LIBOR
Event, and at any time thereafter so long as such LIBOR
Event shall continue, Agent may exercise its aforesaid
option by giving written notice thereof to Debtor, and the
applicable portions of the Loan shall thereafter bear
interest at the Prime Rate.
(b) Increased Costs.
(1) If, after the date hereof, due to either (i) the
introduction of or any change in or in the interpretation of
any law of regulation or (ii) the compliance with any
guideline or request from any Governmental Authority
(whether or not having the force of law), or (iii) other
acts or occurrences, there shall be any increase in the cost
to Banks of agreeing to fund or maintain the Loans at the
LIBOR Adjusted Rate (except to the extent already included
in the determination of the applicable LIBOR Adjusted Rate)
then Debtor shall from time to time, upon demand by Agent,
pay Agent such additional amounts sufficient to compensate
Banks for such increased cost (provided, however, such
amount shall not be greater than the amount which would be
due if Agent were the sole Bank) and may make an alternate
Interest election for the portion of the Loan then subject
to the LIBOR Adjusted Rate, to be effective at the
termination of the then current Interest Period. Any
obligation of any Bank hereunder
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to fund or continue the LIBOR Adjusted Rate
applicable to any portion of the Loans shall be
suspended as long as the events giving rise to such
increased costs shall continue, and the applicable
portion of the Loans shall thereafter bear interest
at the Prime Rate. Any request for payment under this
Section 2.8(b) will be submitted to Debtor by Agent
identifying with reasonable specificity the basis for
and the amount of such interest cost, which
information shall be conclusive and binding for all
purposes, absent manifest error.
(2) Banks shall use their best efforts (consistent
with its internal policies and legal and regulatory
restrictions) to avoid or minimize any additional
amounts that otherwise would be payable pursuant to
this Section 2.8(b); provided that no such change or
action shall be required to be made or taken if, in
the reasonable judgment of Agent, such change would
be disadvantageous to Banks.
(c) Funding Losses.
(1) Debtor will indemnify Banks against, and
reimburse Banks on demand for, any net loss, cost or
expense incurred or sustained by Banks (including,
without limitation, any loss or expense incurred by
reason of the liquidation or reemployment of deposits
or other funds acquired by Banks to fund or maintain
the Loans at the LIBOR Adjusted Rate) as a result of
any payment, prepayment by Debtor (whether authorized
or required hereunder) of all or a portion of the
LIBOR Rate Loans on a day other than the last day of
an Interest Period.
(2) In connection with any demand for payment under
this Section 2.8(c), Agent shall deliver to Debtor a
statement reasonably setting forth the amount and
manner of determining such net loss, cost or expense,
which statement shall be conclusive and binding for
all purposes, absent error.
Section 2.9. Manner and Notice of Borrowing Under the Commitments.
Requests for Advances under the Commitments may be made by Debtor in person, in
writing or through telephone calls to Agent and such requests shall be fully
authorized by Debtor if made by any one of the persons designated by Debtor in
writing to Agent. Debtor shall promptly confirm in writing all requests made in
person or by telephone; provided, however, that failure to do so shall not
relieve Debtor of the obligation to repay such Advance. Agent shall have the
right, but not the obligation, to verify any telephone requests by calling the
person who made the request at the telephone number designated by each of Debtor
in writing to Agent. Requests for Advances must be in a minimum amount as set
forth on Exhibit "F" hereto, and be received by not later than 3:00 p.m. New
Orleans time on the day before the proposed Advance. Promptly after receipt of
such request by Agent, Agent shall notify each Bank of the proposed borrowing.
Each Bank shall make the amount of its Applicable Percentage of the Advance
requested available to Agent not later than 10:00 a.m. (New Orleans time) the
date of the requested Advance, in same day Dollars,
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at the Agent's main office at 210 Baronne Street, New Orleans, Louisiana. Not
later than 3:00 p.m. (New Orleans time) on the date of the proposed Advance,
assuming all conditions of this Agreement for such Advance has been satisfied,
Agent will (a) fund such Advance in the case of (y) below, or (b) commence to
wire transfer such Advance in the case of (z) below. The amount thereof shall
(y) be credited by Agent to the checking account maintained in the name of
Debtor with Agent and the credit advice resulting therefrom shall be mailed to
Debtor or (z) at the request of Debtor, Agent shall wire transfer the amount of
the Advance as designated in writing from time to time by Debtor. Agent's copy
of such credit advice indicating such deposit to the account of Debtor or
Agent's receipt of a federal funds wire transfer number shall be deemed
conclusive evidence of Debtor's indebtedness to Banks in connection with such
borrowing. The aggregate outstanding amount of principal and interest due by
Debtor at any given time under the Commitments shall be and constitute the
indebtedness of Debtor to the Banks under the Notes. When each Advance is made
by Banks to Debtor hereunder, Debtor shall be deemed to have renewed and
reissued its Notes for the amount of the Advance plus all amounts due by Debtor
to Banks under its Commitment immediately prior to such Advance.
Section 2.10. Non-Receipt of Funds by the Agent. Unless Agent shall
have been notified by the Debtor prior to the date on which the Debtor is to
make a payment to the Agent for the account of one or more of the Banks, (such
payment being herein called the "Required Payment"), that the Debtor does not
intend to make the Required Payment to the Agent, the Agent may assume that the
Required Payment has been made and may, in reliance upon such assumption (but
shall not be obligated to) make the amount thereof available to the intended
recipient on such date and, if the Debtor has not in fact made the Required
Payment to the Agent, the recipient of such payment shall, on demand, pay to the
Agent the amount made available by Agent together with interest thereon, for
each day commencing on the date such amount was so made available by Agent until
the date such amount is paid to Agent, at the Prime Rate.
Section 2.11. Several Obligations. First NBC is obligated to make Loans
to Debtor in the maximum amount of $15,000,000.00, subject to the terms and
conditions hereof. The failure of any Bank to make any Loan in excess of
$15,000,000.00 to be made by it on the date specified therefor shall not relieve
any other Bank of its obligation to make its Loan on such date, but neither the
Agent nor any Bank shall be responsible or liable for the failure of any other
Bank to make a Loan to be made by such other Bank. Notwithstanding anything
contained herein to the contrary, (a) no Bank shall be required to make or
maintain Loans at any time outstanding if, as a result, the total Loans made by
such Bank shall exceed such Bank's Applicable Percentage of the Commitment
Amount and (b) if a Bank fails to make a Loan as and when required hereunder,
then upon such subsequent event which would otherwise result in funds being
repaid to the defaulting Bank, the amount which would have been paid to the
defaulting Bank shall be divided among the non-defaulting Banks ratably
according to their respective Applicable Percentages until the Indebtedness of
each Bank (including the defaulting Bank) is equal to such Bank's Applicable
Percentage of the total Loans.
Section 2.12. Additional Cost of Loans. If any legislative authority, other
governmental authority, court, central bank or any other authority to which any
Bank is subject, shall at any time impose, modify or deem applicable any reserve
(including, without limitation, any imposed by the Board of Governors of the
Federal Reserve System), special deposit, capital adequacy or similar
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requirement against assets of, deposits with or for the account of, or credit
extended by, such Bank, or shall impose on any Bank any law, regulation, rule,
directive, instruction, guideline, requirement, judgment, decision or condition
of any type or kind whatsoever affecting the Indebtedness or the obligation of
Banks to make a Loan, and the result of any of the foregoing is to increase,
directly or indirectly, the cost to any Bank of making or maintaining the
Indebtedness to Debtor, or to reduce, directly or indirectly, the amount of the
sum received or receivable by any Bank under this Agreement or under the Notes,
then Debtor shall become obligated to each such Bank for all such amounts as
will compensate such Bank for such increased cost or reduction in revenues
incurred as a result thereof provided, however, the amount of such obligation
shall not be greater than the amount that would be payable if Agent were the
sole Bank. Each Bank will promptly notify Agent, and Agent will promptly notify
Debtor of any event of which it has knowledge, occurring after the date hereof,
which will entitle any Bank to compensation pursuant to this Section 2.12. A
certificate of Agent claiming compensation under this Section 2.12 and setting
forth the additional amount or amounts to be paid to it hereunder and the
reasons therefor shall be conclusive in the absence of error. Thereafter, Debtor
shall pay to the Agent, upon demand from time to time any amounts necessary to
compensate the applicable Bank for such increased cost of reduction in revenues
incurred as a result of any such events. In the event that Debtor cancels this
Agreement and the Commitment because it believes such costs to be excessive and
repays the Indebtedness in full prior to the due date of the next annual
commitment fee, Debtor shall not be liable for such additional commitment fee;
provided, in no event shall Debtor be entitled to a refund of any amounts
previously paid as commitment fee.
Section 2.13. Commitment Fee; Credit Fee; Agency Fee. Debtor agrees to
pay to Agent, for the pro rata benefit of the Banks (a) on the date hereof and
on each anniversary of the date hereof, in advance an annual commitment fee of
0.25% of Commitment Amount, and (b) in arrears due ten days after receipt of
invoice from Agent prepared as of the last day of December, March, June, and
September, commencing December 31, 1996, a quarterly credit fee equal to 0.125%
per annum of the average unused portion of the Commitment Amount. Debtor further
agrees to pay to Agent on the date hereof and on each anniversary of the date
hereof, in advance, the Agency Fee and on any date on which an additional Bank
is added a pro-rata portion of any increase in the Agency Fee for the remainder
of such annual period.
Section 2.14. Calculation of the Applicable Increment. The Applicable
Increment shall be determined for each Interest Period on the first day of such
Interest Period as follows:
If Debtor's TL/TA ratio is greater than or equal to 0.5, the Applicable
Increment shall be 175 basis points;
If Debtor's TL/TA ratio is less than 0.5 but equal to or greater than 0.4,
the Applicable Increment shall be 165 basis points;
If Debtor's TL/TA ratio is less than 0.4, the Applicable Increment shall be
150 basis points.
Debtor's TL/TA ratio shall be determined as of the most recently reported
Financial Statement
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provided pursuant to Section 5.1 hereof.
Section 2.15. Debtor's Right to Terminate. At any time Debtor may
prepay the Loans in full and, at Debtor's option, terminate the Loans and this
Agreement by written notice to Agent without termination fee or penalty (other
than any payments due as a result of prepaying a LIBOR Rate Loan prior to the
termination of the then applicable Interest Period) or obligation to pay further
amounts of any kind to Agent or Banks.
ARTICLE III
CONDITIONS PRECEDENT
Section 3.1. Conditions Precedent to Loans. The obligation of any Bank to
make any Loan hereunder shall be subject to the satisfaction and the continued
satisfaction of the following conditions precedent:
(a) Debtor shall have executed and delivered to Agent this
Agreement, the Notes, the Guaranty and all other documents
required by this Agreement;
(b) The representations and warranties of Debtor as set forth
herein, or any Loan Document furnished to Agent in connection
herewith, shall be and remain true and correct (except for any
changes permitted under this Agreement or as to which Agent
has previously consented in writing);
(c) Agent shall have received as of the execution of this
Agreement a favorable legal opinion of general counsel to
Debtor and Centers in form, scope and substance satisfactory
to Agent;
(d) Agent shall have received certified resolutions of the general
partner of Debtor authorizing the execution of all documents
contemplated hereby;
(e) Agent shall have received certified resolutions of Centers
authorizing the execution of the Guaranty;
(f) Agent shall have received all fees, charges and expenses which
are due and payable as specified in this Agreement;
(g) No Default or Event of Default shall exist or shall result
from the making of a Loan;
(h) Debtor shall have provided Agent with all financial
statements, reports and certificates required by this
Agreement;
(i) Agent's counsel shall have reviewed the partnership agreement
of Debtor and shall be satisfied with the validity, due
authorization and enforceability of all Loan Documents;
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(j) Agent shall have received the commitment fee for the first
twelve months of the Loans.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
Debtor represents and warrants to Agent and to the Banks as follows:
Section 4.1. Authority. Debtor is a North Carolina limited partnership,
duly formed, validly existing and in good standing under the laws of the State
of North Carolina and is duly qualified and in good standing as a foreign
corporation in all jurisdictions where the failure to qualify would have an
adverse effect upon the ability of Debtor to perform its obligations under this
Agreement and all Related Documents. Debtor has the power to enter into this
Agreement and the Related Documents and to issue the Notes. Debtor has the
partnership power to perform its obligations hereunder and under the Related
Documents. The making and performance by Debtor of this Agreement and the
Related Documents have been duly authorized by all necessary partnership action,
and do not and will not violate any provision of any law, rule, regulation,
order, writ, judgment, decree, determination or award presently in effect having
applicability to Debtor or the agreement of limited partnership of Debtor. The
making and performance by Debtor of this Agreement and the Related Documents to
which it is a party do not and will not result in a breach of or constitute a
default under any indenture or loan or credit agreement or any other agreement
or instrument to which Debtor is a party or by which Debtor may be bound or
affected, or result in, or require, the creation or imposition of any mortgage,
deed of trust, pledge, lien, security interest or other charge or encumbrance of
any nature (other than as contemplated by the Related Documents) upon or with
respect to any of the properties now owned or hereafter acquired by Debtor, and
Debtor is not in default under or in violation of any such order, writ,
judgment, decree, determination, award, indenture, agreement or instrument. Each
of this Agreement and the Related Documents to which Debtor is a party
constitute legal, valid and binding obligations of Debtor, enforceable in
accordance with their terms.
Section 4.2. Financial Statements. The balance sheet of Debtor as of
the date thereof, and the related statements of income and retained earnings for
the year then ended, copies of which have been delivered to Agent, are complete
and correct and fairly present the financial condition of Debtor as of the date
thereof. Said financial statements were prepared in conformity with GAAP applied
on a basis consistent with the preceding year. No Material Adverse Change has
occurred since said date in the financial position or in the result of
operations of Debtor in its business taken as a whole.
Section 4.3. Litigation. Other than as has been disclosed previously to
Agent in writing, there are no legal actions, suits or proceedings pending or
threatened against or affecting Debtor or any of its properties before any court
or administrative agency (federal, state or local), which, if determined
adversely to Debtor would constitute a Material Adverse Change to it, and there
are no judgments or decrees affecting Debtor or its properties which are or may
become an Encumbrance against such properties.
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Section 4.4. Approvals. No authorization, consent, approval or formal
exemption of, nor any filing or registration with, any governmental body or
regulatory authority (federal, state or local), and no vote, consent or approval
of the shareholders of Debtor is or will be required in connection with the
execution and delivery by Debtor of the Agreement, the Notes, or the Related
Documents or the performance by Debtor of its obligations hereunder and under
the Notes and the Related Documents.
Section 4.5. Licenses. Debtor possesses adequate franchises, licenses
and permits to own its properties and to carry on its business as presently
conducted.
Section 4.6. Adverse Agreements. Debtor is not a party to any agreement
or instrument, or subject to any charter or other restriction, materially and
adversely affecting its business, properties, assets, or operations or its
condition (financial or otherwise), and Debtor is not in default in the
performance, observance or fulfillment of any of the obligations, covenants or
conditions contained in any agreement or instrument to which it is a party,
which default would constitute a Material Adverse Change to Debtor.
Section 4.7. Default or Event of Default. No Default or Event of
Default hereunder has occurred or is continuing or will occur as a result of the
giving effect hereto.
Section 4.8. Employee Benefit Plans. Each employee benefit plan as to
which Debtor may have any liability complies in all material respects with all
applicable requirements of law and regulations, and (i) no Reportable Event (as
defined in ERISA) has occurred with respect to any such plan, (ii) Debtor has
not withdrawn from any such plan or initiated steps to do so, and (iii) no steps
have been taken to terminate any such plan.
Section 4.9. Information. All information heretofore or
contemporaneously herewith furnished by Debtor to Agent for the purposes of or
in connection with this Agreement or any transaction contemplated hereby is, and
all information hereafter furnished by or on behalf of Debtor to Agent will be,
true and accurate in every material respect on the date as of which such
information is dated or certified; and none of such information is or will be
incomplete by omitting to state any material fact necessary to make such
information not misleading.
Section 4.10. Environmental Matters. Except as may have been disclosed
in writing to Agent prior to the date hereof, no properties of Debtor has ever
been, and ever will be so long as this Agreement remains in effect, used for the
generation, manufacture, storage, treatment, disposal, release or threatened
release of any Hazardous Materials, except in compliance with such Environmental
Laws. Except as may have been disclosed in writing by Debtor to Agent, Debtor
represents and warrants that it is in compliance with all Environmental Laws
affecting it and its properties.
Section 4.11. Employer Identification Number; Name. Debtor's employer
identification number is 56-1822494. Debtor has consistently utilized the name
"Tanger Properties Limited Partnership."
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Section 4.12. Survival of Representations and Warranties. Debtor
understands and agrees that Banks are relying upon the above representations and
warranties in making the above referenced Loans to Debtor. Debtor further agrees
that the foregoing representations and warranties shall be continuing in nature
and shall remain in full force and effect until such time as the Indebtedness
shall be paid in full, or until this Agreement shall be terminated, whichever is
the last to occur.
Section 4.13. No Margin Stock. Debtor is not engaged, and will not
engage, principally or as one of its important activities, in the business of
extending credit for the purpose of "purchasing" or "carrying" any "margin
stock" within the respective meanings of each of the quoted terms under
Regulation U of the Board of Governors of the Federal Reserve System as now and
from time to time hereafter in effect. No part of the proceeds of the Loans
hereunder will be used for "purchasing" or "carrying" "margin stock" as so
defined or for any purpose which violates, or which would be inconsistent with,
the provisions of the Regulations of such Board of Governors.
ARTICLE V
AFFIRMATIVE COVENANTS
Debtor, covenants and agrees in favor of Agent as follows:
Section 5.1. Financial Statements. Debtor, will furnish or cause to
be furnished to Agent:
(a) within forty-five (45) days following the end of each calendar
quarter commencing December 31, 1996, financial statements
consisting of the balance sheets of Debtor as of the end of
such quarter, and statements of income and statements of cash
flow of Debtor for such quarter and for the fiscal year
through such quarter, all certified by the Managing General
Partner of Debtor, as having been prepared in accordance with
GAAP consistently applied,
(b) within forty-five (45) days following the end of each calendar
quarter commencing December 31, 1996, consolidating financial
statements of Debtor and Centers consisting of balance sheets
of Debtor and Centers as of the end of such quarter, and
statements of income and statements of cash flow of Debtor and
Centers for such quarter and for the fiscal year through such
quarter, all certified by the Managing General Partner of
Debtor and the Chief Financial Officer of Centers as having
been prepared in accordance with GAAP consistently applied,
(c) as soon as available and in any event within one hundred
twenty (120) days following the end of each fiscal year
commencing beginning with the fiscal year ending December 31,
1996, and each fiscal year thereafter, consolidating financial
statements of Debtor and Centers consisting of a balance sheet
as
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at the end of such fiscal year and
statements of income, and statement of cash flow for
such fiscal year, setting forth in each case in
comparative form the corresponding figures for the
preceding fiscal year, all certified by the Managing
General Partner of Debtor and the Chief Financial
Officer of Centers as having been prepared in
accordance with GAAP consistently applied,
(d) as soon as available and in any event within one hundred
twenty (120) days following the close of fiscal year of Debtor
audited, consolidated and consolidating financial statements
of Debtor and Centers consisting of a balance sheet as at the
end of such fiscal year and statements of income, and
statement of cash flow for such fiscal year, setting forth in
each case in comparative form the corresponding figures for
the preceding fiscal year, certified by independent public
accountants of recognized standing acceptable to Agent, and
(e) within forty-five (45) days after the end of each calendar
quarter, a certificate signed by the Managing General Partner
of Debtor and the Chief Financial Officer of Centers
certifying that it has reviewed this Agreement and to the best
of its knowledge no Default or Event of Default has occurred,
or if such Default or Event of Default has occurred,
specifying the nature and extent thereof, and that all
financial covenants in this Agreement have been met, and
providing a computation of all financial covenants contained
herein.
Section 5.2. Notice of Default; Litigation; ERISA Matters. Debtor will
give written notice to Agent as soon as reasonably possible and in no event more
than five (5) Business Days of (i) the occurrence of any Default or Event of
Default hereunder of which it has knowledge, (ii) the filing of any actions,
suits or proceedings against Debtor in any court or before any governmental
authority or tribunal of which it has knowledge which could cause a Material
Adverse Change with respect to Debtor, (iii) the occurrence of a reportable
event under, or the institution of steps by Debtor to withdraw from, or the
institution of any steps to terminate, any employee benefit plan as to which
Debtor may have liability, or (iv) the occurrence of any other action, event or
condition of any nature of which Debtor has knowledge and in good faith believes
may cause, or lead to, or result in, any Material Adverse Change to Debtor.
Section 5.3. Maintenance of Partnership Existence and Properties.
Debtor will (i) continue to engage in the business presently being operated by
it; (ii) maintain its partnership existence and good standing in each
jurisdiction in which it is required to be qualified; (iii) keep and maintain
all franchises, licenses and properties necessary in the conduct of its business
in good order and condition; and (iv) duly observe and conform to all material
requirements of any governmental authorities relative to the conduct of its
business or the operation of its properties or assets.
Section 5.4. Taxes. Debtor shall pay or cause to be paid when due, all
taxes, local and special assessments, and governmental and other charges of
every type and description, that may
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from time to time be imposed, assessed and levied Debtor and its properties.
Debtor further agrees to furnish Agent with evidence that such taxes,
assessments, and governmental and other charges due by Debtor have been paid in
full and in a timely manner. Debtor may withhold any such payment or elect to
contest any lien if Debtor is in good faith conducting an appropriate proceeding
to contest the obligation to pay.
