SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant (X)
Filed by a Party other than the Registrant ( )
Check the appropriate box:
( ) Preliminary Proxy Statement ( ) Confidential, for Use of the
Commission Only (as permitted
by Rule 14a-6(e)(2))
(X) Definitive Proxy Statement
( ) Definitive Additional Materials
( ) Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
TANGER FACTORY OUTLET CENTERS, INC.
(Name of Registrant as Specified in its Charter)
(Name of Person(s) Filing Proxy Statement, if other than Registrant)
Payment of Filing Fee (Check the appropriate box):
(X) No fee required
( ) Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
( ) Fee paid previously with preliminary materials.
( ) Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule, or Registration Statement No.:
3) Filing Party:
4) Date Filed:
TANGER FACTORY OUTLET CENTERS, INC.
1400 WEST NORTHWOOD STREET
GREENSBORO, NORTH CAROLINA 27408
------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
to be held on May 8, 1998
To Our Shareholders:
On behalf of the Board of Directors, I cordially invite you to attend
the 1998 Annual Meeting of Shareholders (the "Meeting") of TANGER FACTORY OUTLET
CENTERS, INC. (the "Company") to be held on Friday, May 8, 1998 at 10 o'clock
a.m. at The Marriott Hotel, Piedmont Triad International Airport, Greensboro,
North Carolina, for the following purposes:
1. To elect Directors to serve for the ensuing year;
2. To ratify the amendment and restatement of the Share Option
Plan and the Unit Option Plan (the "Plans") in order to (i)
reflect amendments previously approved by shareholders, (ii)
conform the Plans to changes to Rule 16b-3 of the Exchange Act
with respect to Options granted to officers and directors of
the Company, (iii) permit the grant of Options intended to
qualify as "performance-based compensation" under Section
162(m) of the Internal Revenue Code, (iv) permit discretionary
Option grants to Independent Directors and (v) amend the Plans
in certain other respects;
3. To ratify amendments to the Share Option Plan and the Unit
Option Plan to increase from 1,500,000 to 1,750,000 the
aggregate number of Common Shares and Units which may be issued
under the Share Option Plan and the Unit Option Plan; and,
4. To transact such other business as may properly come before the
Meeting or any adjournment(s) thereof.
Only common shareholders of record at the close of business on March
31, 1998, will be entitled to vote at the Meeting or any adjournment(s) thereof.
PLEASE SIGN AND DATE THE ENCLOSED PROXY WHICH IS BEING SOLICITED BY
THE BOARD OF DIRECTORS, AND RETURN IT PROMPTLY IN THE ENCLOSED ENVELOPE.
Sincerely,
Stanley K. Tanger
Chairman of the Board and
Chief Executive Officer
April 8, 1998
<PAGE>
TANGER FACTORY OUTLET CENTERS, INC.
1400 WEST NORTHWOOD STREET
GREENSBORO, NORTH CAROLINA 27408
------------
PROXY STATEMENT
FOR
ANNUAL MEETING OF SHAREHOLDERS
to be held on May 8, 1998
This Proxy Statement is furnished to shareholders of Tanger Factory
Outlet Centers, Inc., (the "Company"), a self-administered and self-managed real
estate investment trust ("REIT"), in connection with the solicitation of proxies
in the form enclosed herewith for use at the Annual Meeting of Shareholders (the
"Meeting") of the Company to be held on Friday, May 8, 1998, at 10 o'clock a.m.
for the purposes set forth in the Notice of Meeting.
This solicitation is made on behalf of the Board of Directors of the
Company. Costs of the solicitation will be borne by the Company. Directors,
officers and employees of the Company and its affiliates may also solicit
proxies by telephone, telegraph, fax or personal interview. The Company will
reimburse banks, brokerage firms and other custodians, nominees and fiduciaries
for reasonable expenses incurred by them in sending proxy material to
shareholders.
Holders of record of Common Shares of the Company (the "Common
Shares") as of the close of business on the record date, March 31, 1998, are
entitled to receive notice of, and to vote on all proposals at, the Meeting. The
outstanding Common Shares constitute the only class of securities entitled to
vote at the Meeting. Each Common Share entitles the holder thereof to one vote.