Section 5.5. Required Insurance. Debtor shall maintain insurance with
insurance companies in such amounts and against such risks as is usually carried
by owners of similar businesses and properties in the same general areas in
which each of its properties is located, including, but not limited to property,
liability, business interruption, and flood insurance, and as shall be
reasonably satisfactory to Agent.
Debtor agrees, if requested by Agent to provide Agent with originals or
certified copies of such policies of insurance. Debtor further agrees, if
requested by Agent to furnish Agent with copies of all renewal notices and, if
requested by Agent, with copies of receipts for paid premium.
Section 5.6. Payment and Performance. Debtor shall duly and punctually
pay and perform its obligations under the Notes, this Agreement (as the same may
at any time be amended or modified and in effect) and under each of the Related
Documents, in accordance with the terms hereof and thereof.
Section 5.7. Compliance with Environmental Laws. Debtor shall comply
with and shall cause all of its employees, agents, invitees or sublessees to
comply with all Environmental Laws with respect to the disposal of industrial
refuse or waste, and/or the discharge, procession, treatment, removal,
transportation, storage and handling of Hazardous Materials, and pay immediately
when due from Debtor the cost of removal of any such from, and keep its
properties free of any lien imposed pursuant to any such laws, rules,
regulations or orders.
Regardless of whether any Event of Default hereunder shall have
occurred and be continuing, Debtor (i) releases and waives any present or future
claims against Agent for indemnity or contribution in the event Debtor becomes
liable for remediation costs under any Environmental Laws, and (ii) agrees to
defend, indemnify and hold harmless Agent from any and all liabilities
(including strict liability), actions, demands, penalties, losses, costs or
expenses (including, without limitation, reasonable attorneys fees and remedial
costs), suits, administrative orders, agency demand letters, costs of any
settlement or judgment and claims of any and every kind whatsoever which may now
or in the future (whether before or after the termination of this Agreement) be
paid, incurred, or suffered by, or asserted against Agent by any person or
entity or governmental agency for, with respect to, or as a direct or indirect
result of, the presence on or under, or the escape, seepage, leakage, spillage,
discharge, emission, or release from or onto the property of Debtor of any
hazardous materials, wastes or conditions regulated by any Environmental Laws,
contamination resulting therefrom, or arising out of, or resulting from, the
environmental condition of such property or the applicability of any
Environmental Laws not caused by Agent, Agent's employees or agents (the costs
and/or liabilities described in (i) and (ii) above being hereinafter referred to
as the "Liabilities"). The covenants and indemnities contained in this Section
5.7 shall survive termination
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of this Agreement.
Section 5.8. Further Assurances. Debtor will, at any time and from time
to time, execute and deliver such further instruments and take such further
action as may reasonably be requested by Agent, in order to cure any defects in
the execution and delivery of, or to comply with or accomplish the covenants and
agreements contained in this Agreement or the Loan Documents.
Section 5.9. Financial Covenants. Debtor shall comply with the
following covenants and ratios:
(a) Debtor will not permit its ratio of Debt to Total Assets to
exceed 0.6:1.0.
(b) Debtor will not permit its ratio of its Secured Debt to Total
Assets to exceed 0.4:1.0.
(c) Debtor will maintain its Debt Service Ratio at not less than
2.0:1.0, computed on a rolling four-quarter average.
(d) Debtor shall maintain Adjusted Unencumbered Assets equal to
its Total Committed Unsecured Debt.
(e) Debtor shall maintain Net Worth, inclusive of minority
interests, equal to or in excess of $120,000,000.00.
(f) Debtor shall not declare or pay (or set aside reserves for
payment of) any dividends or distributions or make any
shareholder/affiliate loans; provided, however, that Debtor
may make distributions to its partners in any fiscal year
period not in excess of its Funds from Operations, measured as
of the end of each of Debtor's fiscal years.
Section 5.10. Operations. Debtor shall conduct its business affairs in
a reasonable and prudent manner and in compliance with all applicable federal,
state and municipal laws, ordinances, rules and regulations respecting its
properties, charters, businesses and operations, including compliance with all
minimum funding standards and other requirements of ERISA of 1974, and other
laws applicable to any employee benefit plans which they may have.
Section 5.11. Employee Benefit Plans. So long as this Agreement remains
in effect, Debtor will maintain each employee benefit plan as to which they may
have any liability, in compliance with all applicable requirements of law and
regulations.
Section 5.12 Use of Proceeds. Debtor shall use the proceeds of the
Loans solely for construction of additional factory outlet centers, acquisition
of existing factory outlet centers, expansion phases of existing centers, and
for general working capital purposes.
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ARTICLE VI
NEGATIVE COVENANTS
Debtor agrees in favor of Agent as follows:
Section 6.1. Limitations on Fundamental Changes. Without the prior
written consent of Agent, Debtor shall not change the nature of its business, or
form any subsidiary the effect of which would have a material adverse effect on
Debtor's financial condition, nor shall it enter into any transaction of merger
or consolidation the effect of which would have a material adverse effect on
Debtor's financial condition, or liquidate or dissolve itself (or suffer any
liquidation or dissolution).
Section 6.2. Disposition of Assets. Except for leases with tenants in
the ordinary course of business, Debtor shall not convey, sell, lease, assign,
transfer or otherwise dispose of, any of its properties whether now owned or
hereafter acquired except property disposed of in the ordinary course of
business, provided that, if such property is to be replaced, the net cash
proceeds of each such transaction are applied to obtain a replacement item or
items within 30 days of the disposition thereof. Without limitation of other
transfers that may be deemed to be in the ordinary course of business for the
purposes hereof, the transfer during any annual period, commencing on the date
hereof or any anniversary hereof, of (a) properties having an aggregate value
less than the lesser of (i) $30,000,000.00 or (ii) 10% of Total Assets, or (b)
outparcels of developed or acquired factory outlet centers, shall be deemed to
be in the ordinary course of business.
Section 6.3. Other Agreements. Debtor will not enter into any agreement
containing any provision which would be violated or breached by the performance
of its obligations hereunder or under any instrument or document delivered or to
be delivered by it hereunder or in connection herewith.
Section 6.4. Transactions with Affiliates. Debtor will not enter into
any agreement with any Affiliates or Subsidiaries except to the extent that such
agreements are commercially reasonable which provide for terms which would
normally be obtainable in an arm's length transaction with an unrelated third
party.
ARTICLE VII
EVENTS OF DEFAULT
Section 7.1. Events of Default. The occurrence of any one or more of
the following shall constitute an Event of Default:
Default Under the Indebtedness. Should Debtor default in the payment of
principal or interest under the Indebtedness of Debtor and such default shall
not be cured within ten days of the occurrence thereof.
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Default Under this Agreement. Should Debtor violate or fail to comply
fully with any of the terms and conditions of, or default under, this Agreement
and such default not be cured within thirty days after Debtor has knowledge of
the occurrence thereof (provided, however, that no cure period shall be
available for a default in the obligation to maintain insurance coverages
required hereby) (provided further, however, if such default cannot with due
diligence be cured within said 30 days and further provided that Debtor shall
have promptly commenced to cure said default within such 30 days and diligently
pursues the same to completion Borrower shall have an additional reasonable
period of time in which to cure said default).
Default Under the Guaranty. Should Centers default in the terms of the
Guaranty, or should Centers assert the invalidity, unenforceability, or
uncollectability of the Guaranty and such default not be cured within thirty
days after Centers have knowledge of the occurrence thereof (provided, however,
if such default cannot with due diligence be cured within said 30 days and
further provided that Centers shall have promptly commenced to cure said default
within such 30 days and diligently pursues the same to completion Centers shall
have an additional reasonable period of time in which to cure said default).
Default Under Other Agreements. Should any event of default occur or
exist under any of the Related Documents or should Debtor violate, or fail to
comply fully with, any terms and conditions of any of the Related Documents and
such default not be cured within thirty days of the occurrence thereof
(provided, however, that no cure period shall be available for a default in the
obligation to maintain insurance coverages required thereby)(provided further,
however, if such default cannot with due diligence be cured within said 30 days
and further provided that Debtor shall have promptly commenced to cure said
default within such 30 days and diligently pursues the same to completion Debtor
shall have an additional reasonable period of time in which to cure said
default.
Default in Favor of Third Parties. The Debtor or Centers shall fail to
make any payment of principal of or interest on (i) any recourse Debt of the
Debtor or Centers of $5,000,000 or more in the aggregate (other than any Debt
under this Agreement, the Notes, or the Related Documents) within the applicable
cure period; or (ii) any non-recourse Indebtedness of the Debtor or Centers of
$10,000,000 or more in the aggregate (other than Debt under this Agreement, the
Notes, or the Related Documents) within the applicable cure period; and if the
effect of such failure described in subclause (i) or (ii) is to accelerate, or
to permit the holder of such aggregate Debt or any other Person to accelerate,
the maturity of such Debt; or such Debt shall be required to be prepaid (other
than by a regularly scheduled required prepayment) in whole or in part prior to
its stated maturity.
Management. Should a change occur in Debtor's Management Team
(hereinafter defined) and Agent in its reasonable judgment shall determine that
such change may lead to a Material Adverse Change in Debtor. As used herein,
Debtor's Management Team shall mean any of the President or Chairman of the
Board of Centers or the senior financial or operating officers of the Debtor.
Debtor shall have thirty days after notice from Agent of default to cure any
default under this subparagraph.
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Insolvency. The following occurrences, in addition to the failure or
suspension of Debtor or Centers, shall constitute an Event of Default hereunder:
(a) Filing by Debtor or Centers of a voluntary petition or any
answer seeking reorganization, arrangement, readjustment of
its debts or for any other relief under any applicable
bankruptcy act or law, or under any other insolvency act or
law, now or hereafter existing, or any action by Debtor or
Centers consenting to, approving of, or acquiescing in, any
such petition or proceeding; the application by Debtor for, or
the appointment by consent or acquiescence of, a receiver or
trustee of Debtor or Centers for all or a substantial part of
the property of any such person; the inability of Debtor or
Centers or the admission by Debtor or Centers in writing, of
its inability to pay its debts as they mature (the term
"acquiescence" means the failure to file a petition or motion
in opposition to such petition or proceeding or to vacate or
discharge any order, judgment or decree providing for such
appointment within sixty (60) days after the appointment of a
receiver or trustee); or
(b) Filing of an involuntary petition against Debtor or Centers in
bankruptcy or seeking reorganization, arrangement,
readjustment of its debts or for any other relief under any
applicable bankruptcy act or law, or under any other
insolvency act or law, now or hereafter existing and such
petition remains undismissed or unanswered for a period of
sixty (60) days from such filing; or the insolvency
appointment of a receiver or trustee of Debtor or Centers for
all or a substantial part of the property of any such Person
and such appointment remains unvacated or unopposed for a
period of sixty (60) days from such appointment, execution or
similar process against any substantial part of the property
of Debtor and such warrant remains unbonded or undismissed for
a period of sixty (60) days from notice to Debtor of its
issuance.
Dissolution Proceedings. Should proceedings for the dissolution or
appointment of a liquidator of Debtor or Centers be commenced by Debtor or
Centers.
False Statements. Should any representation or warranty of Debtor made
in connection with the Indebtedness prove to be incorrect or misleading in any
material respect when made or reaffirmed.
Material Adverse Change. Should a Material Adverse Change with respect
to Debtor or Centers occur at any time and not be cured within 30 days of the
occurrence thereof.
REIT. Should Centers lose its tax status as a REIT, or should Centers
fail to keep and maintain all franchises, licenses and properties necessary in
the conduct of its business, or shall fail to continue in its business as
presently conducted, or should Centers acquire or create any
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additional subsidiaries or Affiliates, or should Centers fail to distribute to
the Debtor the net proceeds of any public offerings of stock or securities or
any other proceeds obtained by Centers in any public or private offerings.
Upon the occurrence of an Event of Default, the Commitment of Banks
under this Agreement will terminate immediately (including any obligation to
make any further Loans to or for the account of Debtor), and, at Banks' option,
the Notes and all Indebtedness of Debtor will become immediately due and
payable, all without notice of any kind to Debtor, except that in the case of
type described in the "Insolvency" subsection above, such acceleration shall be
automatic and not optional.
Section 7.2. Waivers by Debtor. Except as otherwise provided for in
this Agreement and by applicable law, as pertains to the Indebtedness Debtor
waives presentment, demand and protest and notice of presentment, dishonor,
notice of intent to accelerate, notice of acceleration, protest, default,
nonpayment, maturity, release, compromise, settlement, extension or renewal of
any or all commercial paper, accounts, contract rights, documents, instruments,
chattel paper and guaranties at any time held by Agent on which Debtor may in
any way be liable and hereby ratify and confirm whatever Agent may do in this
regard.
ARTICLE VIII
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THE AGENT
Section 8.1. Appointment, Powers and Immunities. Each Bank hereby
irrevocably appoints and authorizes the Agent to act as its agent hereunder and
under the Notes and Related Documents with such powers as are specifically
delegated to the Agent by the terms hereof and thereof, together with such other
powers as are reasonably incidental thereto. Each Bank specifically acknowledges
that it shall have no right to enforce the Guaranty, which shall be enforced
solely by the Agent. The Agent (the "Agent" as used in this Article VIII shall
include reference to its officers, shareholders, directors, employees and
agents) (a) shall not have any duties or responsibilities except those expressly
set forth in this Agreement and the Related Documents and shall not by reason of
this Agreement or any Related Document be a trustee or fiduciary for any Bank;
(b) shall not be responsible to any Bank for any recitals, statements,
representations or warranties contained in this Agreement or any Related
Document, or in any certificate or other document referred to or provided for
in, or received by any of them under, this Agreement or any Related Document, or
the value, validity, effectiveness, genuineness, enforceability, execution,
filing, registration, collectibility, recording, perfection, existence or
sufficiency of this Agreement or any Related Document or any other document
referred to or provided for herein or therein or any property covered thereby or
for any failure by any Person to perform any of its obligations hereunder or
thereunder, and shall not have any duty to inquire into or pass on any of the
foregoing matters; (c) shall not be required to initiate or conduct any
litigation or collection proceedings hereunder or under any Related Document
except to the extent requested by the Majority Banks; (d) shall not be
responsible for any mistake of law or fact or any action taken or omitted to be
taken hereunder or under any Related Document or any other document or
instrument referred to or provided for herein or therein or in connection
herewith or therewith, including, without limitation, pursuant to its own
negligence, except for its own gross negligence or willful misconduct; (e) shall
not be bound by or obligated to recognize any agreement among or between the
Debtor and any Bank, regardless of whether the Agent has knowledge of the
existence of any such agreement or the terms and provisions thereof; (f) shall
not be charged with notice or knowledge of any fact or information not herein
set out or provided to the Agent in accordance with the terms of this Agreement
or any Related Document; (g) shall not be responsible for any delay, error,
omission or default of any mail, telegraph, cable or wireless agency or
operator; and (h) shall not be responsible for the acts or edicts of any
governmental authority. The Agent may employ agents and attorneys-in-fact and
shall not be responsible for the negligence or misconduct of any such agents or
attorneys-in-fact selected by it with reasonable care.
Section 8.2. Reliance. The Agent shall be entitled to rely upon any
certification, notice or other communication (including any thereof by
telephone, telex, telegram or cable) believed by it to be genuine and correct
and to have been signed or sent by or on behalf of the proper Person or Persons,
and upon advice and statements of legal counsel (which may be counsel for the
Debtor), independent accountants and other experts selected by the Agent. The
Agent shall not be required in any way to determine the identity or authority of
any Person delivering or executing the same. As to any matters not expressly
provided for by this Agreement or any Related Document, the Agent shall in all
cases be fully protected in acting, or in refraining from acting, hereunder and
thereunder, and in accordance with instructions of the Majority Banks, and any
action taken or failure to act pursuant thereto shall be binding on all of the
Banks. The Agent shall have the authority to execute
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releases of the Guaranty of Centers and any obligation of Debtor under this
Agreement, the Notes, or the Related Documents on behalf of the Banks without
the joinder of any Bank. If any order, writ, judgment or decree shall be made or
entered by any court affecting the rights, duties and obligations of the Agent
under this Agreement or any Related Document, then and in any of such events the
Agent is authorized, in its sole discretion, to rely upon and comply with such
order, writ, judgment or decree which it is advised by legal counsel of its own
choosing is binding upon it under the terms of this Agreement, the relevant loan
document or otherwise; and if the Agent complies with any such order, writ,
judgment or decree, then it shall not be liable to any Bank or to any other
Person by reason of such compliance even though such order, writ, judgment or
decree may be subsequently reversed, modified, annulled, satisfied or vacated.
Section 8.3. Defaults. The Agent shall not be deemed to have knowledge of
the occurrence of a Default (other than the non-payment of principal or interest
on Loans) unless it has received notice from a Bank or Debtor specifying such
Default and stating that such notice is a "Notice of Default". In the event that
the Agent receives such a Notice of Default, the Agent shall give prompt notice
thereof to the Banks (and shall give each Bank prompt notice of each such
non-payment). The Agent shall (subject to Section 8.7 hereof) take such action
with respect to such Notice of Default as shall be directed by the Majority
Banks and within its rights under the Loan Documents and at law or in equity,
provided that, unless and until the Agent shall have received such directions,
the Agent may (but shall not be obligated to) take such action, or refrain from
taking such action, permitted hereby with respect to such Notice of Default as
it shall deem advisable in the best interest of the Banks and within its rights
under the loan documents, at law or in equity.
Section 8.4. Rights as a Bank. With respect to its Commitment and the
Loans made, First NBC, in its capacity as a Bank hereunder shall have the same
rights and powers hereunder as any other Bank and may exercise the same as
though it were not acting in its agency capacity, and the term "Bank" or "Banks"
shall, unless the context otherwise indicates, include the First NBC, in its
capacity as a Bank. The Agent may (without having to account therefor to any
Bank) accept deposits from, send money to and generally engage in any kind of
banking, trust, letter of credit, agency or other business with the Debtor (and
any of its affiliates) as if it were not acting as Agent, and the Agent may
accept fees and other considerations from the Debtor (in addition to the fees
heretofore agreed to between the Debtor and the Agent) for services not in
connection with this Agreement or otherwise without having to account for the
same to the Banks.
Section 8.5. Indemnification. The Banks agree to indemnify the Agent,
each (to the extent not reimbursed by Debtor under this Agreement, but without
limiting the obligations of the Debtor under this Agreement), ratably, in
accordance with each Bank's Applicable Percentage, for any and all expenses,
obligations, losses, damages, penalties, actions, judgments, suits, expenses or
disbursements of any kind and nature whatsoever, regardless of whether caused in
whole or in part by negligence of Agent, which may be imposed on, incurred by or
asserted against the Agent in any way relating to or arising out of this
Agreement or any Related Document or any other documents contemplated by or
referred to herein or therein or the transactions contemplated hereby or thereby
(including, but without limitation, the costs and expenses which the Debtor is
obligated to pay under this Agreement), interest, penalties, attorney's fees and
amounts paid in settlement, but excluding,
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unless a Default has occurred and is continuing, normal administrative costs and
expenses incident to the performance of its agency duties hereunder) or the
enforcement of any of the terms hereof or thereof or of any such other
documents; provided that no Bank shall be liable for any of the foregoing to the
extent they arise from the gross negligence or willful misconduct of the Agent.
The obligations of the Banks under this Section 8.5 shall survive the
termination of this Agreement and the repayment of the Indebtedness.
Section 8.6. Non-Reliance on Agent and Other Banks. Each Bank agrees
that it has received current financial information with respect to the Debtor
and that it has, independently and without reliance on the Agent or any other
Bank and based on such documents and information as it has deemed appropriate,
made its own credit analysis of the Debtor and decision to enter into this
Agreement and that it will, independently and without reliance upon the Agent or
any other Bank, and based on such documents and information as it shall deem
appropriate at the time, continue to make its own analysis and decisions in
taking or not taking action under this Agreement or any of the Related
Documents. The Agent shall not be required to keep itself informed as to the
performance or observance by any Person of this Agreement or any of the
Documents or any other document referred to or provided for herein or therein or
to inspect the properties or books of the Debtor or any Person. Except for
notices, reports and other documents and information expressly required to be
furnished to the Bank by the Agent hereunder or under the Related Documents, the
Agent shall not have any duty or responsibility to provide
any Bank with any credit or other information concerning the affairs, financial
condition or business of the Debtor or any other Person (or any of their
Affiliates) which may come into the possession of the Agent.
Section 8.7. Failure to Act. Except for action expressly required by
the Agent hereunder or under the Related Documents, the Agent shall in all cases
be fully justified in failing or refusing to act hereunder or thereunder unless
it shall receive further assurances to its satisfaction by the Banks of their
indemnification obligations under Section 8.5 hereof against any and all
liability and expense which may be incurred by it by reason of taking or
continuing to take any such action.
Section 8.8. Resignation or Removal of Agent. Subject to the
appointment and acceptance of a successor Agent as provided below, the Agent may
resign at any time by giving notice thereof to the Banks and the Debtor, and the
Agent may be removed at any time with cause by the Banks holding Applicable
Percentages equal to or greater than seventy-five percent (75%). Upon any such
resignation or removal, (i) the Majority Banks without the consent of the Debtor
shall have the right to appoint a successor Agent so long as such successor
Agent is also a Bank at the time of such appointment and (ii) the Majority Banks
shall have the right to appoint a successor Agent that is not a Bank at the time
of such appointment so long as the Debtor consents to such appointment (which
consent shall not be unreasonably withheld). If no successor Agent shall have
been so appointed by the Majority Banks and accepted such appointment within
thirty (30) days after the retiring Agent's giving of notice of resignation or
the removal of the retiring Agent by Banks holding Applicable Percentages equal
to or greater than seventy-five percent (75%), then the retiring Agent may, on
behalf of the Banks, appoint a successor Agent, subject to consent of Debtor if
such successor Agent is not then a Bank. Upon the acceptance of any appointment
as Agent hereunder by a successor Agent, such successor Agent shall thereupon
succeed to and become vested with all the rights,
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powers, privileges and duties of the retiring Agent, and the retiring Agent
shall be discharged from its duties and obligations or Agent hereunder and under
any other Loan Documents. After any retiring Agent's resignation or removal
hereunder as Agent, the provisions of this Article VIII shall continue in effect
for its benefit in respect of any actions taken or omitted to be taken by it
while it was acting as the Agent.
Section 8.9. No Partnership. Neither the execution and delivery of this
Agreement nor any of the Related Documents nor any interest the Banks, the Agent
or any of them may now or hereafter have in all or any part of the Indebtedness
shall create or be construed as creating a partnership, joint venture or other
joint enterprise between the Banks or among the Banks and the Agent. The
relationship between the Banks, on the one hand, and the Agent, on the other, is
and shall be that of principals and Agent only, and nothing in this Agreement or
any of the Related Documents shall be construed to constitute the Agent as
Trustee or other fiduciary for any Bank or to impose upon the Agent any duty,
responsibility or obligation other than those expressly provided for herein and
therein.
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ARTICLE IX
MISCELLANEOUS
Section 9.1. No Waiver; Modification in Writing. No failure or delay on
the part of Agent in exercising any right, power or remedy hereunder shall
operate as a waiver thereof, nor shall any single or partial exercise of any
such right, power or remedy preclude any other or further exercise thereof or
the exercise of any other right, power or remedy hereunder. No amendment,
modification or waiver of any provision of this Agreement or of the Notes, nor
consent to any departure by Debtor therefrom, shall in any event be effective
unless the same shall be in writing signed by or on behalf of Agent and then
such waiver or consent shall be effective only in the specific instance and for
the specific purpose for which given. No notice to or demand on Debtor in any
case shall entitle Debtor to any other or further notice or demand in similar or
other circumstances.
Section 9.2. Payment on Non-Business Day. Whenever any payment to be
made hereunder or on account of the Notes shall be scheduled to become due on a
day which is not a Business Day, such payment may be made on the next succeeding
Business Day, and such extension of time shall in such case be included in
computing interest and fees payable hereunder or on account of the Notes.
Section 9.3. Addresses for Notices. All notices and communications
provided for hereunder shall be in writing and, shall be mailed, by certified
mail, return receipt requested, or delivered as set forth below unless any
person named below shall notify the others in writing of another address, in
which case notices and communications shall be mailed, by certified mail, return
receipt requested, or delivered to such other address.
If to Agent:
First National Agent
of Commerce
210 Baronne Street
New Orleans, LA 70112
Attn: Lantz E. Harvey
Real Estate Department
If to Banks:
At their address as set forth on Exhibit "A" hereto
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If to Debtor:
Tanger Properties Limited Partnership
c/o Tanger Factory Outlet Centers, Inc.
1400 W. Northwood Street
Greensboro, NC 27408
Attn: Stanley K. Tanger
With copy to:
Vernon Law Firm
P. O. Box 2958
522 S. Lexington Ave.
Burlington, N.C. 27216
Attn: R. Joyce Garrett
Section 9.4. Fees and Expenses. Debtor agrees to pay all fees, costs
and expenses of Agent in connection with the preparation, execution and delivery
of this Agreement and all Related Documents to be executed in connection
herewith and subsequent modifications or amendments to any of the foregoing,
including without limitation, the reasonable fees and disbursements of counsel
to Agent, and to pay all costs and expenses of Agent in connection with the
enforcement of this Agreement, the Notes or the Related Documents, including
reasonable legal fees and disbursements arising in connection therewith.
Section 9.5. Governing Law Jurisdiction. (a) This Agreement and the
Notes shall be deemed to be contracts made under the laws of the State of
Louisiana and for all purposes shall be construed in accordance with the laws of
said State. (b) DEBTOR, AGENT AND BANKS HEREBY IRREVOCABLY CONSENT TO THE
JURISDICTION OF THE STATE COURTS OF LOUISIANA AND THE FEDERAL COURTS IN
LOUISIANA AND AGREE THAT ANY ACTION OR PROCEEDING ARISING OUT OF OR BROUGHT TO
ENFORCE THE PROVISIONS OF THE NOTES, THIS AGREEMENT AND/OR THE RELATED DOCUMENTS
SHALL BE BROUGHT IN ANY SUCH COURT IN LOUISIANA HAVING SUBJECT MATTER
JURISDICTION; PROVIDED HOWEVER, AT THE ELECTION OF AGENT, ANY SUCH ACTION OR
PROCEEDING MAY BE BROUGHT IN THE STATE COURTS OF NORTH CAROLINA AND THE FEDERAL
COURTS IN NORTH CAROLINA.
Section 9.6. WAIVER OF JURY TRIAL. To the extent permitted by
applicable law, DEBTOR, AGENT, AND BANKS HEREBY WAIVE TRIAL BY JURY IN ANY
ACTION OR PROCEEDING TO WHICH DEBTOR, AGENT, OR ANY BANK MAY BE PARTIES, ARISING
OUT OF OR IN ANY WAY PERTAINING TO (i) THE NOTES, (ii) THIS AGREEMENT, OR (iii)
ANY RELATED DOCUMENT. IT IS AGREED AND UNDERSTOOD THAT THIS WAIVER CONSTITUTES A
WAIVER OF TRIAL BY JURY OF ALL CLAIMS AGAINST ALL PARTIES TO SUCH ACTIONS OR
PROCEEDINGS, INCLUDING CLAIMS AGAINST PARTIES WHO
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ARE NOT PARTIES TO THIS AGREEMENT. THIS WAIVER IS KNOWINGLY, WILLINGLY AND
VOLUNTARILY MADE BY DEBTOR, BANKS, AND AGENT AND DEBTOR, AGENT, AND BANKS HEREBY
REPRESENT THAT NO REPRESENTATIONS OF FACT OR OPINION HAVE BEEN MADE BY ANY
INDIVIDUAL TO INDUCE THIS WAIVER OF TRIAL BY JURY OR TO IN ANY WAY MODIFY OR
NULLIFY ITS EFFECT. DEBTOR, AGENT, AND BANKS EACH FURTHER REPRESENT THAT IT HAS
BEEN REPRESENTED IN THE SIGNING OF THIS AGREEMENT AND IN THE MAKING OF THIS
WAIVER BY INDEPENDENT LEGAL COUNSEL, SELECTED OF ITS OWN FREE WILL, AND THAT IT
HAS HAD THE OPPORTUNITY TO DISCUSS THIS WAIVER WITH COUNSEL.
Section 9.7. Severability. If a court of competent jurisdiction finds
any provision of this Agreement to be invalid or unenforceable as to any person
or circumstance, such finding shall not render that provision invalid or
unenforceable as to any other persons or circumstances. If feasible, any such
offending provision shall be deemed to be modified to be within the limits of
enforceability or validity; however, if the offending provision cannot be so
modified, it shall be stricken and all other provisions of this Agreement in all
other respects shall remain valid and enforceable.
Section 9.8. Consent to Loan Participation; Sales and Assignments (a)
Debtor agrees that any Bank may sell or transfer, whether now or later, one or
more participation interests in the Indebtedness of Debtor arising pursuant to
this Agreement to one or more purchasers. Agent and each Bank may provide,
without any limitation whatsoever, to any one or more purchasers, or potential
purchasers, any information or knowledge Agent or such Bank may have about
Debtor or about any other matter relating to such Indebtedness, and Debtor
hereby waives any rights to privacy they may have with respect to such matters.
Debtor additionally waives any and all notices of sale of participation
interests, as well as all notices of any repurchase of such participation
interests. Debtor agrees that the purchasers of any such participation interest
will be considered as the absolute owners of such interests in such
Indebtedness.
(b) Each original Bank may assign to other Banks or other Persons
that has a short-term unsecured debt rating of at least P-1 from Moody's
Investor Service or A-1 from Standard & Poor Rating Group, in amounts not less
than $5,000,000.00, whether related or unrelated to such Bank, all or a portion
of its interest, rights and obligations under this Agreement; provided, however,
that (i) the consent of Agent and, provided no Event of Default is continuing,
the Debtor, shall be required prior to any transfer becoming effective, which
consents will not be unreasonably withheld, delayed or conditioned, (ii) other
than in the case of an assignment to another Bank (that is, at the time of the
assignment, a party hereto) the Agent and Debtor must give prior written
consent, which written consent shall not be unreasonably withheld; (iii) the
parties to each such assignment shall execute and deliver to the Agent for its
acceptance an Assignment and Acceptance in form satisfactory to Agent (each an
"Assignment and Acceptance"), together with any Note or Notes subject to such
assignment and an administrative fee of $3,000 paid by the assignee (for which
the Debtor will have no liability); and (iv) each such assignment shall be of a
constant, and not of a varying, percentage of all of the assigning Banks' rights
and obligations under this Agreement. Upon such execution, delivery and
acceptance, from and after the effective date specified in each Assignment and
Acceptance, (a) the assignee thereunder shall be a party hereto and, to the
extent
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provided in such Assignment and Acceptance, have the rights and obligations of
the Bank hereunder and (b) the Bank hereunder shall, to the extent provided in
such Assignment and Acceptance, be released from its obligations under this
Agreement (and, in the case of an Assignment and Acceptance covering all of the
remaining portion of an assigning Bank's rights and obligations under this
Agreement, such Bank shall cease to be a party hereto). Notwithstanding anything
contained in this Agreement to the contrary, any Bank may at any time assign all
or any portion of its rights under this Agreement and the Notes issued to it as
collateral to a Federal Reserve Bank; provided that no such assignment shall
release such Bank from any of its obligations hereunder; provided further such
Federal Reserve Bank shall not be considered a Bank for purposes of this
Agreement or the Related Documents.
(c) By executing and delivering an Assignment and Acceptance, the
Bank assignor thereunder and the assignee thereunder confirm to and agree with
each other and the other parties hereto as follows: (i) other than the
representation and warranty that it is the legal and beneficial owner of the
interest being assigned thereby free and clear of any adverse claim, such Bank
assignor makes no representation or warranty and assumes no responsibility with
respect to any statements, warranties or representations made in or in
connection with this Agreement or any of the other Related Documents or the
execution, legality, validity enforceability, genuineness, sufficiency or value
of this Agreement or any of the Related Documents or any other instrument or
document furnished pursuant thereto; (ii) such Bank assignor makes no
representation or warranty and assumes no responsibility with respect to the
financial condition of the Debtor or the performance or observance by the Debtor
of any of its obligations under this Agreement or any of the other Related
Documents or any other instrument or document furnished pursuant hereto; (iii)
such assignee confirms that it has received a copy of this Agreement, together
with copies of the financial statements referred to in Section 5.1 hereof and
such other documents and information as it has deemed appropriate to make its
own credit analysis and decision to enter into such Assignment and Acceptance;
(iv) such assignee will independently and without reliance upon the Agent, such
Bank assignor and any other Bank, based on such documents and information as it
shall deem appropriate at the time, continue to make its own credit decisions in
taking or not taking action under this Agreement and the Related Documents; (v)
such assignee appoints and authorizes the Agent to take such action as Agent on
its behalf and to exercise such powers under this Agreement and the other Loan
Documents as are delegated to the Agent by the terms hereof, together with such
powers as are reasonably incidental thereto; and (vi) such assignee agrees that
it will perform in accordance with their terms all obligations set by the terms
of this Agreement and the Related Documents as are required to be performed by
it as Bank.
(d) The entries in the records of the Agent as to each Assignment
and Acceptance delivered to it and the names and addresses of the Banks and
Commitments of, and principal amount of the Loans owing to, each Bank from time
to time shall be conclusive, in the absence of manifest error, and the Debtor,
the Agent and the Banks may treat each Person, the name of which is recorded in
the books and records of Agent as the Bank hereunder for all purposes of this
Agreement and the Related Documents.
(e) Upon the Agent's receipt of an Assignment and Acceptance
executed by an assigning
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<PAGE>
Bank and the assignee thereunder, together with any Note or Notes subject to
such assignment, and the written consent of Debtor and Agent to such assignment,
if required, the Agent shall, if such Assignment and Acceptance has been
completed with blanks appropriately filled, (i) accept such Assignment and
Acceptance, (ii) record the information contained therein in its records and
(iii) give prompt notice thereof to the Debtor. Within five (5) Business Days
after receipt of Notice, the Debtor, at its own expense, shall execute and
deliver to the Agent, in exchange for the surrendered Note, new Notes to the
order of such assignee in an amount equal to the Loans, (if applicable) assumed
by it pursuant to such Assignment and Acceptance and, if the assigning Bank has
retained interests hereunder, new Notes to the order of the assigning Bank in an
amount equal to the Loans, (if applicable) retained by it hereunder. Such new
Notes shall be in an aggregate principal amount equal to the aggregate principal
amount of such surrendered Notes, shall be dated the effective date of such
Assignment and Acceptance and shall otherwise be in substantially the form of
the Notes surrendered. Thereafter, such surrendered Notes shall be marked
renewed and substituted and the originals thereof delivered to the Debtor (with
copies, certified by the Debtor as true, correct and complete, to be retained by
the Agent).
(f) Each Bank's right to sell a participation under Section 9.8
(a), and Debtor's consent given with respect to Section 9.8(b), is conditioned
on the following: (i) any transferee of information must protect and maintain
all disclosed information, including but not limited to tenant names and sales
data, confidential and such information may be used for no other purpose other
than evaluating the purchase of participation interests; (ii) every transferee
must execute an appropriate confidentiality/use agreement prior to Agent or a
Bank, as the case may be, delivering to such transferee any information; and
(iii) Agent or such Bank, as the case may be, must provide Debtor a copy of such
signed confidentiality/use agreement prior to making disclosure to such
transferee.
Section 9.9 Successors and Assigns
This Agreement shall be binding upon and inure to the benefit
of the Debtor, the Agent and the Banks and their respective successors and
assigns; provided, however, that the Debtor may not assign or transfer any of
its rights or obligations hereunder without the prior written consent of all of
the Banks, and any such assignment or transfer without such a consent shall be
null and void.
Section 9. 10. Headings. Article and Section headings used in this
Agreement are for convenience only and shall not affect the construction of this
Agreement.
Section 9.11. Counterparts. This Agreement may be executed in
counterparts and different parties hereto may execute different counterparts,
but all counterparts together shall constitute a single document.
Section 9. 12 Amendments. This Agreement may be amended from time to
time, but only in writing, by Agent and Debtor, including amendments to modify
the aggregate amount of the Commitments and to admit additional Banks as parties
to this Agreement (in addition to the provisions of Section 9.8 hereof regarding
assignments of existing interests) provided, however, any
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<PAGE>
such amendments shall not require Debtor providing additional resolutions or
opinions of counsel unless such amendment involves an increase in the Commitment
Amount and a related amendment to the Guaranty to increase the guaranty amount,
in which case Banks and Agent may require additional resolutions and opinions .
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers thereunto duly authorized, as of the date
first above written.
DEBTOR:
TANGER PROPERTIES LIMITED
PARTNERSHIP
BY: TANGER FACTORY OUTLET
CENTERS, INC.
General Partner
By: _______________________________
Stanley K. Tanger
Title: Chairman of the Board
Chief Executive Officer
AGENT:
FIRST NATIONAL AGENT OF COMMERCE
By: ________________________________
Lantz E. Harvey
Title: Vice President
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<PAGE>
BANKS:
FIRST NATIONAL BANK OF COMMERCE
By: ___________________________________
Lantz E. Harvey
Title: Vice President
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<PAGE>
EXHIBIT A
Banks Commitment Applicable Address for
Percentage Notes
First National $15,000,000.00 100% 210 Baronne Street
Bank of New Orleans, LA 70112
Commerce Attn: Lantz E. Harvey
Real Estate Department
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<PAGE>
EXHIBIT B
The Agency Fee shall be the sum of $2,000 per annum (pro-rated as set forth
in Section 2.13, as applicable) for each Bank other than First National Bank of
Commerce.
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<PAGE>
EXHIBIT C
Commitment Amount
$15,000,000.00
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<PAGE>
EXHIBIT D
Form of Note
PROMISSORY NOTE
PRINCIPAL AMOUNT: [AMOUNT OF BANK'S COMMITMENT] DATE OF NOTE:
PROMISE TO PAY. TANGER PROPERTIES LIMITED PARTNERSHIP, a North Carolina
Limited Partnership ("Debtor") promises to pay to the order of [name of
Bank]("Bank"), in lawful money of the United States of America the sum of
[amount of Bank's Commitment] AND NO/100 DOLLARS ($[amount in numerals]) or such
other or lesser amounts as may be reflected from time to time on the books and
records of Bank as evidencing the aggregate unpaid principal balance of loan
advances made to Debtor on a multiple advance basis as provided below, together
with simple interest assessed at the Prime Rate or LIBOR Adjusted Rate as
selected by Debtor pursuant to Section 2.7 of the Loan Agreement (defined
below), commencing on the date hereof and continuing until this Note is paid in
full, or until default under this Note with interest thereafter being subject to
the default interest rate provisions set forth herein. This Note is one of the
Notes issued pursuant to, and entitled to the benefits of, that certain Loan
Agreement dated as of October 14, 1996 between Debtor, First National Bank of
Commerce, as agent (the "Agent"), and the banks party thereto from time to time,
as the same may be amended, modified, or restated from time to time (as so
amended, modified, or restated, the "Loan Agreement"). Bank shall act
exclusively through Agent with respect to all rights and terms of this Note.
This Note is further entitled to the benefits of the Guaranty, as defined in the
Loan Agreement.
MULTIPLE ADVANCE LOAN. This Note contemplates multiple loan advances. Debtor is
entitled to borrow, repay, and borrow again, provided, that the aggregate of all
loan advances outstanding at any time shall not exceed the principal amount
listed above, and provided further that the provisions of the Loan Agreement
shall govern the conditions and provisions of borrowings and repayments
hereunder. Debtor agrees to be liable for all sums either: (a) advanced in
accordance with the instructions of an authorized person or (b) credited to any
of Debtor's deposit accounts with Bank in accordance with the instructions of an
authorized person. The unpaid principal balance owing on this Note at any time
may be evidenced by endorsements on this Note or by Bank's internal records,
including daily computer print-outs.
PAYMENT. Debtor will pay this loan in one payment of all outstanding principal
plus all accrued unpaid interest on the Termination Date as defined in the Loan
Agreement. In addition, Debtor will pay monthly payments of accrued unpaid
interest beginning [first monthly date after date of Note] and all subsequent
interest payments are due on the same day of each month after that until this
Note is paid in full. Interest on this Note is computed on a 365/360 simple
interest basis; that is, by applying the ratio of the annual interest rate over
a year of 360 days, multiplied by the outstanding principal balance, multiplied
by the actual number of days the principal balance is outstanding.
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<PAGE>
Debtor will pay First National Bank of Commerce, as Agent under the Loan
Agreement, and its successors as Agent, at the address shown in the Loan
Agreement, or at such other place as Agent may designate in writing. Unless
otherwise agreed or required by applicable law, payments will be applied first
to accrued unpaid interest, then to principal, and any remaining amount to any
unpaid collection costs and late charges.
PREPAYMENT. Debtor may prepay this Note in whole or in part at any time subject
to the terms and provisions of the Loan Agreement. If Debtor prepays this Note
in full, or if Bank accelerates payment, Debtor understands that, unless
otherwise required by law, any prepaid fees or charges will not be subject to
rebate and will be earned by Bank at the time this Note is signed.
LATE CHARGE. If Debtor fails to pay any payment under this Note in full within
10 days of when due, Debtor agrees to pay Agent a late payment fee in an amount
equal to 3.000% of the unpaid amount of the payment, or U.S. $25.00, whichever
is greater, with a maximum of $200.00. Late charges will not be assessed
following declaration of default and acceleration of maturity of this Note.
DEFAULT. The following actions and/or inactions shall constitute Events of
Default under this Note: The occurrence of an Event of Default under the Loan
Agreement
BANK'S RIGHTS UPON DEFAULT. Should any one or more Events of Default occur or
exist under this Note as provided above, Bank shall have the right, at its sole
option, to declare formally this Note to be in default and to accelerate the
maturity and insist upon immediate payment in full of the unpaid principal
balance then outstanding under this Note, plus accrued interest, together with
reasonable attorneys' fees, costs, expenses and other fees and charges as
provided in the Loan Agreement.
INTEREST AFTER DEFAULT. If Bank declares this Note to be in default, based upon
an Event of Default, Bank has the right prospectively to adjust and fix the
simple interest rate under this Note until this Note is paid in full, to
eighteen (18%) percent per annum (the "Post-Default Rate")
ATTORNEYS' FEES. If Bank refers this Note to an attorney for collection, or
files suit against Debtor to collect this Note, or if Debtor files for
bankruptcy or other relief from creditors, Debtor agrees to pay Bank's
reasonable attorneys' fees in an amount not exceeding 25.000% of the unpaid debt
then owing under this Note.
NSF CHECK CHARGES. In the event that Debtor makes any payment under this Note by
check and Debtor's check is returned to Bank unpaid due to nonsufficient funds
in my deposit account, Debtor agrees to pay Bank an additional NSF check charge
equal to $15.00.
FINANCIAL STATEMENTS. Debtor agrees to provide Bank with such financial
statements and other related information at such frequencies and in such detail
as Bank may reasonably request as set forth in the Loan Agreement.