At the close of business on March 20, 1998, there were 7,864,763 Common Shares
issued and outstanding.
Shares represented by proxies in the form enclosed, if such proxies
are properly executed and returned and not revoked, will be voted as specified.
Where no specification is made on the properly executed and returned form of
proxy, the shares will be voted FOR the election of all nominees for Director,
FOR the ratification of the amendment and restatement of the Share Option Plan
and the Unit Option Plan and FOR the ratification of the amendments to the Share
Option Plan and the Unit Option Plan to increase from 1,500,000 to 1,750,000 the
aggregate number of the Company's Common Shares and units of the Company's
majority owned partnership, Tanger Properties Limited Partnership (the
"Operating Partnership") which may be issued under the Share Option Plan and the
Unit Option Plan; provided however, shares held by a broker or nominee who has
not received specific voting instructions from the beneficial owner will not be
voted FOR or AGAINST the amendments to the Share Option Plan and Unit Option
Plan. To be voted, proxies must be filed with the Secretary of the Company prior
to voting. Proxies may be revoked at any time before exercise by filing a notice
of such revocation, by filing a later dated proxy with the Secretary of the
Company or by voting in person at the Meeting. Dissenters will not have rights
of appraisal with respect to the matters to be acted upon at the Meeting.
Under the Company's By-laws and North Carolina law, shares represented
at the Meeting by proxy for any purpose will be deemed present for quorum
purposes for the remainder of the Meeting. Directors will be elected by the vote
of a plurality of the votes cast by the shares entitled to vote in the election,
provided that a quorum is present. Accordingly, shares which are present at the
Meeting for any other purpose but which are not voted in the election of
directors will not affect the election of the candidates receiving a plurality
of the votes cast by the shares entitled to vote in the election at the Meeting.
All other proposals to come before the Meeting require a plurality of the votes
cast regarding the proposal. Accordingly, shares which are present at the
Meeting for any other purpose but which are not voted on a particular proposal
will not affect the outcome of the vote on the proposal unless the Business
Corporation Act requires that the proposal be approved by a greater number of
affirmative votes than a plurality of the votes cast.
The Company's 1997 Annual Report for the calendar year ended December
31, 1997, has been mailed with this Proxy Statement. This Proxy Statement and
the enclosed form of proxy were mailed to shareholders on or about April 8,
1998. The principal executive offices of the Company are located at 1400 West
Northwood Street, Greensboro, North Carolina 27408.
2
<PAGE>
PROPOSAL 1
ELECTION OF DIRECTORS
The Company's By-Laws provide that directors be elected at each annual
meeting of shareholders. Pursuant to such By-Laws, the current directors of the
Company (the "Directors") have fixed the number of directors to be elected at
five. The persons named as proxies in the accompanying form of proxy intend to
vote in favor of the election of the five nominees for director designated
below, all of whom are presently directors of the Company, to serve until the
next Annual Meeting of Shareholders and until their successors are elected and
shall qualify. It is expected that each of these nominees will be able to serve,
but if any such nominee is unable to serve for any reason, the proxies reserve
discretion to vote or refrain from voting for a substitute nominee or nominees.
Information Regarding Nominees (as of February 28, 1998):
<TABLE>
<CAPTION>
Present Principal Occupation or
Name Age Employment and Five-Year Employment History
- - ---- --- -------------------------------------------
<S> <C>
Stanley K. Tanger 74 Chairman of the Board of Directors and Chief Executive Officer of the
Company; President of the Company from inception to December 1994. Mr.
Tanger opened one of the Country's first outlet shopping centers in
Burlington, N.C. in 1981. He was the founder and Chief Executive of the
Company's predecessor formed in 1981 until its business was acquired by the
Company in 1993.
Steven B. Tanger 49 Director of the Company since May 1993. President and Chief Operating
Officer since January 1995; Executive Vice President from 1986 to 1994. Mr.
Tanger joined the Company's predecessor in 1986 and is the son of Stanley K.
Tanger.