GOVERNING LAW. Debtor agrees that this Note and the loan evidenced hereby shall
be governed
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<PAGE>
under the laws of the State of Louisiana. Specifically, this business or
commercial Note is subject to La. R.S. 9:3509 et seq.
WAIVERS. To the extent permitted by applicable law, Debtor and each guarantor of
this Note hereby waive presentment for payment, protest, notice of protest and
notice of nonpayment, and all pleas of division and discussion, and severally
agree that their obligations and liabilities to Bank hereunder shall be on a
"solidary" or "joint and several" basis. Debtor and each guarantor further
severally agree that discharge or release of any party who is or may be liable
to Bank for the indebtedness represented hereby shall not have the effect of
releasing any other party or parties, who shall remain liable to Bank Debtor and
each guarantor additionally agree that Bank's acceptance of payment other than
in accordance with the terms of this Note, or Bank's subsequent agreement to
extend or modify such repayment terms, or Bank's failure or delay in exercising
any rights or remedies granted to Bank shall likewise not have the effect of
releasing Debtor or any other party or parties from their respective obligations
to Bank, or of releasing any collateral that directly or indirectly secures
repayment hereof. In addition, any failure or delay on the part of Bank to
exercise any of the rights and remedies granted to Bank shall not have the
effect of waiving any of Bank's rights and remedies. Any partial exercise of any
rights and/or remedies granted to Bank shall furthermore not be construed as a
waiver of any other rights and remedies; it being Debtor's intent and agreement
that Bank's rights and remedies shall be cumulative in nature. Debtor and each
guarantor further agree that, should any Event of Default occur or exist under
this Note, any waiver or forbearance on the part of Bank to pursue the rights
and remedies available to Bank, shall be binding upon Bank only to the extent
that Bank specifically agrees to any such waiver or forbearance in writing. A
waiver or forbearance on the part of Bank as to one default event shall not be
construed as a waiver or forbearance as to any other default. Debtor and each
guarantor of this Note further agree that any late charges provided for under
this Note will not be charges for deferral of time for payment and will not and
are not intended to compensate Bank for a grace or cure period, and no such
deferral, grace or cure period has or will be granted to Debtor in return for
the imposition of any late charge. Debtor recognizes that Debtor's failure to
make timely payment of amounts due under this Note will result in damages to
Bank, including but not limited to Bank's loss of the use of amounts due, and
Debtor agrees that any late charges imposed by Bank hereunder will represent
reasonable compensation to Bank for such damages.
SUCCESSORS AND ASSIGNS LIABLE. Debtor's and each guarantor's obligations and
agreements under this Note shall be binding upon Debtor's and each guarantor's
respective successors, heirs, legatees, devisees, administrators, executors and
assigns. The rights and remedies granted to Bank under this Note shall inure to
the benefit of Bank's successors and assigns, as well as to any subsequent
holder or holders of this Note.
CAPTION HEADINGS. Caption headings of the sections of this Note are for
convenience purposes only and are not to be used to interpret or to define their
provisions. In this Note, whenever the context so requires, the singular
includes the plural and the plural also includes the singular.
SEVERABILITY. If any provision of this Note is held to be invalid, illegal or
unenforceable by any court, that provision shall be deleted from this Note and
the balance of this Note shall be interpreted as if the deleted provision never
existed.
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<PAGE>
PRIOR TO SIGNING THIS NOTE, BORROWER READ AND UNDERSTOOD ALL THE PROVISIONS OF
THIS NOTE, INCLUDING THE VARIABLE INTEREST RATE PROVISIONS. BORROWER HEREBY
WAIVES THE RIGHT TO ANY JURY TRIAL IN ANY ACTION, PROCEEDING, OR COUNTERCLAIM
BROUGHT BY BANK, AGENT OR BORROWER AGAINST THE OTHER TO THE EXTENT PERMITTED BY
APPLICABLE LAW.
BORROWER:
TANGER PROPERTIES LIMITED PARTNERSHIP
BY: TANGER FACTORY OUTLET CENTERS, INC.
BY: ___________________________________
Stanley K. Tanger
Chairman of Board
Chief Executive Officer
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<PAGE>
EXHIBIT E
Termination Date
June 30, 1998
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<PAGE>
EXHIBIT F
Minimum Advance
LIBOR Rate Loans __________________________________$500,000.00
Prime Rate Loans ___________________________________$100,000.00
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<PAGE>
GUARANTY AGREEMENT
THIS GUARANTY AGREEMENT, dated as of October 14, 1996 (the "Guaranty"),
is given by TANGER FACTORY OUTLET CENTERS, INC., a North Carolina corporation
(the "Guarantor"); and extended to FIRST NATIONAL BANK OF COMMERCE, a national
banking association, with its principal offices located in New Orleans,
Louisiana, in its capacity as agent under the Loan Agreement (defined below) (in
such capacity, the "Agent") and in favor of each bank or other institution
(each, a "Bank" and collectively, the "Banks") now or hereafter party to the
Loan Agreement, for the benefit of TANGER PROPERTIES LIMITED PARTNERSHIP, a
limited partnership organized under the laws of the State of North Carolina (the
"Debtor").
RECITALS:
1. The Banks have agreed to make loans (the "Loans") of up to
$15,000,000.00 to Debtor pursuant to the terms and conditions of notes executed
pursuant to the Loan Agreement dated even date herewith among Debtor, Agent, and
Banks (as amended, modified, renewed or extended from time to time, the "Loan
Agreement") as amended, modified, renewed, or extended from time to time (the
"Notes"). All of the definitions used in the Notes and the Loan Agreement are
hereby incorporated herein by reference and shall have the meaning set forth in
the Notes and the Loan Agreement unless otherwise defined herein. References
herein to the "Loans" and to the "Related Documents" refer to the Loans defined
above and to the Related Documents as defined in the Loan Agreement.
2. The Guarantor is the sole general partner of the Debtor.
3. Without this Guaranty the Banks would be unwilling to make
the Loans to Debtor.
4. Because of the direct benefit to the Guarantor from the loans to the
Debtor, the Guarantor agrees to guarantee to the Banks the obligations of the
Debtor as set forth herein.
NOW THEREFORE, in consideration of the Banks entering into the Loan
Agreement and making the Loans to Debtor, and subject to the covenants and
conditions of Item 19 below:
1. Guaranty of Payment. The Guarantor hereby unconditionally guarantees
to the Agent and the Banks the payment, when due, by acceleration or otherwise,
of the Indebtedness. For the purposes hereof, the term "Indebtedness" shall
include any and all indebtedness of the Debtor to the Agent and the Banks
evidenced by the Notes and the Loan Agreement and the Related Documents or
arising in connection with the Loans, including without limitation, all
principal, interest, fees and expenses, whether existing now or arising
hereafter, as such Notes, Loan Agreement and Related Documents may be modified,
extended, or renewed from time to time. The guaranty of the Guarantor as set
forth in this section is a guaranty of payment and not of collection.
2. Guaranty of Performance. The Guarantor additionally unconditionally
guarantees to the Agent and the Banks the timely performance of all other
obligations of the Debtor under the Loan Agreement and all of the Related
Documents.
1
<PAGE>
In the event of the occurrence of an Event of Default as defined in the
Loan Agreement relating to any of the foregoing conditions, and without the
necessity of any notice from the Agent or the Banks to the Guarantor, the
Guarantor agrees to indemnify and hold the Agent and the Banks harmless from any
and all loss, cost, liability or expense the Agent and the Banks may suffer by
reason of any such event. The Agent and the Banks shall accept performance by
the Guarantor of the Debtor's obligations under the Loan Agreement and the
Related Documents, and so long as all of said obligations are being performed by
the Debtor or the Guarantor, the Agent and the Bank will make the Loan proceeds
available under the terms of the Loan Agreement, the Notes, and the Related
Documents. The obligation and liability of the Guarantor under this Section 2
shall not be limited or restricted by the existence of (or limitation on) the
guaranty of payment under Section 1.
3. Subordination. Upon the occurrence and during the continuance of any
Event of Default as defined in the Loan Agreement, no payments shall be made by
Debtor or received by the Guarantor on any indebtedness, now or hereafter
existing, of the Debtor to the Guarantor.
4. Waiver of Rights. The Guarantor expressly waives: (a) notice of
acceptance of this Guaranty by the Banks and of all extensions of credit
pursuant to the Loan Agreement, the Notes, and the Related Documents to the
Debtor by the Banks; (b) presentment and demand for payment of any of the
Indebtedness; (c) protest and notice of dishonor or of default to the Guarantor
or to any other party with respect to the Indebtedness; (d) demand for payment
under this Guaranty; and (e) any right to assert against the Agent or the Banks,
as a defense, counterclaim, set-off, or cross-claim any defense (legal or
equitable), set-off, counterclaim or claim which the Guarantor may now or
hereafter have against the Agent or the Banks or the Debtor, but such waiver
shall not prevent the Guarantor from asserting against the Agent or the Banks in
a separate action, any claim, action, cause of action, or demand that the
Guarantor might have, whether or not arising out of this Guaranty.
5. Primary Liability of the Guarantor. The Guarantor agrees that this
Guaranty may be enforced by the Agent for the benefit of the Banks and Guarantor
waives all rights of division and discussion. The Guarantor further agrees that
nothing contained herein shall prevent the Agent, for the benefit of the Banks,
from suing on the Note or from exercising any other rights available to it under
the Notes, the Loan Agreement, or any other instrument evidencing the
Indebtedness if neither the Debtor nor the Guarantor timely performs the
obligations of the Debtor thereunder, and the exercise of any of the aforesaid
rights shall not constitute a discharge of any of the Guarantor's obligations
hereunder; it being the purpose and intent of the Guarantor that the Guarantor's
obligations hereunder shall be absolute, independent and unconditional under any
and all circumstances. Neither the Guarantor's obligations under the Guaranty
nor any remedy for the enforcement thereof shall be impaired, modified, changed
or released in any manner whatsoever by an impairment, modification, change,
release or limitation of the liability of the Debtor or any co-guarantor or by
reason of the Debtor's or any co-guarantor's bankruptcy or insolvency. The
Guarantor acknowledges that the term "Indebtedness" as used herein includes any
payments made by the Debtor to the Banks and subsequently recovered by the
Debtor or a trustee for the Debtor pursuant to the Debtor's bankruptcy or
insolvency. At any time the Agent, for the benefit of the Banks, is entitled to
exercise its remedies hereunder, it may in its discretion elect to demand
payment or performance. the event the Agent, for the benefit of the Banks,
elects to demand performance,
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<PAGE>
it shall at all times thereafter have the right to demand payment until all of
the Indebtedness has been paid in full. In the event the Agent, for the benefit
of the Banks, elect to demand payment, it shall at all times thereafter have the
right to demand performance until all of the Indebtedness has been paid in full.
6. Waiver of Subrogation Rights. The Guarantor agrees that (i) during
the period prior to the payment in full of the Indebtedness the Guarantor shall
have no rights of subrogation, reimbursement, contribution or indemnity
whatsoever against Debtor for the Guarantor's payment to the Agent or any Bank
of the Guarantor's obligation under this Guaranty (hereinafter referred to as
the "Rights"), and (ii) the Guarantor waives and renounces but only during the
period set forth in (i) above any Rights the Guarantor has or may have against
the Debtor for the Guarantor's payment to the Agent or any Bank of Guarantor's
obligations under this Guaranty. This waiver is expressly intended to prevent
the existence of any claim (as defined in the Bankruptcy Code) in respect of
such Rights by the Guarantor and to prevent the Guarantor from being a creditor
of Debtor due to such Rights unless the Bank has received payment in full of the
Indebtedness.
7. Attorney's Fees and Costs of Collection. If at any time or times
hereafter the Agent or the Banks employ counsel to pursue collection, to
intervene, to sue for enforcement of the terms hereof or of the Loan Agreement,
the Notes, or the Related Documents, or to file a petition, complaint, answer,
motion or other pleading in any suit or proceeding relating to this Guaranty or
the Loan Agreement, the Notes, or the Related Documents, then in such event, all
of the reasonable attorneys' fees relating thereto shall be an additional
liability of the Guarantor to the Agent and the Banks, payable on demand.
8. Term of Guaranty; Warranties. This Guaranty shall continue in full
force and effect until the Indebtedness is fully paid. This Guaranty covers the
Indebtedness whether presently outstanding or arising subsequent to the date
hereof including all amounts advanced by the Banks in stages or installments and
all revolving credit loans and advances made pursuant to the Loan Agreement, the
Notes, or the Related Documents. The Guarantor warrants and represents to the
Agent and the Banks, (i) that this Guaranty is binding upon and enforceable
against the Guarantor, in accordance with its terms, (ii) that the execution and
delivery of this Guaranty do not violate or constitute a breach of any agreement
to which the Guarantor is a party or of any applicable laws, (iii) that there is
no litigation, claim, action or proceeding pending, or to the best knowledge of
the Guarantor, threatened against the Guarantor which would materially adversely
affect the financial condition of the Guarantor or its ability to fulfill its
obligations hereunder. Guarantor agrees to submit annually to the Agent current
financial statements in the same form and with the same substance and level of
detail required of the Debtor pursuant to the Loan Agreement. Guarantor agrees
to promptly inform the Agent of the adverse determination of any litigation,
claim, action or proceeding or the institution of any litigation, claim, action
or proceeding against Guarantor which does or could materially adversely affect
the financial condition of the Guarantor or its ability to fulfill its
obligations hereunder. This Guaranty is binding on and enforceable against the
Guarantor, its successors and assigns. The Guarantor represents and warrants
that (i) it is a corporation duly organized, existing and in good standing under
the laws of the State of North Carolina, with stock outstanding that has been
duly and validly issued, (ii) it has the corporate power, authority and legal
right to carry on the business now being conducted by it and to engage in the
transactions
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<PAGE>
contemplated by this Guaranty and the Loan Documents, and (iii) the execution
and delivery of this Guaranty and the performance and observance of the
provisions hereof have been duly authorized by all necessary corporate and, if
required, stockholder action.
9. Further Representations and Warranties. The Guarantor further
represents to the Agent and the Banks that the Guarantor has knowledge of the
Debtor's financial condition and affairs and represents and agrees that it will
keep so informed while this Guaranty is in force. The Guarantor agrees that the
Agent and the Banks will have no obligation to investigate the financial
condition or affairs of the Debtor for the benefit of the Guarantor nor to
advise the Guarantor of any fact respecting, or any change in, the financial
condition or affairs of the Debtor which might come to the knowledge of the
Agent and the Banks at any time, whether or not the Agent and the Banks know or
believe or have reason to know or believe that any such fact or change is
unknown to the Guarantor or might (or does) materially increase the risk of the
Guarantor as guarantor or might (or would) affect the willingness of the
Guarantor to continue as guarantor with respect to the Indebtedness.
10. Additional Liability of the Guarantor. If the Guarantor is or
becomes liable for any indebtedness owing by the Debtor to the Agent and the
Banks by endorsement or otherwise than under this Guaranty, such liability shall
not be in any manner impaired or reduced hereby but shall have all and the same
force and effect it would have had if this Guaranty had not existed and the
Guarantor's liability hereunder shall not be in any manner impaired or reduced
thereby.
11. Cumulative Rights. All rights of the Agent and the Banks hereunder
or otherwise arising under any documents executed in connection with the
Indebtedness are separate and cumulative and may be pursued separately,
successively or concurrently, or not pursued, without affecting or limiting any
other right of the Agent and the Banks and without affecting or impairing the
liability of the Guarantor.
12. Usury. Notwithstanding any other provisions herein contained, no
provision of this Guaranty shall require or permit the collection from the
Guarantor of interest in excess of the maximum rate or amount that the Guarantor
may be required or permitted to pay pursuant to any applicable law.
13. Multiple Counterparts; Pronouns; Captions; Severability. This
Guaranty may be executed in multiple counterparts, each of which shall be deemed
an original but all of which shall constitute but one and the same document. The
pronouns used in this instrument shall be construed as masculine, feminine or
neuter as the occasion may require. Captions are for reference only and in no
way limit the terms of this Guaranty. Invalidation of any one or more of the
provisions of this Guaranty shall in no way affect any of the other provisions
hereof, which shall remain in full force and effect.
14. Bank Assigns. This Guaranty is intended for and shall inure to the
benefit of the Agent and each Bank and each and every person who shall from time
to time be or become the "Agent" under the Loan Agreement or the owner or holder
of any of the Indebtedness, and each and every reference herein to the "Agent"
shall include successors and assigns of First National Bank
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<PAGE>
of Commerce in such capacity and every reference herein to "Bank" shall include
and refer to each and every successor or assignee of the Bank at any time
holding or owning any part of or interest in any part of the Indebtedness.
This Guaranty shall be transferable and negotiable with the same force
and effect, and to the same extent, that the Indebtedness is transferable and
negotiable, it being understood and stipulated that upon assignment or transfer
by the Agent of its rights and duties under the Loan Agreement or by any Bank of
any of the Indebtedness, the successor Agent under the Loan Agreement, or the
legal holder or owner of said Indebtedness (or a part thereof or interest
therein thus transferred or assigned by the Bank), as the case may be, shall
(except as otherwise stipulated by the Bank in its assignment) have and may
exercise all of the rights granted to the Agent or such Bank under this Guaranty
to the extent of that part of or interest in the Indebtedness thus assigned or
transferred to said person. The Guarantor expressly waives notice of transfer or
assignment of the Indebtedness, or any part thereof, or of the rights of the
Agent or such Bank hereunder. Failure to give notice will not affect the
liability of the Guarantor hereunder.
15. Application of Payments. The Banks may apply any payments received
by it from any source against that portion of the Indebtedness (principal,
interest, court costs, attorneys' fees or other) in such priority and fashion as
it may deem appropriate.
16. Notices. All notices required to be given hereunder shall be in
writing and shall be deemed served at the earlier of (i) receipt or (ii)
seventy-two (72) hours after deposit in registered, certified or first-class
United States mail, postage prepaid, or (iii) upon delivery when deposited with
Federal Express, Airborne Express, or other similar courier providing next-day
deliveries, in each case, addressed to the parties at the following addresses,
or such other addresses as may from time to time be designated by written notice
given as herein required:
to the Guarantor:
Tanger Factory Outlet Centers, Inc.
1400 West Northwood Street [zip 27408]
P.O. Box 29168
Greensboro, North Carolina 27429
Attention: Mr. Stanley K. Tanger
and Ms. Rochelle Simpson
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to the Agent or the Banks:
Mr. Lantz Harvey
First National Bank of Commerce
210 Baronne Street
Real Estate Department
New Orleans, LA 70112
Personal delivery to any officer, agent or employee of a party at its address
herein shall constitute receipt. Rejection or other refusal to accept or
inability to deliver because of changed address of which no notice has been
received shall also constitute receipt. Notwithstanding the foregoing, no notice
of change of address shall be effective until the date of receipt thereof. This
section shall not be construed in any way to affect or impair any waiver of
notice of demand herein provided or to require giving of notice or demand to or
upon the Guarantor in any situation or for any reason.
17. Governing Law. This Guaranty shall be deemed to be a contract made
under, and for all purposes shall be construed in accordance with, the internal
laws and judicial decisions of the State of Louisiana. The Guarantor, the Agent,
and the Banks agree that any dispute arising out of this Guaranty shall be
subject to the jurisdiction of both the state and federal courts in the States
of Louisiana or North Carolina, and acknowledges that Agent shall have the sole
and complete discretion regarding the selection of which of the two
jurisdictions in which it will elect to bring suit. For that purpose, the
Guarantor hereby submits to the jurisdiction of the state and federal courts of
the States of Louisiana and North Carolina. The Agent and the Banks agree that
they will not seek to enforce this Guaranty in any other jurisdiction, so long
as Guarantor is domiciled in North Carolina and is subject to service of process
in the State of Louisiana. The Guarantor further agrees to accept service of
process out of any of the before mentioned courts in such dispute by registered
or certified mail addressed to the Guarantor.
18. Federal Tax Identification Number. The Guarantor hereby certifies
to the Bank that the Guarantor's federal tax identification number is
56-1815473.
19. Bank Covenants. Notwithstanding any other provisions of this
Guaranty by accepting this Guaranty Agent and each Bank warrants, covenants and
agrees as follows: (a) no Bank may enforce any rights under this Guaranty
directly, but all rights hereunder shall be enforced solely by and through the
Agent; (b) such Bank will not authorize or direct Agent, on its behalf, to
institute an action against the Guarantor or exercise any of such Bank's
remedies under this Guaranty unless and until an Event of Default (as defined in
the Loan Agreement) has occurred and is continuing; (c) the Loan may be prepaid
in full without penalty (other than any payments due as a result of prepaying a
LIBOR Rate Loan (as defined in the Loan Agreement) prior to the termination of
the then applicable Interest Period (as defined in the Loan Agreement)) at any
time during which an Event of Default has occurred and is continuing; and (d)
such Bank will not authorize or direct Agent, on its behalf, to enforce its
rights against the Guarantor, unless in the same proceeding, the Agent shall
also seek recovery (unless Agent is prohibited, temporarily or permanently, by
bankruptcy, dissolutions, injunction inability to achieve service of
process or other similar legal
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<PAGE>
impediment) from the Debtor of any outstanding balance due on the
Indebtedness. Nothing herein shall limit Banks' rights against Guarantor to
pursue only a deficiency judgment or otherwise obligate Banks to take actions
other than as set forth above.
IN WITNESS WHEREOF, the Guarantor has executed this Guaranty under seal
as of the day and year first above written.
TANGER FACTORY OUTLET CENTERS, INC.
[CORPORATE SEAL]
BY: _____________________________________
ATTEST: Stanley K. Tanger
Chairman of the Board
Chief Executive Officer
- -------------------------
Secretary
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<PAGE>
PROMISSORY NOTE
PRINCIPAL AMOUNT: $15,000,000.00 DATE OF NOTE: OCTOBER 14, 1996
PROMISE TO PAY. TANGER PROPERTIES LIMITED PARTNERSHIP, a North Carolina Limited
Partnership ("Debtor") promises to pay to the order of First National Bank of
Commerce ("Bank"), in lawful money of the United States of America the sum of
FIFTEEN MILLION AND NO/100 DOLLARS ($15,000,000.00) or such other or lesser
amounts as may be reflected from time to time on the books and records of Bank
as evidencing the aggregate unpaid principal balance of loan advances made to
Debtor on a multiple advance basis as provided below, together with simple
interest assessed at the Prime Rate or LIBOR Adjusted Rate as selected by Debtor
pursuant to Section 2.7 of the Loan Agreement (defined below), commencing on the
date hereof and continuing until this Note is paid in full, or until default
under this Note with interest thereafter being subject to the default interest
rate provisions set forth herein. This Note is one of the Notes issued pursuant
to, and entitled to the benefits of, that certain Loan Agreement dated as of
October 14, 1996 between Debtor, First National Bank of Commerce, as agent (the
"Agent"), and the banks party thereto from time to time, as the same may be
amended, modified, or restated from time to time (as so amended, modified, or
restated, the "Loan Agreement"). Bank shall act exclusively through Agent with
respect to all rights and terms of this Note. This Note is further entitled to
the benefits of the Guaranty, as defined in the Loan Agreement.
MULTIPLE ADVANCE LOAN. This Note contemplates multiple loan advances. Debtor is
entitled to borrow, repay, and borrow again, provided, that the aggregate of all
loan advances outstanding at any time shall not exceed the principal amount
listed above, and provided further that the provisions of the Loan Agreement
shall govern the conditions and provisions of borrowings and repayments
hereunder. Debtor agrees to be liable for all sums either: (a) advanced in
accordance with the instructions of an authorized person or (b) credited to any
of Debtor's deposit accounts with Bank in accordance with the instructions of an
authorized person. The unpaid principal balance owing on this Note at any time
may be evidenced by endorsements on this Note or by Bank's internal records,
including daily computer print-outs.
PAYMENT. Debtor will pay this loan in one payment of all outstanding principal
plus all accrued unpaid interest on the Termination Date as defined in the Loan
Agreement. In addition, Debtor will pay monthly payments of accrued unpaid
interest beginning November 15, 1996, and all subsequent interest payments are
due on the same day of each month after that until this Note is paid in full.
Interest on this Note is computed on a 365/360 simple interest basis; that is,
by applying the ratio of the annual interest rate over a year of 360 days,
multiplied by the outstanding principal balance, multiplied by the actual number
of days the principal balance is outstanding. Debtor will pay First National
Bank of Commerce, as Agent under the Loan Agreement, and its successors as
Agent, at the address shown in the Loan Agreement, or at such other place as
Agent may designate in writing. Unless otherwise agreed or required by
applicable law, payments will be applied first to accrued unpaid interest, then
to principal, and any remaining amount to any unpaid collection costs and late
charges.
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<PAGE>
PREPAYMENT. Debtor may prepay this Note in whole or in part at any time subject
to the terms and provisions of the Loan Agreement. If Debtor prepays this Note
in full, or if Bank accelerates payment, Debtor understands that, unless
otherwise required by law, any prepaid fees or charges will not be subject to
rebate and will be earned by Bank at the time this Note is signed.
LATE CHARGE. If Debtor fails to pay any payment under this Note in full within
10 days of when due, Debtor agrees to pay Agent a late payment fee in an amount
equal to 3.000% of the unpaid amount of the payment, or U.S. $25.00, whichever
is greater, with a maximum of $200.00. Late charges will not be assessed
following declaration of default and acceleration of maturity of this Note.
DEFAULT. The following actions and/or inactions shall constitute Events of
Default under this Note: The occurrence of an Event of Default under the Loan
Agreement
BANK'S RIGHTS UPON DEFAULT. Should any one or more Events of Default occur or
exist under this Note as provided above, Bank shall have the right, at its sole
option, to declare formally this Note to be in default and to accelerate the
maturity and insist upon immediate payment in full of the unpaid principal
balance then outstanding under this Note, plus accrued interest, together with
reasonable attorneys' fees, costs, expenses and other fees and charges as
provided in the Loan Agreement.
INTEREST AFTER DEFAULT. If Bank declares this Note to be in default, based upon
an Event of Default, Bank has the right prospectively to adjust and fix the
simple interest rate under this Note until this Note is paid in full, to
eighteen (18%) percent per annum (the "Post-Default Rate")
ATTORNEYS' FEES. If Bank refers this Note to an attorney for collection, or
files suit against Debtor to collect this Note, or if Debtor files for
bankruptcy or other relief from creditors, Debtor agrees to pay Bank's
reasonable attorneys' fees in an amount not exceeding 25.000% of the unpaid debt
then owing under this Note.
NSF CHECK CHARGES. In the event that Debtor makes any payment under this Note by
check and Debtor's check is returned to Bank unpaid due to nonsufficient funds
in my deposit account, Debtor agrees to pay Bank an additional NSF check charge
equal to $15.00.
FINANCIAL STATEMENTS. Debtor agrees to provide Bank with such financial
statements and other related information at such frequencies and in such detail
as Bank may reasonably request as set forth in the Loan Agreement.
GOVERNING LAW. Debtor agrees that this Note and the loan evidenced hereby shall
be governed under the laws of the State of Louisiana. Specifically, this
business or commercial Note is subject to La. R.S. 9:3509 et seq.
WAIVERS. To the extent permitted by applicable law, Debtor and each guarantor of
this Note hereby waive presentment for payment, protest, notice of protest and
notice of nonpayment, and all pleas of division and discussion, and severally
agree that their obligations and liabilities to Bank
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<PAGE>
hereunder shall be on a "solidary" or "joint and several" basis. Debtor and each
guarantor further severally agree that discharge or release of any party who is
or may be liable to Bank for the indebtedness represented hereby shall not have
the effect of releasing any other party or parties, who shall remain liable to
Bank Debtor and each guarantor additionally agree that Bank's acceptance of
payment other than in accordance with the terms of this Note, or Bank's
subsequent agreement to extend or modify such repayment terms, or Bank's failure
or delay in exercising any rights or remedies granted to Bank shall likewise not
have the effect of releasing Debtor or any other party or parties from their
respective obligations to Bank, or of releasing any collateral that directly or
indirectly secures repayment hereof. In addition, any failure or delay on the
part of Bank to exercise any of the rights and remedies granted to Bank shall
not have the effect of waiving any of Bank's rights and remedies. Any partial
exercise of any rights and/or remedies granted to Bank shall furthermore not be
construed as a waiver of any other rights and remedies; it being Debtor's intent
and agreement that Bank's rights and remedies shall be cumulative in nature.
Debtor and each guarantor further agree that, should any Event of Default occur
or exist under this Note, any waiver or forbearance on the part of Bank to
pursue the rights and remedies available to Bank, shall be binding upon Bank
only to the extent that Bank specifically agrees to any such waiver or
forbearance in writing. A waiver or forbearance on the part of Bank as to one
default event shall not be construed as a waiver or forbearance as to any other
default. Debtor and each guarantor of this Note further agree that any late
charges provided for under this Note will not be charges for deferral of time
for payment and will not and are not intended to compensate Bank for a grace or
cure period, and no such deferral, grace or cure period has or will be granted
to Debtor in return for the imposition of any late charge. Debtor recognizes
that Debtor's failure to make timely payment of amounts due under this Note will
result in damages to Bank, including but not limited to Bank's loss of the use
of amounts due, and Debtor agrees that any late charges imposed by Bank
hereunder will represent reasonable compensation to Bank for such damages.
SUCCESSORS AND ASSIGNS LIABLE. Debtor's and each guarantor's obligations and
agreements under this Note shall be binding upon Debtor's and each guarantor's
respective successors, heirs, legatees, devisees, administrators, executors and
assigns. The rights and remedies granted to Bank under this Note shall inure to
the benefit of Bank's successors and assigns, as well as to any subsequent
holder or holders of this Note.
CAPTION HEADINGS. Caption headings of the sections of this Note are for
convenience purposes only and are not to be used to interpret or to define their
provisions. In this Note, whenever the context so requires, the singular
includes the plural and the plural also includes the singular.
SEVERABILITY. If any provision of this Note is held to be invalid, illegal or
unenforceable by any court, that provision shall be deleted from this Note and
the balance of this Note shall be interpreted as if the deleted provision never
existed.
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<PAGE>
PRIOR TO SIGNING THIS NOTE, BORROWER READ AND UNDERSTOOD ALL THE PROVISIONS OF
THIS NOTE, INCLUDING THE VARIABLE INTEREST RATE PROVISIONS. BANK, AGENT AND
BORROWER HEREBY WAIVE THE RIGHT TO ANY JURY TRIAL IN ANY ACTION, PROCEEDING, OR
COUNTERCLAIM BROUGHT BY BANK, AGENT OR BORROWER AGAINST THE OTHER TO THE EXTENT
PERMITTED BY APPLICABLE LAW.
BORROWER:
TANGER PROPERTIES LIMITED PARTNERSHIP
BY: TANGER FACTORY OUTLET CENTERS, INC.
BY: ___________________________________
Stanley K. Tanger
Chairman of Board
Chief Executive Officer
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<PAGE>
LOAN AGREEMENT
dated as of
November 18, 1996
Between
TANGER PROPERTIES LIMITED PARTNERSHIP
and
SOUTHTRUST BANK OF ALABAMA, NATIONAL ASSOCIATION
<PAGE>
LOAN AGREEMENT
THIS LOAN AGREEMENT dated as of November 18, 1996, by and between
TANGER PROPERTIES LIMITED PARTNERSHIP, a North Carolina limited partnership
(which, together with its Subsidiaries from time to time, is referred to as the
"Debtor"), and SOUTHTRUST BANK OF ALABAMA, NATIONAL ASSOCIATION, a national
banking association (the "Bank").
W I T N E S S E T H:
WHEREAS, Debtor applied for the issuance of a commitment for a
line of credit, and the Bank has agreed to provide such credit facility to
Debtor subject to the terms and conditions of this Agreement.
NOW, THEREFORE, in consideration of the mutual covenants hereunder set
forth, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
Section 1.1. Defined Terms. As used in this Agreement, and unless the
context requires a different meaning, the following terms have the meanings
indicated:
"Adjusted Unencumbered Assets" shall mean 100% of Debtor's
non-operating cash and cash equivalents which are not subject to any
lien, or security interest, plus 60% of Debtor's income earning
Undepreciated Real Estate Assets which are not subject to any
Encumbrance.
"Affiliate" of any specified Person means (i) any other Person directly
or indirectly controlling or controlled by or under direct or indirect
common control with such specified Person or (ii) any other Person that
owns, directly or indirectly, 10% or more of such specified Person's
Voting Stock or any executive officer, director, manager or trustee of
any such specified Person or other Person or, with respect to any
natural person, any person having a relationship with such person by
blood, marriage or adoption not more remote than first cousin. For the
purposes of this definition, "control", when used with respect to any
specified Person, means the power to direct the management and policies
of such Person, directly or indirectly, whether through the ownership
of Voting Stock, by contract or otherwise; and the terms "controlling"
and "controlled" have meanings correlative to the foregoing.
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<PAGE>
"Agreement" shall mean this Loan Agreement, as the same may from time
to time be amended, modified or supplemented and in effect.
"Applicable Increment" shall mean, with respect to the applicable
Interest Period, the number of basis points to be added to the LIBOR
Rate to calculate the LIBOR Adjusted Rate, as determined under Section
2.11.
"Business Day" means a day other than a Saturday, Sunday or legal
holiday for commercial banks under the laws of the State of Alabama or
a day on which national banks are authorized to be closed in
Birmingham, Alabama, and if such day relates to a Conversion to, or
Continuation of, or Advance subject to, the LIBOR Adjusted Rate, shall
also be a day on which dealings in Dollar deposits are carried out in
the interbank market selected by Bank for purposes of setting the LIBOR
Rate.
"Centers" shall mean Tanger Factory Outlet Centers, Inc., a North
Carolina corporation, the sole general partner of Debtor.
"Commitment" shall mean the agreement by the Bank to Debtor to make
Loan in accordance with the provisions of Article II hereof in an
aggregate principal amount not to exceed the Commitment Amount.
"Commitment Amount" shall mean the amount not less than $15,000,000.00
as set forth on Exhibit "A" hereto, as amended from time to time.
"Continue", "Continuation" and "Continued" shall mean the continuation
pursuant to Section 2.6 hereof of the LIBOR Adjusted Rate or the Prime
Rate accruing on the Note from one Interest Period to the next Interest
Period.
"Convert", "Conversion" and "Converted" shall mean a conversion
pursuant to Section 2.6 hereof of the interest rate then accruing on
the Note to the LIBOR Adjusted Rate or to the Prime Rate.
"Debt" shall mean any indebtedness, whether or not contingent, in
respect of (i) borrowed money evidenced by bonds, notes, debentures or
similar instruments, (ii) indebtedness secured by any Encumbrance
existing on property, (iii) the reimbursement obligations, contingent
or otherwise, in connection with any letters of credit actually issued
or amounts representing the balance deferred and unpaid of the purchase
price of any property except any such balance that constitutes an
accrued expense or trade payable or (iv) any lease of property which
would be reflected on a consolidated balance sheet as a capitalized
lease in accordance with GAAP, in the case of items of indebtedness
under (i) through (iii) above to the extent that any such items (other
than letters of credit) would appear as a liability on a consolidated
balance sheet in accordance with GAAP, and also includes, to the extent
not
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<PAGE>
otherwise included, any obligation to be liable for, or to pay, as
obligor, guarantor or otherwise (other than for purposes of collection
in the ordinary course of business), indebtedness of another person.
"Debt Service" shall mean regularly scheduled principal and interest
payments, exclusive of balloon maturity payments on all Liabilities,
and the current portion of all long-term leases or lease agreements
required to be capitalized under GAAP.
"Debt Service Coverage Ratio" as calculated quarterly for the most
recent four quarters then ending shall mean (a) EBITDA divided by (b)
Debt Service.
"Debtor" shall mean Tanger Properties Limited Partnership, a North
Carolina limited partnership, together with its successors and assigns
and together with its Subsidiaries from time to time.
"Default" shall mean an event which with the giving of notice or the
lapse of time (or both) would constitute an Event of Default hereunder.
"Dollars" and "$" shall mean lawful money of the United States
of America.
"EBITDA" shall mean Debtor's income before minority interest plus
interest, taxes, depreciation, and amortization, all determined in
accordance with GAAP consistently applied, calculated quarterly on a
rolling four-quarters basis
"Encumbrances" shall mean individually, collectively and
interchangeably any and all presently existing and/or future mortgages
or liens (other than those that are fully bonded by deposit of cash or
by commercial surety reasonably acceptable to the Bank) or similar
charges, contractual and/or statutory charges on real property.
"Environmental Laws" shall mean the Comprehensive Environmental
Response, Compensation, and Liability Act of 1980, as amended, 42
U.S.C. Section 9601, et seq. ("CERCLA"), the Superfund Amendments and
Reauthorization Act of 1986, Pub. L. No. 99-499 ("SARA"), the Hazardous
Materials Transportation Act, 49 U.S.C. Section 1801, et seq., the
Resource Conservation and Recovery Act, 49 U.S.C. Section 6901, et
seq., any similar laws or laws relating to the environment enacted in
any State in which Debtor owns real properties, and any applicable
Governmental Requirements or regulations adopted pursuant to any of
the foregoing.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as amended from time to time.
"Eurocurrency Liabilities" shall have the meaning assigned to that term
in Regulation D of the Board of Governors of the Federal Reserve
System, as in effect from time
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<PAGE>
to time.
"Eurodollar Rate Reserve Percentage" for any Interest Period means the
reserve percentage applicable during such Interest Period (or if more
than one such percentage shall be so applicable, the daily average of
such percentages for those days in such Interest Period during which
any such percentage shall be so applicable) under regulations issued
from time to time by the Board of Governors of the Federal Reserve
System (or any successor) for determining the maximum reserve
requirement (including, without limitation, any emergency, supplemental
or other marginal reserve requirement) for member banks of the Federal
Reserve System with deposits exceeding $1,000,000,000 with respect to
liabilities or assets consisting of or including Eurocurrency
Liabilities having a term equal to such Interest Period.
"Event of Default" shall mean individually, collectively and
interchangeably any of the Events of Default set forth below in Section
7.1 hereof.
"Funds from Operations" for any period shall mean the Net Income of the
Debtor and its Subsidiaries for such period before giving effect to
depreciation and amortization uniquely significant to real estate,
gains or losses from extraordinary items, gains or losses on sales of
real estate, gains or losses with respect to the disposition of
investments in marketable securities and any provision/benefit for
income taxes for such period, plus the allocable portion, based on the
Debtor's ownership interest, of funds from operations of unconsolidated
joint ventures, all determined on a consistent basis.
"GAAP" shall mean, at any time, accounting principles generally
accepted in the United States as then in effect.
"Governmental Requirement" shall mean any applicable state, federal or
local law, statute, ordinance, code, rule, regulation, order or decree.
"Guaranty" shall mean an unconditional continuing guaranty of the
Indebtedness executed by Centers.
"Hazardous Materials" shall mean
(i) any "hazardous waste" in quantities as defined by either
the Resource Conservation and Recovery Act of 1976 (42 U.S.C. ss. 6901
et seq.), or any similar laws or laws relating to the environment
enacted in any State in which Debtor owns real property, as amended
from time to time, and regulations promulgated thereunder;
(ii) any "hazardous substance" in quantities as defined by
either the Comprehensive Environmental Response, Compensation and
Liability Act of 1980
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<PAGE>
(42 U.S.C. ss. 9601 et seq.) ("CERCLA") or any similar laws or laws
relating to the environment enacted in any State in which Debtor owns
real property, as amended from time to time, and regulations
promulgated thereunder;
(iii) any "regulated substance" as that term is defined under
the Resource Conservation and Recovery Act, 42 U.S.C. ss. 6991 et seq.;
(iv) asbestos in violation of Governmental Requirement;
(v) polychlorinated biphenyls in violation of Governmental
Requirement;
(vi) any substance the presence of which on Debtor's
properties is prohibited by Governmental Requirement from time to time
in force and effect relating to such properties; and
(vii) any other substance which by any such rule or regulation
requires special handling in its collection, storage, treatment or
disposal.
"Hazardous Materials Contamination" shall mean the contamination in
quantities in violation of any applicable Governmental Requirement
(whether presently existing or hereafter occurring) in, on, or under
any of the Debtor's properties, including the improvements thereon, by
Hazardous Materials.
"Indebtedness" shall mean, at any time, the indebtedness of Debtor
evidenced by the Note in principal, interest, costs, expenses and
reasonable attorneys' fees and all other fees and charges, together
with all other indebtedness and costs and expenses for which Debtor is
responsible under this Agreement or any of the Related Documents.
"Interest Period" shall mean in connection with each Advance for which
the LIBOR Adjusted Rate is applicable, a period of one, two, three,
four or six months as selected by the Debtor in the notice of
borrowing, or to Continue, or to Convert for such Advance subject to
the following:
(i) the initial Interest Period for any Advance shall
commence on the date of such Advance;
(ii) if any Interest Period would otherwise expire on a day
which is not a Business Day, such Interest Period shall expire on the
next succeeding Business Day, provided that if any Interest Period in
respect of an Advance would otherwise expire on a day that is not a
Business Day but is a day of the month after which no further Business
Day occurs in such month, such Interest Period shall expire on the next
preceding Business Day;
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<PAGE>
(iii) any Interest Period in respect of an Advance which
begins on the last Business Day of a calendar month (or on a day for
which there is no numerically corresponding day in the calendar month
at the end of such Interest Period) shall, subject to clause (iv)
below, end on the last Business Day of a calendar month;
(iv) no Interest Period shall extend beyond the Termination
Date.
"LIBOR Event" shall have the meaning specified in Section 2.7(a)
hereof.
"LIBOR Adjusted Rate" shall mean with respect to the applicable
Interest Period, the per annum rate of interest equal to the Applicable
Increment added to the LIBOR Rate.
"LIBOR Rate" shall mean with respect to the applicable Interest Period,
the annual rate of interest (rounded upward to the nearest whole
multiple of 1/100 of 1%, if such rate is not such a multiple)
determined by the Bank, at or before 10:00 a.m. Birmingham, Alabama
time on the first day of such Interest Period, to be the annual rate of
interest at which deposits of Dollars are offered by prime banks in
whatever London interbank market may be selected by the Bank in its
sole discretion, acting in good faith, at the time of determination and
in accordance with the then existing practice in such market for
delivery on the first day of such Interest Period in immediately
available funds and having a maturity equal to such Interest Period in
an amount equal (or as nearly equal as may be) to the applicable Loan.
"LIBOR Rate Advances" shall mean Advances bearing interest calculated
on the basis of the LIBOR Adjusted Rate.
"Loan" shall mean the loan made by Bank to Debtor pursuant to this
Agreement.
"Material Adverse Change" shall mean, with respect to Debtor, an event
which causes a material adverse effect on the business, assets,
operations or condition (financial or otherwise) of Debtor.
"Net Income" for any period shall mean the amount of consolidated net
income (or loss) of the Debtor and its Subsidiaries for such period
determined on a consolidated basis in accordance with GAAP.