Jack Africk 69 Director of the Company since June 4, 1993. Chairman of the Board of
Evolution Consulting Group, Inc. since June 1993. Vice Chairman of Duty
Free International Inc. from 1993 to 1994; Vice Chairman of UST Inc.
("UST") from 1990 through 1993; President and Chief Executive Officer of
US Tobacco Company, a UST subsidiary, from 1987 through 1990.
William Benton 52 Director of the Company since June 4, 1993. Chairman of the Board and
Chief Executive Officer of Diversified Senior Services, Inc. since May 1996.
Chairman of the Board and Chief Executive Officer of Benton Investment
Company since 1982. Chairman of the Board and Chief Executive Officer of
Health Equity Properties, Inc. from 1989 to September 1994; President of
Health Equity Properties, Inc. from 1987 to 1989 and from 1991 to September
1994.
Thomas E. Robinson 50 Director of the Company since January 21, 1994. Managing Director of Legg
Mason Wood Walker, Inc. since June 1997. Director (March 1994 to June
1997), President (August 1994 to June 1997) and Chief Financial Officer
(July 1996 to June 1997) of Storage USA, Inc.; a senior executive of Jerry J.
Moore Investments from August 1993 through August 1994; Partner in
Coopers & Lybrand's National Real Estate Industry Service's Group and
Director of the Firm's Real Estate Investment Trust Advisory Services from
November 1989 through July 1993.
</TABLE>
Mr. Africk is also a director of Duty Free International Inc.,
Transmedia Networks Inc. and Crown Central Petroleum Corporation. Mr. Robinson
is also a director of CenterPoint Properties Trust.
All directors of the Company serve terms of one year or until the
election of their respective successors. The Board of Directors held four
regular and three special meetings during 1997. Each of the above Directors was
in attendance at all regular and special meetings of the Board of Directors,
except for Mr. Robinson who was unable to attend two regular meetings.
The Board of Directors unanimously recommends a vote FOR the nominations set
forth above.
3
<PAGE>
Committees of the Board of Directors; Meetings
Audit Committee. The Board of Directors has established an Audit
Committee consisting of three directors who are not concurrently serving as
officers of the Company ("Independent Directors"). The Audit Committee makes
recommendations concerning the engagement of independent public accountants,
reviews with the independent public accountants the plans and results of the
audit engagement, approves professional services provided by the independent
public accountants, reviews the independence of the independent public
accountants, considers the range of audit and non-audit fees and reviews the
adequacy of the Company's internal accounting controls. Messrs. Africk, Benton
and Robinson currently serve on the Audit Committee, with Mr. Africk serving as
chairman. During 1997, there were three meetings of the Audit Committee.
Executive Compensation Committee. The Board of Directors has
established an Executive Compensation Committee consisting of a majority of
independent directors. The Executive Compensation Committee is charged with
determining compensation for the Company's executive officers. Messrs. Africk,
Benton and Stanley K. Tanger currently serve on the Executive Compensation
Committee, with Mr. Africk serving as chairman. During 1997, there were no
meetings of the Executive Compensation Committee.
Share and Unit Option Committee. The Board of Directors has
established a Share and Unit Option Committee ("Option Committee") consisting of
three Independent Directors. The Option Committee administers the Company's
Share Option Plan and the Operating Partnership's Unit Option Plan. Messrs.
Benton, Africk and Robinson currently serve on the Option Committee, with Mr.
Benton serving as chairman. During 1997, there were no meetings of the Option
Committee.
Each of the Directors serving on the aforementioned Committees of the
Board of Directors was in attendance at all meetings of such Committees held as
indicated above, except for Mr. Robinson, who was unable to attend one Audit
Committee meeting. The Board of Directors has not established a separate
nominating committee.