"Net Operating Income" for any period shall mean Net Income of the
Debtor (i) plus amounts which have been deducted for (a) interest on
Debt of the Debtor (b) provision for taxes of the Debtor based on
income, (c) amortization of debt discount, (d) depreciation and
amortization, (e) the effect of any noncash charge resulting from a
change in accounting principles in determining Net Income for such
period, (f) amortization of deferred charges and (g) provisions for or
realized losses on
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properties and (ii) less amounts which have been included for gains on
properties.
"Net Worth" shall mean, at any time, the sum obtained by subtracting
Total Liabilities from Total Assets.
"Note" shall mean that certain promissory note made by Debtor
evidencing the Loan, in the form of Exhibit "B" hereto, together with
any and all extensions, renewals, modifications and substitutions
therefor.
"Person" means any individual, partnership, firm, corporation,
association, joint venture, joint stock company, trust, unincorporated
organization or other entity, or any governmental or political
subdivision or agency, department, or instrumentality thereof.
"Prime Rate" shall mean the per annum rate of interest equal to 1/4%
less than the annual rate of interest established from time to time by
the Bank as its "base" lending rate or "Base Rate", whether or not that
rate is published, and which is not necessarily the lowest rate charged
by such bank, such rate to be adjusted automatically on and as of the
effective date of any change in such Prime Rate. In the event Bank
fails or ceases to publish a Base Rate or is dissolved, merged, or
otherwise is not in existence, Bank shall select Citibank, N.A. or, if
such bank fails or ceases to publish a prime or base rate or is
dissolved, merged, or otherwise is not in existence, Bank shall select
another large bank in New York City as the basis for computation of the
Prime Rate.
"Prime Rate Advances" shall mean Advances bearing interest calculated
on the basis of the Prime Rate.
"Related Documents" shall mean and include individually, collectively,
interchangeably and without limitation the Note, the Guaranty, and all
promissory notes, credit agreements, loan agreements, guaranties, and
all other instruments and documents, whether now or hereafter existing,
executed in connection with the Indebtedness.
"Secured Debt" shall mean any Debt secured by any Encumbrance or by any
security interest, lien, privilege, or charge on any personal property.
"Subsidiaries" shall mean at any date with respect to any Person all
the corporations of which such Person at such date, directly or
indirectly, owns 50% or more of the outstanding capital stock
(excluding directors' qualifying shares) and all partnerships, limited
liability companies, or other entities of which such Person at such
date, directly or indirectly, owns 50% or more of the partnership,
limited liability company, or other equity interests.
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"TL/TA Ratio" shall mean, at any time, the ratio of Total Liabilities
to Total Assets.
"Termination Date" shall mean the earlier to occur of (i) the date set
forth on Exhibit "C" hereto, as amended from time to time, or (ii) the
date of termination of the Loan pursuant to Article VII hereof.
"Total Assets" shall mean, at any date, the sum of (i) Undepreciated
Real Estate Assets and (ii) all other assets of Debtor determined in
accordance with GAAP (but excluding intangibles and accounts
receivables).
"Total Committed Unsecured Debt" shall mean, at any time, all of
Debtor's unsecured Debt that is outstanding and all Debt which Debtor
has the option (whether or not such option is subject to the
satisfaction of conditions) to borrow or request be advanced.
"Total Liabilities" shall mean, at any date, the sum, after eliminating
inter-company items, of all liabilities (including, without limitation,
deferred taxes) other than minority interests, of Debtor at such date,
determined in accordance with GAAP consistently applied.
"Undepreciated Real Estate Assets" as of any date shall mean the cost
(original cost plus capital improvements) of real estate assets of the
Debtor on such date, before depreciation and amortization determined in
accordance with GAAP.
"Voting Stock" means stock having general voting power under ordinary
circumstances to elect at least a majority of the board of directors,
managers or trustees (or persons performing similar functions),
provided that stock that carries only the right to vote conditionally
on the happening of an event shall not be considered Voting Stock.
Section 1.2. Accounting Terms. All accounting terms not specifically
defined herein shall be construed in accordance with GAAP, and all financial
data submitted pursuant to this Agreement shall be prepared in accordance with
GAAP.
ARTICLE II
THE LOAN
Section 2.1. The Commitment. Subject to the terms and conditions of
this Agreement, the Bank agrees to extend credit to Debtor during the period
from the date hereof until the Termination Date by making a Loan (each funding
of which is herein referred to as an "Advance", and collectively as "Advances")
to Debtor from time to time during the period from the date hereof to and
including the Termination Date; provided, that in the event, at any time, and
from time to time, the sum of
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outstanding Loan exceeds the Commitment Amount, Debtor shall prepay the Loan by
such an amount to cause the sum of the Loan outstanding to equal the Commitment
Amount. Within the limits of the Commitment to Debtor hereunder and subject to
the terms and conditions of this Agreement, Debtor may borrow Advances, repay
Advances, and reborrow Advances, and the Bank shall only be obligated to lend
Debtor an amount which will not cause the Commitment Amount to be exceeded and
which will not cause the Loan to exceed the Commitment Amount.
Section 2.2. The Loan. Debtor's obligation to repay the Loan made by
Bank shall be evidenced by the Note payable to the order of Bank in the
principal sum of the Commitment Amount, with a final maturity of the Termination
Date and bearing interest at the applicable LIBOR Adjusted Rate, or the Prime
Rate, as set forth herein as in effect from time to time, and which shall be
substantially in the form of Exhibit "B" hereto.
Section 2.3. Interest. Interest on the Note shall be payable in arrears
on the fifteenth day of each calendar month commencing December 15, 1996, and on
the Termination Date. Interest on the Note will be computed on a 365/360 simple
interest basis. Interest shall accrue on the unpaid principal amount of the Loan
for the period from and including the Closing Date to the date the Loan shall be
paid in full at the following rates per annum:
(a) during each period that an Advance is subject to a Prime Rate
election by Debtor, at the Prime Rate from time to time in effect computed on
the outstanding balance of such portion;
(b) during each period that an Advance is subject to a LIBOR Rate
election by Debtor, the LIBOR Adjusted Rate for such Interest Period computed on
the outstanding balance of such portion.
Notwithstanding the foregoing, Debtor will pay to Bank interest at the
applicable Post-Default Rate as defined in the Note on any principal of the
Loan, or on any other amount payable by Debtor hereunder to Bank, which shall
not be paid in full when due (whether at stated maturity, by acceleration or
otherwise), for the period from and including the due date thereof to the date
the same is paid in full, which interest shall be due and payable on demand.
Section 2.4. Principal Repayment. Principal and all accrued and unpaid
interest shall be payable on the Termination Date; provided, however, in the
event at any time the aggregate outstanding principal amount of the Loan to
Debtor causes the Commitment Amount to be exceeded, Debtor shall immediately
prepay the Note in an amount necessary to cause the aggregate principal amount
of its unpaid Loan to not exceed the Commitment Amount.
Section 2.5 Additional Interest. Debtor shall pay to Bank, so long as
Bank shall be required under regulations of the Board of Governors of the
Federal Reserve System to maintain reserves with respect to liabilities or
assets consisting of or including Eurodollar Liabilities, additional interest on
the unpaid principal amount of the LIBOR Rate Advances which shall be determined
based on reserves actually maintained by Bank pursuant to the requirements
imposed by Regulation D of such
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Board of Governors with respect to Eurocurrency Liabilities, for so long as any
LIBOR Rate Advances are outstanding at an interest rate per annum equal at all
times to the remainder obtained by subtracting (i) the LIBOR Rate for the
Interest Period in effect from (ii) the rate obtained by dividing such LIBOR
Rate by a percentage equal to 100% minus the Eurodollar Rate Reserve Percentage
of Bank for such Interest Period, payable promptly, and in any event within 10
Business Days after Debtor receives notice of such additional interest from Bank
as provided below. Such additional interest payable to Bank shall be determined
by Bank after the end of each Interest Period and Bank shall notify Debtor of
such additional amount (such notice to include the calculation of such
additional interest, which calculation shall be conclusive in the absence of
error).
Section 2.6. Rate and Interest Period Elections. Not later than 3:00
p.m. (Birmingham, Alabama time) on the day before the date of Debtor's request
for an Advance, Debtor shall provide Bank with a written notice specifying the
Prime Rate or the LIBOR Adjusted Rate as the applicable interest rate to accrue
under Advances in an amount not less than that set forth on Exhibit "D". In the
event Debtor chooses the LIBOR Adjusted Rate it shall also designate the
applicable Interest Period of one, two, three, four, or six months. If for any
reason Debtor fails to select an interest rate for any Advance or fails to
continue the LIBOR Adjusted Rate beyond the Interest Period selected, such
Advance shall bear interest at the Prime Rate from time to time in effect.
From time to time, Debtor shall have the right to convert to the LIBOR
Adjusted Rate, provided (i) Debtor may not select an Interest Period having a
maturity as of the date of Conversion later than the Termination Date, and (ii)
the LIBOR Adjusted Rate shall remain in effect, and may not be Converted, until
the end of the applicable Interest Period selected.
Notices by Debtor to Bank of Conversions and Continuations and of the
duration of subsequent Interest Periods shall be irrevocable and binding on
Debtor and shall be effective only if received by Bank not later than 3:00 p.m.
(Birmingham, Alabama time) on the day before the first day of such Interest
Period. Each such notice of Conversion or Continuation shall specify (a) the
dollar amount of the Advance (which shall be not less than the applicable
minimum set forth on Exhibit "D" hereto) to be Converted or Continued; (b)
whether the applicable interest rate on such Advance is to be Converted or
Continued to the Prime Rate or the LIBOR Adjusted Rate; (c) the effective date
of Conversion or Continuation (which shall be a Business Day); and (d) the
Interest Period, if the LIBOR Adjusted Rate is chosen. In the event that Debtor
fails to properly or timely Convert or Continue, such portion of the Loan will
be automatically Converted to the Prime Rate at the end of the then current
Interest Period (if LIBOR Adjusted Rate is in effect). Notwithstanding the
above, requests for Advances made no later than 10:00 a.m. (Birmingham, Alabama
time) shall be funded on the same Business Day, provided the Prime Rate election
is made with respect to such Advances.
Section 2.7. Change in Law; Increased Costs; Etc.
(a) Change of Law. If at any time Bank determines in good faith (which
determination shall be conclusive absent manifest error) that any change in any
applicable law, rule or regulation or
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in the interpretation, application or administration thereof makes it unlawful,
or any Governmental Authority asserts that it is unlawful, for Bank to fund or
maintain the Advances at the LIBOR Adjusted Rate (any of the foregoing
determinations being a "LIBOR Event"), then the obligation of Bank hereunder to
fund or maintain LIBOR Rate Advances shall be suspended as long as such LIBOR
Event shall continue. Upon the occurrence of any LIBOR Event, and at any time
thereafter so long as such LIBOR Event shall continue, Bank may exercise its
aforesaid option by giving written notice thereof to Debtor, and the Advance
shall thereafter bear interest at the Prime Rate.
(b) Increased Costs.
(1) If, after the date hereof, due to either (i) the introduction of or
any change in or in the interpretation of any law of regulation or (ii) the
compliance with any guideline or request from any Governmental Authority
(whether or not having the force of law), or (iii) other acts or occurrences,
there shall be any increase in the cost to Bank of agreeing to fund or maintain
Advances at the LIBOR Adjusted Rate (except to the extent already included in
the determination of the applicable LIBOR Adjusted Rate) then Debtor shall from
time to time, upon demand by Bank, pay Bank such additional amounts sufficient
to compensate Bank for such increased cost and may make an alternate Interest
election for the Advance then subject to the LIBOR Adjusted Rate, to be
effective at the termination of the then current Interest Period. Any obligation
of Bank hereunder to fund or continue the LIBOR Adjusted Rate applicable to any
Advance shall be suspended as long as the events giving rise to such increased
costs shall continue, and the Advance shall thereafter bear interest at the
Prime Rate. Any request for payment under this Section 2.7(b) will be submitted
to Debtor by Bank identifying with reasonable specificity the basis for and the
amount of such interest cost, which information shall be conclusive and binding
for all purposes, absent manifest error.
(2) Bank shall use its best efforts (consistent with its internal
policies and legal and regulatory restrictions) to avoid or minimize any
additional amounts that otherwise would be payable pursuant to this Section
2.7(b); provided that no such change or action shall be required to be made or
taken if, in the reasonable judgment of Bank, such change would be
disadvantageous to Bank.
(c) Funding Losses.
(1) Debtor will indemnify Bank against, and reimburse Bank on demand
for, any net loss, cost or expense incurred or sustained by Bank (including,
without limitation, any loss or expense incurred by reason of the liquidation or
reemployment of deposits or other funds acquired by Bank to fund or maintain
Advances at the LIBOR Adjusted Rate) as a result of any payment, prepayment by
Debtor (whether authorized or required hereunder) of all or a portion of the
LIBOR Rate Advances on a day other than the last day of an Interest Period.
(2) In connection with any demand for payment under this Section
2.7(c), Bank shall deliver to Debtor a statement reasonably setting forth the
amount and manner of determining such net loss, cost or expense, which statement
shall be conclusive and binding for all purposes, absent error.
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Section 2.8. Manner and Notice of Borrowing Under the Commitment.
Requests for Advances under the Commitment may be made by Debtor in person, in
writing or through telephone calls to Bank and such requests shall be fully
authorized by Debtor if made by any one of the persons designated by Debtor in
writing to Bank. Debtor shall promptly confirm in writing all requests made in
person or by telephone; provided, however, that failure to do so shall not
relieve Debtor of the obligation to repay such Advance. Bank shall have the
right, but not the obligation, to verify any telephone requests by calling the
person who made the request at the telephone number designated by Debtor in
writing to Bank. Requests for Advances must be in a minimum amount as set forth
on Exhibit "D" hereto, and be received by not later than 3:00 p.m. Birmingham,
Alabama time on the day before the proposed Advance. Not later than 3:00 p.m.
(Birmingham, Alabama time) on the date of the proposed Advance, assuming all
conditions of this Agreement for such Advance has been satisfied, Bank will (a)
fund such Advance in the case of (y) below, or (b) commence to wire transfer
such Advance in the case of (z) below. The amount thereof shall (y) be credited
by Bank to the checking account maintained in the name of Debtor with Bank and
the credit advice resulting therefrom shall be mailed to Debtor or (z) at the
request of Debtor, Bank shall wire transfer the amount of the Advance as
designated in writing from time to time by Debtor. Bank's copy of such credit
advice indicating such deposit to the account of Debtor or Bank's receipt of a
federal funds wire transfer number shall be deemed conclusive evidence of
Debtor's indebtedness to Bank in connection with such borrowing. The aggregate
outstanding amount of principal and interest due by Debtor at any given time
under the Commitment shall be and constitute the indebtedness of Debtor to the
Bank under the Note. When each Advance is made by Bank to Debtor hereunder,
Debtor shall be deemed to have renewed and reissued its Note for the amount of
the Advance plus all amounts due by Debtor to Bank under its Commitment
immediately prior to such Advance.
Section 2.9. Additional Cost of Loan. If any legislative authority,
other governmental authority, court, central bank or any other authority to
which Bank is subject, shall at any time impose, modify or deem applicable any
reserve (including, without limitation, any imposed by the Board of Governors of
the Federal Reserve System), special deposit, capital adequacy or similar
requirement against assets of, deposits with or for the account of, or credit
extended by Bank, or shall impose on Bank any law, regulation, rule, directive,
instruction, guideline, requirement, judgment, decision or condition of any type
or kind whatsoever affecting the Indebtedness or the obligation of Bank to make
the Loan or any Advance thereunder, and the result of any of the foregoing is to
increase, directly or indirectly, the cost to Bank of making or maintaining the
Indebtedness to Debtor, or to reduce, directly or indirectly, the amount of the
sum received or receivable by Bank under this Agreement or under the Note, then
Debtor shall become obligated to Bank for all such amounts as will compensate
Bank for such increased cost or reduction in revenues incurred as a result
thereof. Bank will promptly notify Debtor of any event of which it has
knowledge, occurring after the date hereof, which will entitle Bank to
compensation pursuant to this Section 2.9. A certificate of Bank claiming
compensation under this Section 2.9 and setting forth the additional amount or
amounts to be paid to it hereunder and the reasons therefor shall be conclusive
in the absence of error. Thereafter, Debtor shall pay to the Bank, upon demand
from time to time any amounts necessary to compensate the Bank for such
increased cost of reduction in revenues incurred as a result of any such events.
In the event that Debtor cancels this Agreement and the Commitment because it
believes such
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costs to be excessive and repays the Indebtedness in full prior to the due date
of the next annual commitment fee, Debtor shall not be liable for such
additional commitment fee; provided, in no event shall Debtor be entitled to a
refund of any amounts previously paid as commitment fee.
Section 2.10. Commitment Fee; Credit Fee. Debtor agrees to pay to Bank
(a) on the date hereof and on each anniversary of the date hereof, in advance an
annual commitment fee of 0.25% of Commitment Amount, and (b) in arrears due ten
days after receipt of invoice from the Bank prepared as of the last day of
December, March, June and September and on the Termination Date, commencing
December 31, 1996, a quarterly credit fee equal to 0.125% per annum of the
average unused portion of the Commitment Amount. The commitment fees payable
pursuant to (a) shall be pro-rated in the event that the remaining term of the
Loan is less than one (1) year.
Section 2.11. Calculation of the Applicable Increment. The Applicable
Increment shall be determined for each Interest Period on the first day of such
Interest Period as follows:
If Debtor's TL/TA ratio is greater than or equal to 0.5, the Applicable
Increment shall be 175 basis points;
If Debtor's TL/TA ratio is less than 0.5 but equal to or greater than
0.4, the Applicable Increment shall be 165 basis points;
If Debtor's TL/TA ratio is less than 0.4, the Applicable Increment
shall be 150 basis points.
Debtor's TL/TA ratio shall be determined as of the most recently
reported Financial Statement provided pursuant to Section 5.1 hereof.
Section 2.12. Debtor's Right to Terminate. At any time Debtor may
prepay the Loan and any Advance thereunder in full and, at Debtor's option,
terminate the Loan and this Agreement by written notice to Bank without
termination fee or penalty (other than any payments due as a result of prepaying
a LIBOR Rate Loan prior to the termination of the then applicable Interest
Period) or obligation to pay further amounts of any kind to Bank.
ARTICLE III
CONDITIONS PRECEDENT
Section 3.1. Conditions Precedent to Advances. The obligation of Bank
to make any Advance hereunder shall be subject to the satisfaction and the
continued satisfaction of the following conditions precedent:
(a) Debtor shall have executed and delivered to Bank this Agreement,
the Note, the Guaranty and all other documents required by this Agreement;
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(b) The representations and warranties of Debtor as set forth herein,
or any Loan Document furnished to Bank in connection herewith, shall be and
remain true and correct (except for any changes permitted under this Agreement
or as to which Bank has previously consented in writing);
(c) Bank shall have received as of the execution of this Agreement a
favorable legal opinion of general counsel to Debtor and Centers in form, scope
and substance satisfactory to Bank;
(d) Bank shall have received certified resolutions of the general
partner of Debtor authorizing the execution of all documents contemplated
hereby;
(e) Bank shall have received certified resolutions of Centers
authorizing the execution of the Guaranty;
(f) Bank shall have received all fees, charges and expenses which are
due and payable as specified in this Agreement;
(g) No Default or Event of Default shall exist or shall result from the
making of the Loan or any Advance;
(h) Debtor shall have provided Bank with all financial statements,
reports and certificates required by this Agreement;
(i) Bank's counsel shall have reviewed the partnership agreement of
Debtor and shall be satisfied with the validity, due authorization and
enforceability of all Loan Documents;
(j) Bank shall have received the commitment fee for the first twelve
months of the Loan.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
Debtor represents and warrants to the Bank as follows:
Section 4.1. Authority. Debtor is a North Carolina limited partnership,
duly formed, validly existing and in good standing under the laws of the State
of North Carolina and is duly qualified and in good standing as a foreign
corporation in all jurisdictions where the failure to qualify would have an
adverse effect upon the ability of Debtor to perform its obligations under this
Agreement and all Related Documents. Debtor has the power to enter into this
Agreement and the Related Documents and to issue the Note. Debtor has the
partnership power to perform its obligations hereunder and
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under the Related Documents. The making and performance by Debtor of this
Agreement and the Related Documents have been duly authorized by all necessary
partnership action, and do not and will not violate any provision of any law,
rule, regulation, order, writ, judgment, decree, determination or award
presently in effect having applicability to Debtor or the agreement of limited
partnership of Debtor. The making and performance by Debtor of this Agreement
and the Related Documents to which it is a party do not and will not result in a
breach of or constitute a default under any indenture or loan or credit
agreement or any other agreement or instrument to which Debtor is a party or by
which Debtor may be bound or affected, or result in, or require, the creation or
imposition of any mortgage, deed of trust, pledge, lien, security interest or
other charge or encumbrance of any nature (other than as contemplated by the
Related Documents) upon or with respect to any of the properties now owned or
hereafter acquired by Debtor, and Debtor is not in default under or in violation
of any such order, writ, judgment, decree, determination, award, indenture,
agreement or instrument. Each of this Agreement and the Related Documents to
which Debtor is a party constitute legal, valid and binding obligations of
Debtor, enforceable in accordance with their terms.
Section 4.2. Financial Statements. The balance sheet of Debtor as of
the date thereof, and the related statements of income and retained earnings for
the year then ended, copies of which have been delivered to Bank, are complete
and correct and fairly present the financial condition of Debtor as of the date
thereof. Said financial statements were prepared in conformity with GAAP applied
on a basis consistent with the preceding year. No Material Adverse Change has
occurred since said date in the financial position or in the result of
operations of Debtor in its business taken as a whole.
Section 4.3. Litigation. Other than as has been disclosed previously to
Bank in writing, there are no legal actions, suits or proceedings pending or
threatened against or affecting Debtor or any of its properties before any court
or administrative agency (federal, state or local), which, if determined
adversely to Debtor would constitute a Material Adverse Change to it, and there
are no judgments or decrees affecting Debtor or its properties which are or may
become an Encumbrance against such properties.
Section 4.4. Approvals. No authorization, consent, approval or formal
exemption of, nor any filing or registration with, any governmental body or
regulatory authority (federal, state or local), and no vote, consent or approval
of the shareholders of Debtor is or will be required in connection with the
execution and delivery by Debtor of the Agreement, the Note, or the Related
Documents or the performance by Debtor of its obligations hereunder and under
the Note and the Related Documents.
Section 4.5. Licenses. Debtor possesses adequate franchises, licenses
and permits to own its properties and to carry on its business as presently
conducted.
Section 4.6. Adverse Agreements. Debtor is not a party to any agreement
or instrument, or subject to any charter or other restriction, materially and
adversely affecting its business, properties, assets, or operations or its
condition (financial or otherwise), and Debtor is not in default in the
performance, observance or fulfillment of any of the obligations, covenants or
conditions contained in any agreement or instrument to which it is a party,
which default would constitute a Material
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Adverse Change to Debtor.
Section 4.7. Default or Event of Default. No Default or Event of
Default hereunder has occurred or is continuing or will occur as a result of the
giving effect hereto.
Section 4.8. Employee Benefit Plans. Each employee benefit plan as to
which Debtor may have any liability complies in all material respects with all
applicable requirements of law and regulations, and (i) no Reportable Event (as
defined in ERISA) has occurred with respect to any such plan, (ii) Debtor has
not withdrawn from any such plan or initiated steps to do so, and (iii) no steps
have been taken to terminate any such plan.
Section 4.9. Information. All information heretofore or
contemporaneously herewith furnished by Debtor to Bank for the purposes of or in
connection with this Agreement or any transaction contemplated hereby is, and
all information hereafter furnished by or on behalf of Debtor to Bank will be,
true and accurate in every material respect on the date as of which such
information is dated or certified; and none of such information is or will be
incomplete by omitting to state any material fact necessary to make such
information not misleading.
Section 4.10. Environmental Matters. Except as may have been disclosed
in writing to Bank prior to the date hereof, no properties of Debtor has ever
been, and ever will be so long as this Agreement remains in effect, used for the
generation, manufacture, storage, treatment, disposal, release or threatened
release of any Hazardous Materials, except in compliance with such Environmental
Laws. Except as may have been disclosed in writing by Debtor to Bank, Debtor
represents and warrants that it is in compliance with all Environmental Laws
affecting it and its properties.
Section 4.11. Employer Identification Number; Name. Debtor's employer
identification number is 56-1822494. Debtor has consistently utilized the name
"Tanger Properties Limited Partnership."
Section 4.12. Survival of Representations and Warranties. Debtor
understands and agrees that Bank is relying upon the above representations and
warranties in making the above referenced Loan to Debtor. Debtor further agrees
that the foregoing representations and warranties shall be continuing in nature
and shall remain in full force and effect until such time as the Indebtedness
shall be paid in full, or until this Agreement shall be terminated, whichever is
the last to occur.
Section 4.13. No Margin Stock. Debtor is not engaged, and will not
engage, principally or as one of its important activities, in the business of
extending credit for the purpose of "purchasing" or "carrying" any "margin
stock" within the respective meanings of each of the quoted terms under
Regulation U of the Board of Governors of the Federal Reserve System as now and
from time to time hereafter in effect. No part of the proceeds of the Loan
hereunder will be used for "purchasing" or "carrying" "margin stock" as so
defined or for any purpose which violates, or which would be inconsistent with,
the provisions of the Regulations of such Board of Governors.
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ARTICLE V
AFFIRMATIVE COVENANTS
Debtor, covenants and agrees in favor of Bank as follows:
Section 5.1. Financial Statements. Debtor, will furnish or cause to be
furnished to Bank:
(a) within forty-five (45) days following the end of each calendar
quarter commencing December 31, 1996, financial statements consisting of the
balance sheets of Debtor as of the end of such quarter, and statements of income
and statements of cash flow of Debtor for such quarter and for the fiscal year
through such quarter, all certified by the Managing General Partner of Debtor,
as having been prepared in accordance with GAAP consistently applied,
(b) within forty-five (45) days following the end of each calendar
quarter commencing December 31, 1996, consolidating financial statements of
Debtor and Centers consisting of balance sheets of Debtor and Centers as of the
end of such quarter, and statements of income and statements of cash flow of
Debtor and Centers for such quarter and for the fiscal year through such
quarter, all certified by the Managing General Partner of Debtor and the Chief
Financial Officer of Centers as having been prepared in accordance with GAAP
consistently applied,
(c) as soon as available and in any event within one hundred twenty
(120) days following the end of each fiscal year commencing beginning with the
fiscal year ending December 31, 1996, and each fiscal year thereafter,
consolidating financial statements of Debtor and Centers consisting of a balance
sheet as at the end of such fiscal year and statements of income, and statement
of cash flow for such fiscal year, setting forth in each case in comparative
form the corresponding figures for the preceding fiscal year, all certified by
the Managing General Partner of Debtor and the Chief Financial Officer of
Centers as having been prepared in accordance with GAAP consistently applied,
(d) as soon as available and in any event within one hundred twenty
(120) days following the close of fiscal year of Debtor audited, consolidated
and consolidating financial statements of Debtor and Centers consisting of a
balance sheet as at the end of such fiscal year and statements of income, and
statement of cash flow for such fiscal year, setting forth in each case in
comparative form the corresponding figures for the preceding fiscal year,
certified by independent public accountants of recognized standing acceptable to
Bank, and
(e) within forty-five (45) days after the end of each calendar quarter,
a certificate signed by the Managing General Partner of Debtor and the Chief
Financial Officer of Centers certifying that it has reviewed this Agreement and
to the best of its knowledge no Default or Event of Default has occurred, or if
such Default or Event of Default has occurred, specifying the nature and extent
thereof, and that all financial covenants in this Agreement have been met, and
providing a computation of all financial covenants contained herein.
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Section 5.2. Notice of Default; Litigation; ERISA Matters. Debtor will
give written notice to Bank as soon as reasonably possible and in no event more
than five (5) Business Days of (i) the occurrence of any Default or Event of
Default hereunder of which it has knowledge, (ii) the filing of any actions,
suits or proceedings against Debtor in any court or before any governmental
authority or tribunal of which it has knowledge which could cause a Material
Adverse Change with respect to Debtor, (iii) the occurrence of a reportable
event under, or the institution of steps by Debtor to withdraw from, or the
institution of any steps to terminate, any employee benefit plan as to which
Debtor may have liability, or (iv) the occurrence of any other action, event or
condition of any nature of which Debtor has knowledge and in good faith believes
may cause, or lead to, or result in, any Material Adverse Change to Debtor.
Section 5.3. Maintenance of Partnership Existence and Properties.
Debtor will (i) continue to engage in the business presently being operated by
it; (ii) maintain its partnership existence and good standing in each
jurisdiction in which it is required to be qualified; (iii) keep and maintain
all franchises, licenses and properties necessary in the conduct of its business
in good order and condition; and (iv) duly observe and conform to all material
requirements of any governmental authorities relative to the conduct of its
business or the operation of its properties or assets.
Section 5.4. Taxes. Debtor shall pay or cause to be paid when due, all
taxes, local and special assessments, and governmental and other charges of
every type and description, that may from time to time be imposed, assessed and
levied Debtor and its properties. Debtor further agrees to furnish Bank with
evidence that such taxes, assessments, and governmental and other charges due by
Debtor have been paid in full and in a timely manner. Debtor may withhold any
such payment or elect to contest any lien if Debtor is in good faith conducting
an appropriate proceeding to contest the obligation to pay.
Section 5.5. Required Insurance. Debtor shall maintain insurance with
insurance companies in such amounts and against such risks as is usually carried
by owners of similar businesses and properties in the same general areas in
which each of its properties is located, including, but not limited to property,
liability, business interruption, and flood insurance, and as shall be
reasonably satisfactory to Bank.
Debtor agrees, if requested by Bank to provide Bank with originals or
certified copies of such policies of insurance. Debtor further agrees, if
requested by Bank to furnish Bank with copies of all renewal notices and, if
requested by Bank, with copies of receipts for paid premium.
Section 5.6. Payment and Performance. Debtor shall duly and punctually
pay and perform its obligations under the Note, this Agreement (as the same may
at any time be amended or modified and in effect) and under each of the Related
Documents, in accordance with the terms hereof and thereof.
Section 5.7. Compliance with Environmental Laws. Debtor shall comply
with and shall cause all of its employees, agents, invitees or sublessees to
comply with all Environmental Laws with
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respect to the disposal of industrial refuse or waste, and/or the discharge,
procession, treatment, removal, transportation, storage and handling of
Hazardous Materials, and pay immediately when due from Debtor the cost of
removal of any such from, and keep its properties free of any lien imposed
pursuant to any such laws, rules, regulations or orders.
Regardless of whether any Event of Default hereunder shall have
occurred and be continuing, Debtor (i) releases and waives any present or future
claims against Bank for indemnity or contribution in the event Debtor becomes
liable for remediation costs under any Environmental Laws, and (ii) agrees to
defend, indemnify and hold harmless Bank from any and all liabilities (including
strict liability), actions, demands, penalties, losses, costs or expenses
(including, without limitation, reasonable attorneys fees and remedial costs),
suits, administrative orders, agency demand letters, costs of any settlement or
judgment and claims of any and every kind whatsoever which may now or in the
future (whether before or after the termination of this Agreement) be paid,
incurred, or suffered by, or asserted against Bank by any person or entity or
governmental agency for, with respect to, or as a direct or indirect result of,
the presence on or under, or the escape, seepage, leakage, spillage, discharge,
emission, or release from or onto the property of Debtor of any hazardous
materials, wastes or conditions regulated by any Environmental Laws,
contamination resulting therefrom, or arising out of, or resulting from, the
environmental condition of such property or the applicability of any
Environmental Laws not caused by Bank, Bank's employees or agents (the costs
and/or liabilities described in (i) and (ii) above being hereinafter referred to
as the "Liabilities"). The covenants and indemnities contained in this Section
5.7 shall survive termination of this Agreement.
Section 5.8. Further Assurances. Debtor will, at any time and from time
to time, execute and deliver such further instruments and take such further
action as may reasonably be requested by Bank, in order to cure any defects in
the execution and delivery of, or to comply with or accomplish the covenants and
agreements contained in this Agreement or the Loan Documents.
Section 5.9. Financial Covenants. Debtor shall comply with the
following covenants and ratios:
(a) Debtor will not permit its ratio of Debt to Total Assets to exceed
0.6:1.0.
(b) Debtor will not permit its ratio of its Secured Debt to Total
Assets to exceed 0.4:1.0.
(c) Debtor will maintain its Debt Service Ratio at not less than
2.0:1.0, computed on a rolling four-quarter average.
(d) Debtor shall maintain Adjusted Unencumbered Assets equal to its
Total Committed Unsecured Debt.
(e) Debtor shall maintain Net Worth, inclusive of minority interests,
equal to or in excess of $120,000,000.00.
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(f) Debtor shall not declare or pay (or set aside reserves for payment
of) any dividends or distributions or make any shareholder/affiliate loans;
provided, however, that Debtor may make distributions to its partners in any
fiscal year period not in excess of its Funds from Operations, measured as of
the end of each of Debtor's fiscal years.
Section 5.10. Operations. Debtor shall conduct its business affairs in
a reasonable and prudent manner and in compliance with all applicable federal,
state and municipal laws, ordinances, rules and regulations respecting its
properties, charters, businesses and operations, including compliance with all
minimum funding standards and other requirements of ERISA of 1974, and other
laws applicable to any employee benefit plans which they may have.
Section 5.11. Employee Benefit Plans. So long as this Agreement remains
in effect, Debtor will maintain each employee benefit plan as to which they may
have any liability, in compliance with all applicable requirements of law and
regulations.
Section 5.12 Use of Proceeds. Debtor shall use the proceeds of the Loan
solely for construction of additional factory outlet centers, acquisition of
existing factory outlet centers, expansion phases of existing centers, and for
general working capital purposes.
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ARTICLE VI
NEGATIVE COVENANTS
Debtor agrees in favor of Bank as follows:
Section 6.1. Limitations on Fundamental Changes. Without the prior
written consent of Bank, Debtor shall not change the nature of its business, or
form any subsidiary the effect of which would have a material adverse effect on
Debtor's financial condition, nor shall it enter into any transaction of merger
or consolidation the effect of which would have a material adverse effect on
Debtor's financial condition, or liquidate or dissolve itself (or suffer any
liquidation or dissolution).
Section 6.2. Disposition of Assets. Except for leases with tenants in
the ordinary course of business, Debtor shall not convey, sell, lease, assign,
transfer or otherwise dispose of, any of its properties whether now owned or
hereafter acquired except property disposed of in the ordinary course of
business, provided that, if such property is to be replaced, the net cash
proceeds of each such transaction are applied to obtain a replacement item or
items within 30 days of the disposition thereof. Without limitation of other
transfers that may be deemed to be in the ordinary course of business for the
purposes hereof, the transfer during any annual period, commencing on the date
hereof or any anniversary hereof, of (a) properties having an aggregate value
less than the lesser of (i) $30,000,000.00 or (ii) 10% of Total Assets, or (b)
outparcels of developed or acquired factory outlet centers, shall be deemed to
be in the ordinary course of business.
Section 6.3. Other Agreements. Debtor will not enter into any agreement
containing any provision which would be violated or breached by the performance
of its obligations hereunder or under any instrument or document delivered or to
be delivered by it hereunder or in connection herewith.
Section 6.4. Transactions with Affiliates. Debtor will not enter into
any agreement with any Affiliates or Subsidiaries except to the extent that such
agreements are commercially reasonable which provide for terms which would
normally be obtainable in an arm's length transaction with an unrelated third
party.
ARTICLE VII
EVENTS OF DEFAULT
Section 7.1. Events of Default. The occurrence of any one or more of
the following shall constitute an Event of Default:
Default Under the Indebtedness. Should Debtor default in the payment of
principal or interest under the Indebtedness of Debtor and such default shall
not be cured within ten days of the occurrence thereof.
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Default Under this Agreement. Should Debtor violate or fail to comply
fully with any of the terms and conditions of, or default under, this Agreement
and such default not be cured within thirty days after Debtor has knowledge of
the occurrence thereof (provided, however, that no cure period shall be
available for a default in the obligation to maintain insurance coverages
required hereby) (provided further, however, if such default cannot with due
diligence be cured within said 30 days and further provided that Debtor shall
have promptly commenced to cure said default within such 30 days and diligently
pursues the same to completion Borrower shall have an additional reasonable
period of time in which to cure said default).
Default Under the Guaranty. Should Centers default in the terms of the
Guaranty, or should Centers assert the invalidity, unenforceability, or
uncollectability of the Guaranty and such default not be cured within thirty
days after Centers have knowledge of the occurrence thereof (provided, however,
if such default cannot with due diligence be cured within said 30 days and
further provided that Centers shall have promptly commenced to cure said default
within such 30 days and diligently pursues the same to completion Centers shall
have an additional reasonable period of time in which to cure said default).
Default Under Other Agreements. Should any event of default occur or
exist under any of the Related Documents or should Debtor violate, or fail to
comply fully with, any terms and conditions of any of the Related Documents and
such default not be cured within thirty days of the occurrence thereof
(provided, however, that no cure period shall be available for a default in the
obligation to maintain insurance coverages required thereby)(provided further,
however, if such default cannot with due diligence be cured within said 30 days
and further provided that Debtor shall have promptly commenced to cure said
default within such 30 days and diligently pursues the same to completion Debtor
shall have an additional reasonable period of time in which to cure said
default.
Default in Favor of Third Parties. The Debtor or Centers shall fail to
make any payment of principal of or interest on (i) any recourse Debt of the
Debtor or Centers of $5,000,000 or more in the aggregate (other than any Debt
under this Agreement, the Note, or the Related Documents) within the applicable
cure period; or (ii) any non-recourse Indebtedness of the Debtor or Centers of
$10,000,000 or more in the aggregate (other than Debt under this Agreement, the
Note, or the Related Documents) within the applicable cure period; and if the
effect of such failure described in subclause (i) or (ii) is to accelerate, or
to permit the holder of such aggregate Debt or any other Person to accelerate,
the maturity of such Debt; or such Debt shall be required to be prepaid (other
than by a regularly scheduled required prepayment) in whole or in part prior to
its stated maturity.
Management. Should a change occur in Debtor's Management Team
(hereinafter defined) and Bank in its reasonable judgment shall determine that
such change may lead to a Material Adverse Change in Debtor. As used herein,
Debtor's Management Team shall mean any of the President or Chairman of the
Board of Centers or the senior financial or operating officers of the Debtor.
Debtor shall have thirty days after notice from Bank of default to cure any
default under this subparagraph.
Insolvency. The following occurrences shall constitute an Event of
Default hereunder:
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(a) Filing by Debtor or Centers of a voluntary petition or any answer
seeking reorganization, arrangement, readjustment of its debts or for any other
relief under any applicable bankruptcy act or law, or under any other insolvency
act or law, now or hereafter existing, or any action by Debtor or Centers
consenting to, approving of, or acquiescing in, any such petition or proceeding;
the application by Debtor for, or the appointment by consent or acquiescence of,
a receiver or trustee of Debtor or Centers for all or a substantial part of the
property of any such person; the inability of Debtor or Centers or the admission
by Debtor or Centers in writing, of its inability to pay its debts as they
mature (the term "acquiescence" means the failure to file a petition or motion
in opposition to such petition or proceeding or to vacate or discharge any
order, judgment or decree providing for such appointment within sixty (60) days
after the appointment of a receiver or trustee); or
(b) Filing of an involuntary petition against Debtor or Centers in
bankruptcy or seeking reorganization, arrangement, readjustment of its debts or
for any other relief under any applicable bankruptcy act or law, or under any
other insolvency act or law, now or hereafter existing and such petition remains
undismissed or unanswered for a period of sixty (60) days from such filing; or
the insolvency appointment of a receiver or trustee of Debtor or Centers for all
or a substantial part of the property of any such Person and such appointment
remains unvacated or unopposed for a period of sixty (60) days from such
appointment, execution or similar process against any substantial part of the
property of Debtor and such warrant remains unbonded or undismissed for a period
of sixty (60) days from notice to Debtor of its issuance.
Dissolution Proceedings. Should proceedings for the dissolution or
appointment of a liquidator of Debtor or Centers be commenced by Debtor or
Centers.
False Statements. Should any representation or warranty of Debtor made
in connection with the Indebtedness prove to be incorrect or misleading in any
material respect when made or reaffirmed.
Material Adverse Change. Should a Material Adverse Change with respect
to Debtor or Centers occur at any time and not be cured within 30 days of the
occurrence thereof.
REIT. Should Centers lose its tax status as a REIT, or should Centers
fail to keep and maintain all franchises, licenses and properties necessary in
the conduct of its business, or shall fail to continue in its business as
presently conducted, or should Centers acquire or create any additional
subsidiaries or Affiliates, or should Centers fail to distribute to the Debtor
the net proceeds of any public offerings of stock or securities or any other
proceeds obtained by Centers in any public or private offerings.
Upon the occurrence of an Event of Default, the Commitment of Bank
under this Agreement will terminate immediately (including any obligation to
make any further loans to or for the account of Debtor), and, at Bank's option,
the Note and all Indebtedness of Debtor will become immediately due and payable,
all without notice of any kind to Debtor, except that in the case of type
described in the "Insolvency" subsection above, such acceleration shall be
automatic and not optional.
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Section 7.2. Waivers by Debtor. Except as otherwise provided for in
this Agreement and by applicable law, as pertains to the Indebtedness Debtor
waives presentment, demand and protest and notice of presentment, dishonor,
notice of intent to accelerate, notice of acceleration, protest, default,
nonpayment, maturity, release, compromise, settlement, extension or renewal of
any or all commercial paper, accounts, contract rights, documents, instruments,
chattel paper and guaranties at any time held by Bank on which Debtor may in any
way be liable and hereby ratify and confirm whatever Bank may do in this regard.
ARTICLE VIII
[RESERVED]
ARTICLE IX
MISCELLANEOUS
Section 9.1. No Waiver; Modification in Writing. No failure or delay on
the part of Bank in exercising any right, power or remedy hereunder shall
operate as a waiver thereof, nor shall any single or partial exercise of any
such right, power or remedy preclude any other or further exercise thereof or
the exercise of any other right, power or remedy hereunder. No amendment,
modification or waiver of any provision of this Agreement or of the Note, nor
consent to any departure by Debtor therefrom, shall in any event be effective
unless the same shall be in writing signed by or on behalf of Bank and then such
waiver or consent shall be effective only in the specific instance and for the
specific purpose for which given. No notice to or demand on Debtor in any case
shall entitle Debtor to any other or further notice or demand in similar or
other circumstances.
Section 9.2. Payment on Non-Business Day. Whenever any payment to be
made hereunder or on account of the Note shall be scheduled to become due on a
day which is not a Business Day, such payment may be made on the next succeeding
Business Day, and such extension of time shall in such case be included in
computing interest and fees payable hereunder or on account of the Note.
Section 9.3. Addresses for Notices. All notices and communications
provided for hereunder shall be in writing and, shall be mailed, by certified
mail, return receipt requested, or delivered as set forth below unless any
person named below shall notify the others in writing of another address, in
which case notices and communications shall be mailed, by certified mail,
return receipt requested, or delivered to such other address.