Compensation of Directors
The Company pays its directors who are not employees of the Company
("Independent Directors") an annual compensation fee of $15,000 and a per
meeting fee of $750 (for each Board of Directors meeting and each Committee
meeting attended). Pursuant to the Share Option Plan for Directors and Executive
and Key Employees of Tanger Factory Outlet Centers, Inc. (the "Share Option
Plan"), on the date of his or her initial election to the Board and on each of
the first two anniversaries thereof, each Independent Director received an
option to purchase 3,000 Common Shares at an exercise price equal to the Fair
Market Value (as defined in the Share Option Plan) of a Common Share on the date
of option grant (except for the initial grant of options to Messrs. Africk and
Benton); such options become exercisable with respect to 20% of the Common
Shares subject thereto on each of the first five anniversaries of the date of
grant, subject to the Independent Director's continued service as such. On June
4, 1993, the Company granted to Messrs. Africk and Benton options to purchase
3,000 Common Shares with an exercise price set at $22.50 per Common Share, the
initial public offering price of the Common Shares. Employees of the Company who
are also directors will not be paid any director fees and will not receive any
options for their services as directors of the Company.
As provided herein, subject to shareholder approval, the Share Option
Plan has been amended by the Board to permit additional grants of options to
Independent Directors. On January 6, 1998, the Board of Directors granted to
each Independent Director (subject to shareholder approval as described herein)
an option to purchase 5,000 Common Shares at an exercise price equal to Fair
Market Value as of such date ($30.125 per Common Share); such options become
exercisable with respect to 20% of the Common Shares subject thereto on each of
the first five anniversaries of the date of grant, subject to the Independent
Director's continued service as such. (See "Proposal 2 - Amendment and
Restatement of the Share Option Plan and the Unit Option Plan").
4
<PAGE>
Security Ownership of Certain Beneficial Owners and Management
The following table sets forth certain information as of February 28,
1998, available to the Company with respect to its Common Shares, $.01 par value
per share, and of units of partnership interests in the Operating Partnership
(the "Units") (i) held by those persons known to the Company to be the
beneficial owners (as determined under the rules of the Securities and Exchange
Commission (the "SEC")) of more than 5% of such shares, (ii) held individually
by the Directors and named executive officers of the Company, and (iii) held by
the Directors and all executive officers of the Company as a group.
<TABLE>
<CAPTION>
Numbers of
Common Number of Percent of All
Shares Percent of All Units Common
Beneficially Common Beneficially Shares
Name and Business Address of Beneficial Owners Owned (1) Shares Owned (2) and Units
- - ---------------------------------------------- ----------- -------- ----------- ----------
<S> <C> <C> <C> <C> <C>
Stanley K. Tanger (3) 147,796 1.9% 3,232,305 29.8%
Tanger Factory Outlet Centers, Inc.
1400 West Northwood Street
Greensboro, NC 27408
Steven B. Tanger (4) --- --- 181,000 1.6%
Tanger Factory Outlet Centers, Inc.
150 East 59th Street
New York, NY 10155
FMR Corp. 861,800 11.0% --- 7.9%
82 Devonshire Street
Boston, MA 02109
Legg Mason, Inc. 474,850 6.0% --- 4.4%
100 Light Street
Baltimore, MD 21202
Jack Africk (6) 6,400 * --- *
William G. Benton (6) (8) 5,700 * --- *
Thomas E. Robinson (6) 5,595 * --- *
Rochelle G. Simpson (5) 1,297 * 22,000 *
Willard A. Chafin (5) --- * 3,000 *
Richard T. Parker (5) --- * 4,000 *
Directors and Executive Officers as a Group 167,847 2.1% 3,468,305 32.1%
(14 persons) (7) (8)
</TABLE>
- - --------------------
* Less than 1%
(1) The ownership of Common Shares reported herein is based upon filings with
the Securities and Exchange Commission and is subject to confirmation by
the Company that such ownership did not violate the ownership restrictions
in the Company's Articles of Incorporation.
(2) Units in the Operating Partnership held by the Tanger Family Limited
Partnership ("TFLP") and Units which may be acquired upon the exercise of
options to purchase Units may be exchanged for Common Shares of the Company
on a one-for-one basis.
(3) Includes 139,031 Common Shares and 3,033,305 Units owned by the TFLP, of
which Stanley K. Tanger is the general partner and may be deemed to be the
beneficial owner. Also includes 8,765 Common Shares and 199,000 presently
exercisable options to purchase Units owned by Stanley K. Tanger
individually. Does not include 171,000 options to purchase Units, which are
presently unexercisable, owned by Stanley K. Tanger individually.
(4) Includes 181,000 presently exercisable options to purchase Units. Does not
include 139,031 Common Shares and 3,033,305 Units owned by the TFLP,
(Steven B. Tanger is a limited partner of the Tanger Investments Limited
Partnership, which is a limited partner of TFLP). Does not include 129,000
options to purchase Units which are presently unexercisable. Does not
include 8,765 Common Shares actually owned or 139,031 Common Shares which
may be deemed beneficially owned by Steven B. Tanger's father, Stanley K.
Tanger.
(5) Represents presently exercisable options to purchase Units.
5
<PAGE>
(6) Includes 5,400 presently exercisable options to purchase Common Shares of
the Company.
(7) Includes 16,200 presently exercisable options to purchase Common Shares and
435,000 presently exercisable options to purchase Units. Does not include
16,200 options to purchase Common Shares and 492,600 options to purchase
Units which are presently unexercisable.
(8) Excludes 325 Series A Preferred Depositary Shares which are convertible
into 292 Common Shares.
Executive Compensation
The following table sets forth the compensation earned for the fiscal
years ended December 31, 1997, 1996, and 1995 with respect to each of the five
persons who are expected to be the most highly compensated executive officers of
the Company whose cash compensation exceeded $100,000 during such year.
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
Long Term
Compensation
Annual Compensation Awards
----------------------------------------- ------------------
Other Annual All Other
Name and Principal Position Year Salary($) Bonuses($) Compensation($) Options/SARs(#)(5) Compensation($)
- - --------------------------- ---- --------- -------------------------- ----------------------------------
<S> <C> <C> <C> <C> <C>
Stanley K. Tanger, 1997 300,000 400,000 --- --- 2,000 (4)
Chairman of the Board of 1996 275,000 375,000 --- 50,000 1,875 (4)
Directors and Chief 1995 250,000 350,000 --- 45,000 ---
Executive Officer(1)(2)
Steven B. Tanger, 1997 250,000 350,000 --- --- 19,150 (3)
President and Chief 1996 225,000 325,000 --- 35,000 19,025 (3)
Operating Officer(1) 1995 200,000 300,000 --- 30,000 17,150 (3)
Rochelle G. Simpson, 1997 175,000 10,798 --- --- 2,000 (4)
Secretary, Senior Vice 1996 165,000 10,178 --- 12,500 1,875 (4)
President-Administration 1995 140,000 --- --- 10,000 1,750 (4)
and Finance
Willard A. Chafin, Jr., 1997 185,000 11,415 --- --- 308 (4)
Senior Vice President- 1996 175,000 10,795 --- 12,500 1,875 (4)
Leasing, Site Selection, 1995 152,500 25,000 --- 10,000 1,906 (4)
Operations and Marketing
Richard T. Parker 1997 171,731 10,596 --- --- 13,000 (6)
Vice President- 1996 111,692 31,890 --- 20,000 8,000 (6)
Development (6)
</TABLE>
- - ---------------
(1) A portion of the salaries of Stanley K. Tanger and Steven B. Tanger are
paid by the Company for services to the Company and the remainder are paid
by the Operating Partnership.
(2) In addition, Stanley K. Tanger owns the stock of Stanley K. Tanger &
Company ("SKT Co."), which performed certain marketing services for the
Company during 1995. SKT Co. was paid an annual fee equal to cost plus
$5,000 per year.
(3) The Company provides term life insurance to Steven B. Tanger at a current
annual premium of $17,150. In addition, the Company provided $2,000 and
$1,875 during 1997 and 1996 as a Company match under the employee 401(k)
plan.
(4) Company match under employee 401(k) plan.
(5) Number of Units in the Operating Partnership under option grant.
(6) Mr. Parker joined the Company in April 1996 and thus the annual
compensation shown for 1996 represents less than a full calendar year.
Other compensation includes $2,000 in 1997 as a Company match under the
employee 401(k) plan and $11,000 and $8,000 in 1997 and 1996 as a moving
allowance for relocating to Greensboro, North Carolina.