If to Bank:
SouthTrust Bank of Alabama,
National Association
420 North 20th Street
Birmingham, Alabama 35203
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Attention: Southeastern Banking
With copy to:
SouthTrust Bank of Alabama,
National Association
652 Morrison Blvd.
Suite 318
Charlotte, NC 28211
Attention: North Carolina Corporate
If to Debtor:
Tanger Properties Limited Partnership
c/o Tanger Factory Outlet Centers, Inc.
1400 W. Northwood Street
Greensboro, NC 27408
Attn: Mr. Stanley K. Tanger
With copy to:
Vernon Law Firm
P. O. Box 2958
522 S. Lexington Ave.
Burlington, N.C. 27216
Attn: R. Joyce Garrett, Esquire
Section 9.4. Fees and Expenses. Debtor agrees to pay all fees, costs
and expenses of Bank in connection with the preparation, execution and delivery
of this Agreement and all Related Documents to be executed in connection
herewith and subsequent modifications or amendments to any of the foregoing,
including without limitation, the reasonable fees and disbursements of counsel
to Bank, and to pay all costs and expenses of Bank in connection with the
enforcement of this Agreement, the Note or the Related Documents, including
reasonable legal fees and disbursements arising in connection therewith.
Section 9.5. Governing Law Jurisdiction. (a) This Agreement and the
Note shall be deemed to be contracts made under the laws of the State of Alabama
and for all purposes shall be construed in accordance with the laws of said
State. (b) DEBTOR AND BANK HEREBY IRREVOCABLY CONSENT TO THE JURISDICTION OF THE
STATE COURTS OF ALABAMA AND THE FEDERAL COURTS IN ALABAMA AND AGREE THAT ANY
ACTION OR PROCEEDING ARISING OUT OF OR BROUGHT TO ENFORCE THE PROVISIONS OF THE
NOTE, THIS AGREEMENT AND/OR THE RELATED DOCUMENTS SHALL BE BROUGHT IN ANY SUCH
COURT IN ALABAMA HAVING SUBJECT MATTER JURISDICTION; PROVIDED HOWEVER, AT THE
ELECTION OF BANK, ANY SUCH ACTION OR PROCEEDING MAY BE BROUGHT IN THE STATE
COURTS OF NORTH CAROLINA AND THE FEDERAL
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COURTS IN NORTH CAROLINA.
Section 9.6. WAIVER OF JURY TRIAL. To the extent permitted by
applicable law, DEBTOR AND BANK HEREBY WAIVE TRIAL BY JURY IN ANY ACTION OR
PROCEEDING TO WHICH DEBTOR OR BANK MAY BE PARTIES, ARISING OUT OF OR IN ANY WAY
PERTAINING TO (i) THE NOTE, (ii) THIS AGREEMENT, OR (iii) ANY RELATED DOCUMENT.
IT IS AGREED AND UNDERSTOOD THAT THIS WAIVER CONSTITUTES A WAIVER OF TRIAL BY
JURY OF ALL CLAIMS AGAINST ALL PARTIES TO SUCH ACTIONS OR PROCEEDINGS, INCLUDING
CLAIMS AGAINST PARTIES WHO ARE NOT PARTIES TO THIS AGREEMENT. THIS WAIVER IS
KNOWINGLY, WILLINGLY AND VOLUNTARILY MADE BY DEBTOR AND BANK, AND DEBTOR AND
BANK HEREBY REPRESENT THAT NO REPRESENTATIONS OF FACT OR OPINION HAVE BEEN MADE
BY ANY INDIVIDUAL TO INDUCE THIS WAIVER OF TRIAL BY JURY OR TO IN ANY WAY MODIFY
OR NULLIFY ITS EFFECT. DEBTOR AND BANK EACH FURTHER REPRESENT THAT IT HAS BEEN
REPRESENTED IN THE SIGNING OF THIS AGREEMENT AND IN THE MAKING OF THIS WAIVER BY
INDEPENDENT LEGAL COUNSEL, SELECTED OF ITS OWN FREE WILL, AND THAT IT HAS HAD
THE OPPORTUNITY TO DISCUSS THIS WAIVER WITH COUNSEL.
Section 9.7. Severability. If a court of competent jurisdiction finds
any provision of this Agreement to be invalid or unenforceable as to any person
or circumstance, such finding shall not render that provision invalid or
unenforceable as to any other persons or circumstances. If feasible, any such
offending provision shall be deemed to be modified to be within the limits of
enforceability or validity; however, if the offending provision cannot be so
modified, it shall be stricken and all other provisions of this Agreement in all
other respects shall remain valid and enforceable.
Section 9.8. Consent to Loan Participation; Sales and Assignments (a)
Debtor agrees that Bank may sell or transfer, whether now or later, one or more
participation interests in the Indebtedness of Debtor arising pursuant to this
Agreement to one or more purchasers. Bank may provide, without any limitation
whatsoever, to any one or more purchasers, or potential purchasers, any
information or knowledge Bank may have about Debtor or about any other matter
relating to such Indebtedness, and Debtor hereby waives any rights to privacy it
may have with respect to such matters. Debtor additionally waives any and all
notices of sale of participation interests, as well as all notices of any
repurchase of such participation interests. Debtor agrees that the purchasers of
any such participation interest will be considered as the absolute owners of
such interests in such Indebtedness.
(b) Bank may assign to other banks or other Persons that have a
short-term unsecured debt rating of at least P-1 from Moody's Investor Service
or A-1 from Standard & Poor Rating Group, in amounts not less than
$5,000,000.00, whether related or unrelated to Bank, all or a portion of its
interest, rights and obligations under this Agreement; provided, however, that
(i) provided no Event of Default is continuing, consent of the Debtor shall be
required prior to any transfer becoming effective, which consent will not be
unreasonably withheld, delayed or conditioned, (ii) the parties to each
assignment shall execute an Assignment and Acceptance in form satisfactory to
Bank (each an "Assignment and Acceptance"), together with the Note subject to
such assignment; and (iii) each such assignment shall be of all of the assigning
bank's rights and obligations under this Agreement. Upon such execution,
delivery and acceptance, from and after the effective date specified in the
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Assignment and Acceptance, (a) the assignee thereunder shall be a party hereto
and, to the extent provided in such Assignment and Acceptance, have the rights
and obligations of the Bank hereunder and (b) the Bank hereunder shall, to the
extent provided in such Assignment and Acceptance, be released from its
obligations under this Agreement (and, in the case of an Assignment and
Acceptance covering all of the remaining portion of an assigning Bank's rights
and obligations under this Agreement, such Bank shall cease to be a party
hereto). Notwithstanding anything contained in this Agreement to the contrary,
Bank may at any time assign all or any portion of its rights under this
Agreement and the Note issued to it as collateral to a Federal Reserve Bank;
provided that no such assignment shall release Bank from any of its obligations
hereunder; provided further such Federal Reserve Bank shall not be considered a
bank for purposes of this Agreement or the Related Documents.
(c) By executing and delivering an Assignment and Acceptance, the Bank
assignor thereunder and the assignee thereunder confirm to and agree with each
other and the other parties hereto as follows: (i) other than the representation
and warranty that it is the legal and beneficial owner of the interest being
assigned thereby free and clear of any adverse claim, such Bank assignor makes
no representation or warranty and assumes no responsibility with respect to any
statements, warranties or representations made in or in connection with this
Agreement or any of the other Related Documents or the execution, legality,
validity enforceability, genuineness, sufficiency or value of this Agreement or
any of the Related Documents or any other instrument or document furnished
pursuant thereto; (ii) such Bank assignor makes no representation or warranty
and assumes no responsibility with respect to the financial condition of the
Debtor or the performance or observance by the Debtor of any of its obligations
under this Agreement or any of the other Related Documents or any other
instrument or document furnished pursuant hereto; (iii) such assignee confirms
that it has received a copy of this Agreement, together with copies of the
financial statements referred to in Section 5.1 hereof and such other documents
and information as it has deemed appropriate to make its own credit analysis and
decision to enter into such Assignment and Acceptance; (iv) such assignee will
independently and without reliance upon the Bank assignor, based on such
documents and information as it shall deem appropriate at the time, continue to
make its own credit decisions in taking or not taking action under this
Agreement and the Related Documents;and (v) such assignee agrees that it will
perform in accordance with their terms all obligations set by the terms of this
Agreement and the Related Documents as are required to be performed by it as
Bank.
(d) Bank's right to sell a participation under Section 9.8 (a), and
Debtor's consent given with respect to Section 9.8(b), is conditioned on the
following: (i) any transferee of information must protect and maintain all
disclosed information, including but not limited to tenant names and sales data,
confidential and such information may be used for no other purpose other than
evaluating the purchase of participation interests; (ii) every transferee must
execute an appropriate confidentiality/use agreement prior to Bank delivering to
such transferee any information; and (iii) Bank must provide Debtor a copy of
such signed confidentiality/use agreement prior to making disclosure to such
transferee.
Section 9.9 Successors and Assigns
This Agreement shall be binding upon and inure to the benefit of the
Debtor and the Bank and their respective successors and assigns; provided,
however, that the Debtor may not assign or transfer any of its rights or
obligations hereunder without the prior written consent of the Bank, and any
such assignment or transfer without such a consent shall be null and void.
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Section 9. 10. Headings. Article and Section headings used in this
Agreement are for convenience only and shall not affect the construction of this
Agreement.
Section 9.11. Counterparts. This Agreement may be executed in
counterparts and different parties hereto may execute different counterparts,
but all counterparts together shall constitute a single document.
Section 9. 12 Amendments. This Agreement may be amended from time to
time, but only in writing, by Bank and Debtor, including amendments to modify
the amount of the Commitment and to admit additional banks as parties to this
Agreement (in addition to the provisions of Section 9.8 hereof regarding
assignments of existing interests) provided, however, any such amendments shall
not require Debtor providing additional resolutions or opinions of counsel
unless such amendment involves an increase in the Commitment Amount and a
related amendment to the Guaranty to increase the guaranty amount, in which case
Bank may require additional resolutions and opinions .
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers thereunto duly authorized, as of the date
first above written.
DEBTOR: BANK:
TANGER PROPERTIES LIMITED SOUTHTRUST BANK OF ALABAMA,
PARTNERSHIP NATIONAL ASSOCIATION
BY: TANGER FACTORY OUTLET
CENTERS, INC.
General Partner
By: _______________________________ By: ______________________
Stanley K. Tanger Name:
Title: Chairman of the Board Title:
Chief Executive Officer
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STATE OF ____________
COUNTY OF ___________
The foregoing Loan Agreement was sworn to and subscribed before me this
____ day of November, 1996, by Stanley K. Tanger, who is personally known to me,
as Chairman of the Board and Chief Executive Officer of Tanger Factory Outlet
Centers, Inc., general partner of Tanger Properties Limited Partnership.
-------------------------------
Print Name:
Notary Public, State of ________
My Commission Number is:
My Commission Expires:
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Exhibit A
Commitment Amount
$15,000,000.00
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Exhibit B
Form of Note
PROMISSORY NOTE
Principal Amount: $15,000,000 Date of Note: November 18, 1996
PROMISE TO PAY. TANGER PROPERTIES LIMITED PARTNERSHIP, a North Carolina Limited
Partnership ("Debtor") promises to pay to the order of SOUTHTRUST BANK OF
ALABAMA, NATIONAL ASSOCIATION ("Bank"), in lawful money of the United States of
America the sum of FIFTEEN MILLION AND NO/100 DOLLARS ($15,000,000) or such
other or lesser amounts as may be reflected from time to time on the books and
records of Bank as evidencing the aggregate unpaid principal balance of loan
advances made to Debtor on a multiple advance basis as provided below, together
with simple interest assessed at the Prime Rate or LIBOR Adjusted Rate as
selected by Debtor pursuant to the Loan Agreement (defined below), commencing on
the date hereof and continuing until this Note is paid in full, or until default
under this Note with interest thereafter being subject to the default interest
rate provisions set forth herein. This Note is issued pursuant to, and entitled
to the benefits of, that certain Loan Agreement dated as of November 18, 1996
between Debtor and the Bank, as the same may be amended, modified, or restated
from time to time (as so amended, modified, or restated, the "Loan Agreement").
This Note is further entitled to the benefits of the Guaranty, as defined in the
Loan Agreement.
MULTIPLE ADVANCE LOAN. This Note contemplates multiple loan advances. Debtor is
entitled to borrow, repay, and borrow again, provided, that the aggregate of all
loan advances outstanding at any time shall not exceed the principal amount
listed above, and provided further that the provisions of the Loan Agreement
shall govern the conditions and provisions of borrowings and repayments
hereunder. Debtor agrees to be liable for all sums either: (a) advanced in
accordance with the instructions of an authorized person or (b) credited to any
of Debtor's deposit accounts with Bank in accordance with the instructions of an
authorized person. The unpaid principal balance owing on this Note at any time
may be evidenced by endorsements on this Note or by Bank's internal records,
including daily computer print-outs.
PAYMENT. Debtor will pay this loan in one payment of all outstanding principal
plus all accrued unpaid interest on the Termination Date as defined in the Loan
Agreement. In addition, Debtor will pay monthly payments of accrued unpaid
interest beginning December 15, 1996 and all subsequent interest payments are
due on the same day of each month after that until this Note is paid in full.
Interest on this Note is computed on a 365/360 simple interest basis; that is,
by applying the ratio of the annual interest rate over a year of 360 days,
multiplied by the outstanding principal balance, multiplied by the actual number
of days the principal balance is outstanding. Debtor will pay Bank at the
address shown in the Loan Agreement, or at such other place as Bank may
designate in writing. Unless otherwise agreed or required by applicable law,
payments will be applied first to accrued unpaid interest, then to principal,
and any remaining amount to any unpaid collection costs and late charges.
PREPAYMENT. Debtor may prepay this Note in whole or in part at any time subject
to the terms and provisions of the Loan Agreement. If Debtor prepays this Note
in full, or if Bank accelerates payment, Debtor understands that, unless
otherwise required by law, any prepaid fees or charges will
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not be subject to rebate and will be earned by Bank at the time this Note is
signed.
LATE CHARGE. If Debtor fails to pay any payment under this Note in full within
10 days of when due, Debtor agrees to pay Bank a late payment fee in an amount
equal to 3.000% of the unpaid amount of the payment, or U.S. $25.00, whichever
is greater, with a maximum of $200.00. Late charges will not be assessed
following declaration of default and acceleration of maturity of this Note.
DEFAULT. The following actions and/or inactions shall constitute Events of
Default under this Note: The occurrence of an Event of Default under the Loan
Agreement
BANK'S RIGHTS UPON DEFAULT. Should any one or more Events of Default occur or
exist under this Note as provided above, Bank shall have the right, at its sole
option, to declare formally this Note to be in default and to accelerate the
maturity and insist upon immediate payment in full of the unpaid principal
balance then outstanding under this Note, plus accrued interest, together with
reasonable attorneys' fees, costs, expenses and other fees and charges as
provided in the Loan Agreement.
INTEREST AFTER DEFAULT. If Bank declares this Note to be in default, based upon
an Event of Default, Bank has the right prospectively to adjust and fix the
simple interest rate under this Note until this Note is paid in full, to
eighteen (18%) percent per annum (the "Post-Default Rate")
ATTORNEYS' FEES. If Bank refers this Note to an attorney for collection, or
files suit against Debtor to collect this Note, or if Debtor files for
bankruptcy or other relief from creditors, Debtor agrees to pay Bank's
reasonable attorneys' fees in an amount not exceeding 25.000% of the unpaid debt
then owing under this Note.
NSF CHECK CHARGES. In the event that Debtor makes any payment under this Note by
check and Debtor's check is returned to Bank unpaid due to nonsufficient funds
in my deposit account, Debtor agrees to pay Bank an additional NSF check charge
equal to $15.00.
FINANCIAL STATEMENTS. Debtor agrees to provide Bank with such financial
statements and other related information at such frequencies and in such detail
as Bank may reasonably request as set forth in the Loan Agreement.
GOVERNING LAW. Debtor agrees that this Note and the loan evidenced hereby shall
be governed under the laws of the State of Alabama.
WAIVERS. To the extent permitted by applicable law, Debtor and each guarantor of
this Note hereby waive presentment for payment, protest, notice of protest and
notice of nonpayment, and severally agree that their obligations and liabilities
to Bank hereunder shall be on a "solidary" or "joint and several" basis. Debtor
and each guarantor further severally agree that discharge or release of any
party who is or may be liable to Bank for the indebtedness represented hereby
shall not have the effect of releasing any other party or parties, who shall
remain liable to Bank Debtor and each guarantor additionally agree that Bank's
acceptance of payment other than in accordance with the terms of this Note, or
Bank's subsequent agreement to extend or modify such repayment terms, or Bank's
failure or delay in exercising any rights or remedies granted to Bank shall
likewise not have the effect of releasing Debtor or any other party or parties
from their respective obligations to Bank, or of
33
<PAGE>
releasing any collateral that directly or indirectly secures repayment hereof.
In addition, any failure or delay on the part of Bank to exercise any of the
rights and remedies granted to Bank shall not have the effect of waiving any of
Bank's rights and remedies. Any partial exercise of any rights and/or remedies
granted to Bank shall furthermore not be construed as a waiver of any other
rights and remedies; it being Debtor's intent and agreement that Bank's rights
and remedies shall be cumulative in nature. Debtor and each guarantor further
agree that, should any Event of Default occur or exist under this Note, any
waiver or forbearance on the part of Bank to pursue the rights and remedies
available to Bank, shall be binding upon Bank only to the extent that Bank
specifically agrees to any such waiver or forbearance in writing. A waiver or
forbearance on the part of Bank as to one default event shall not be construed
as a waiver or forbearance as to any other default. Debtor and each guarantor of
this Note further agree that any late charges provided for under this Note will
not be charges for deferral of time for payment and will not and are not
intended to compensate Bank for a grace or cure period, and no such deferral,
grace or cure period has or will be granted to Debtor in return for the
imposition of any late charge. Debtor recognizes that Debtor's failure to make
timely payment of amounts due under this Note will result in damages to Bank,
including but not limited to Bank's loss of the use of amounts due, and Debtor
agrees that any late charges imposed by Bank hereunder will represent reasonable
compensation to Bank for such damages.
SUCCESSORS AND ASSIGNS LIABLE. Debtor's and each guarantor's obligations and
agreements under this Note shall be binding upon Debtor's and each guarantor's
respective successors, heirs, legatees, devisees, administrators, executors and
assigns. The rights and remedies granted to Bank under this Note shall inure to
the benefit of Bank's successors and assigns, as well as to any subsequent
holder or holders of this Note.
CAPTION HEADINGS. Caption headings of the sections of this Note are for
convenience purposes only and are not to be used to interpret or to define their
provisions. In this Note, whenever the context so requires, the singular
includes the plural and the plural also includes the singular.
SEVERABILITY. If any provision of this Note is held to be invalid, illegal or
unenforceable by any court, that provision shall be deleted from this Note and
the balance of this Note shall be interpreted as if the deleted provision never
existed.
PRIOR TO SIGNING THIS NOTE, BORROWER READ AND UNDERSTOOD ALL THE PROVISIONS OF
THIS NOTE, INCLUDING THE VARIABLE INTEREST RATE PROVISIONS. BORROWER HEREBY
WAIVES THE RIGHT TO ANY JURY TRIAL IN ANY ACTION, PROCEEDING, OR COUNTERCLAIM
BROUGHT BY BANKOR BORROWER AGAINST THE OTHER TO THE EXTENT PERMITTED BY
APPLICABLE LAW.
BORROWER:
TANGER PROPERTIES LIMITED PARTNERSHIP
By: TANGER FACTORY OUTLET CENTERS, INC.
34
<PAGE>
By: ___________________________________
Stanley K. Tanger
Chairman of Board
Chief Executive Officer
35
<PAGE>
Exhibit C
Termination Date
January 15, 1998
36
<PAGE>
Exhibit D
Minimum Advance
LIBOR Rate Advances __________________________________$500,000.00
Prime Rate Advances___________________________________$100,000.00
37
Exhibit 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the registration
statements of Tanger Factory Outlet Centers, Inc. and Subsidiary on Form S-8
(File No. 33-80450) and Form S-3 (File No. 33-99736) of our reports dated
January 27, 1997, except Note 14, which is dated February 28, 1997, on our
audits of the consolidated financial statements and financial statement schedule
of Tanger Factory Outlet Centers, Inc. and Subsidiary as of December 31, 1996
and 1995, and for the years ended December 31, 1996, 1995 and 1994, which
reports are included in this Annual Report on Form 10-K.
COOPERS & LYBRAND
Greensboro, North Carolina
March 18, 1997
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> DEC-31-1996
<CASH> 2,585
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 358,361
<DEPRECIATION> 46,907
<TOTAL-ASSETS> 332,138
<CURRENT-LIABILITIES> 0
<BONDS> 178,004
0
1
<COMMON> 66
<OTHER-SE> 110,590
<TOTAL-LIABILITY-AND-EQUITY> 332,138
<SALES> 0
<TOTAL-REVENUES> 75,500
<CGS> 0
<TOTAL-COSTS> 23,559
<OTHER-EXPENSES> 16,458
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 13,998
<INCOME-PRETAX> 16,018
<INCOME-TAX> 0
<INCOME-CONTINUING> 11,752
<DISCONTINUED> 0
<EXTRAORDINARY> 561
<CHANGES> 0
<NET-INCOME> 11,191
<EPS-PRIMARY> 1.37
<EPS-DILUTED> 1.37
</TABLE>