6
<PAGE>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR END OPTION VALUES
The following table provides information on option exercises in 1997 by
the named executive officers, and the value of each such officer's unexercised
options at December 31, 1997.
<TABLE>
<CAPTION>
(a) (b) (c) (d) (e)
Value of
Unexercised In-the-Money
Number of Unexercised Options at
Shares Acquired Value Options at Year End(#) Year-End ($)(1)
Name on Exercise(#) Realized($) Exercisable Unexercisable Exercisable Unexercisable
---- -------------- ----------- ------------------------- -------------------------
<S> <C> <C> <C> <C>
Stanley K. Tanger -- -- 199,000 121,000 1,457,563 804,312
Steven B. Tanger -- -- 181,000 94,000 1,360,813 641,375
Rochelle G. Simpson 8,000 46,750 22,000 25,000 138,063 157,437
Willard A. Chafin, Jr. 10,500 53,056 3,000 19,000 11,813 121,437
Richard T. Parker -- -- 4,000 16,000 24,500 98,000
</TABLE>
- - ------------
(1) Based upon the closing price of the Company's Common Shares on the New York
Stock Exchange on December 31, 1997 of $30.5625 per share.
Compensation Committee Interlocks and Insider Participation
The Executive Compensation Committee of the Board of Directors, which
is required to have a majority of Independent Directors, is charged with
determining compensation for the Company's executive officers. Messrs. Africk,
Benton and Stanley K. Tanger currently serve on the Executive Compensation
Committee, with Mr. Africk serving as chairman.
Mr. Stanley K. Tanger is Chief Executive Officer and Chairman of the
Board of Directors of the Company.
Mr. Stanley K. Tanger is an investor in certain real estate joint
ventures owning three properties managed by the Company. See Certain
Relationships and Related Transactions.
Report of the Executive Compensation Committee on Executive Compensation
The Company's factory outlet centers are held by, and all of the
Company's operations are conducted by, the Operating Partnership. Except as
expressly described below, references to compensation (or policies with respect
thereto) paid by the Company refer to compensation paid by both the Company and
the Operating Partnership.
This Committee believes that the Company's success is attributable in
large part to the management and leadership efforts of its executive officers.
The Company's management team has substantial experience in owning, operating,
managing, developing and acquiring interests in factory outlet centers. Stanley
K. Tanger, Chairman of the Board and Chief Executive Officer, and Steven B.
Tanger, President and Chief Operating Officer, provide the Company with
strategic business direction.
During 1997, through the efforts of management, the Company acquired
three factory outlet centers totaling 302,554 square feet and completed
construction and put into operation an additional 402,694 square feet of retail
space through expansions of the Company's existing centers. The Company's
portfolio of properties at December 31, 1997 was 98% leased and the Company has
continued to vigorously explore opportunities for new developments and
acquisitions. Funds from operations ("FFO"), a widely accepted financial
indicator used by certain investors and analysts to analyze and compare one
equity REIT with another, before minority interest increased 11% during the 1997
and total revenues increased 13%. FFO is generally defined as net income (loss),
computed in accordance with generally accepted accounting principles, before
extraordinary items and gains (losses) on sale of properties, plus depreciation
and amortization uniquely significant to real estate. Accordingly, the Company
intends to continue to maintain compensation policies, plans and programs which
will reward management and provide additional incentives for the enhancement of
cash flows, and consequently real property and shareholder values.
7
<PAGE>
The Company's business is most competitive and the Committee believes
that it is extremely desirable for the Company to maintain employment contracts
with its senior executives. The Company currently has employment contracts with
each of the named executives on page 6, with the exception of Mr. Parker.
Pursuant to those contracts, each executive (except Stanley K. Tanger) is
prohibited from engaging in activities in competition with the Company during
the term of employment and for a period of one year following termination of
employment. Stanley K. Tanger is permanently prohibited from engaging in
competitive activities.
The employment contracts for Stanley K. Tanger and Steven B. Tanger,
the Company's two most senior executives, provide for annual cash bonuses based
upon the Company's performance as measured by FFO per share (See "Employment
Contracts"). The Company may also consider the award of cash bonuses to other
executive officers and key employees based on similar measures. Based on the
Company's financial condition as of the end of 1997 and the results of
operations during 1997, the Company concluded that its executive officers and
key employees substantially contributed toward achieving the 1997 performance
goals, and as a result, the Company awarded each such officer and key employee a
cash bonus based on a percentage of their salary. The Committee members believe
the bonuses awarded were appropriate in view of previously awarded bonuses and
their qualitative assessment that 1997 represented a year of significant
achievement for the Company that was, in large part, attributable to the talents
and efforts of the executive officers and key employees.
Stock-based compensation is also an important element of the Company's
compensation program. The Company maintains the Share Option Plan and the
Operating Partnership maintains the Unit Option Plan (collectively with the
Share Option Plan, the "Plans") for the purpose of attracting and retaining the
Company's Directors, executive officers and certain other employees. The Option
Committee of the Board of Directors determines in its sole discretion, subject
to the terms and conditions of the Plans, the specific terms of each option
granted to an employee of the Company or Operating Partnership based upon its
subjective assessment of the individual's performance, responsibility and
functions and how this performance may have contributed or may contribute in the
future to the Company's performance. The Compensation Committee believes awards
pursuant to the Plans align the interests of the Directors and management with
those of Company's shareholders since optionees will benefit under such options
only if the shareholders of the Company also benefit. Options granted under the
Plans are generally granted at the Fair Market Value of the Company's Common
Shares on the date of grant and thus will provide value only if the price of
Common Shares exceeds the exercise price of the options.
The cash compensation for the Company's Chief Executive Officer,
Stanley K. Tanger, is determined pursuant to his employment contract. Mr.
Tanger's base salary is established each year by agreement between Mr. Tanger
and the Board of Directors. Provided however, Mr. Tanger's annual base salary
will not be less than his base salary for the previous year and, if FFO per
share (calculated on a fully diluted basis assuming the conversion of all
outstanding Series A Preferred Shares and all minority interest Operating
Partnership Units) for the prior year equals or exceeds that year's target per
share, a Consumer Price Index increase. The Company's FFO per share exceeded the
target per share during the year ended December 31, 1996. Based on Mr. Tanger's
key contributions towards the Company's continued success in an increasingly
competitive environment, the Committee approved that Mr. Tanger's base salary
for 1997 be increased to $300,000. In addition, he was entitled to a bonus
ranging from $100,000 to $400,000 based upon the amount, if any, by which the
Company's FFO per share exceeded a target per share. If the Company's FFO had
not exceeded the target, Mr. Tanger would have received no bonus. For the twelve
month period ended on December 31,1997, the Company's FFO exceeded the target
necessary for Mr. Tanger to receive the maximum bonus allowed under the
contract. For the year ended December 31, 1997, the Company paid 20% of Mr.
Tanger's base annual salary and the Operating Partnership paid the remainder of
Mr. Tanger's compensation, including his bonus. For periods thereafter, the
ratio will be determined by the Company acting in its capacity as General
Partner of the Operating Partnership and on its own behalf.
On January 6, 1998, the Option Committee granted Mr. Tanger 50,000 Unit
options with an exercise price equal to the Fair Market Value on the date of
grant. The primary basis for the Committee's determination to grant such options
to Mr. Tanger was to provide strong incentive for him to continue to increase
the value of the Company during the remainder of his employment.
During 1993, the Internal Revenue Code of 1986 (the "Code") was amended
to add Section 162(m), which denies an income tax deduction to any publicly held
corporation for compensation paid to a "covered employee" (which is defined as
the Chief Executive Officer and each of the Company's other four most highly
compensated officers) to the extent that such compensation in any taxable year
of the employee exceeds $1 million. In addition
8
<PAGE>
to salaries, bonuses payable to the Company's executives under their present
employment contracts and compensation attributable to the exercise of options
granted under the Share Option Plan and Unit Option Plan constitute compensation
subject to the Section 162(m) limitation. It is the Company's policy to take
account of the implications of Section 162(m) among all factors reviewed in
making compensation decisions. The Plans have been amended, subject to
shareholder approval as provided herein, to permit the grant of options intended
to qualify as "performance-based compensation" which is exempt from application
of the Section 162(m) limitation. The Company expects that it will not be denied
any deduction under Section 162(m) for compensation paid during its taxable year
ended December 31, 1997, although it is possible that in some future year some
portion of the compensation paid to a Company executive will not be tax
deductible by the Company under Section 162(m).
Jack Africk (Chairman)
Stanley K. Tanger
William Benton
As to that portion of the report which pertains to Mr. Stanley K. Tanger's
compensation:
Jack Africk (Chairman)
William Benton
SHARE PRICE PERFORMANCE
---------------------
The following share price performance chart compares the Company's
performance to the S&P 500, the index of equity real estate investment trusts
prepared by the National Association of Real Estate Investment Trusts ("NAREIT")
and the index prepared by SNL Securities LC of the four other publicly traded
factory outlet REITs ("Tanger Peer Group"). The Tanger Peer Group consists of
Chelsea GCA Realty, Inc., FAC Realty Trust, Inc., Horizon Group, Inc., and Prime
Retail, Inc. Equity real estate investment trusts are defined as those which
derive more than 75% of their income from equity investments in real estate
assets. The NAREIT equity index includes all tax qualified real estate
investment trusts listed on the New York Stock Exchange, American Stock Exchange
or the NASDAQ National Market System.
All share price performance assumes an initial investment of $100 at
the beginning of the period and assumes the reinvestment of dividends. The graph
further assumes that the Common Shares of the Company were bought at the initial
public offering price of $22.50. Share price performance for the period May 1993
(the month in which the Company completed its initial public stock offering)
through December 1997, is not necessarily indicative of future results.
[Line graph appears here with the following plot points]
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
May 93 Dec 93 Dec 94 Dec 95 Dec 96 Dec 97
Tanger 100 130.2 113.7 130.8 154.1 187.2
Nareit 100 102.9 106.2 122.4 165.5 199.1
S&P 100 108.1 109.5 150.5 185.1 246.9
Peer Group 100 110.7 110.6 112.9 120.4 122.4
</TABLE>
9
<PAGE>
Employment Contracts
Each of the Messrs. Tanger will receive annual cash compensation in the
form of salary and bonus pursuant to a three year employment contract, which is
automatically extended for one additional year on January 1 of each year
beginning January 1, 1997, with both the Company and the Operating Partnership.
The base salary provided for in such contracts may be increased each year. Upon
termination of employment, Stanley K. Tanger has agreed not to compete with the
Company for the remainder of his life. Steven B. Tanger has agreed not to
compete with the Company for one year (or three years if severance compensation
is received) within a 50 mile radius of the site of any commercial property
owned, leased or operated by the Company and/or the Operating Partnership or
within a 50 mile radius of any commercial property which the Company and/or the
Operating Partnership negotiated to acquire, lease or operate within the six
month period prior to termination . The covenant not to compete mandates that,
during the term of the contract and during the effective period of the covenant,
such executives direct their commercial real estate activities through the
Company, with exceptions for development of properties which were owned
collectively or individually by them, by members of their families or by any
entity in which any of them owned an interest or which was for the benefit of
any of them prior to the initial public offering (including the three factory
outlet centers in which Stanley K. Tanger is a 50% partner and a single shopping
center in Greensboro, North Carolina (the "Excluded Properties")). In no event
will either of Messrs. Tanger engage in the development, construction or
management of factory outlet shopping centers or other competing retail
commercial property outside of the Company or the Operating Partnership during
the effective period of the covenant (with the exception of the Excluded
Properties and as described above). See "Certain Relationships and Related
Transactions." In addition, such executives will not engage in any active or
passive investment in property relating to factory outlet centers or other
competing retail commercial property, with the exception of the ownership of up
to one percent of the securities of any publicly traded company.
The contracts for Stanley K. Tanger and Steven B. Tanger provide for
annual bonuses based upon the Company's performance as measured by FFO per
share. The minimum bonus in each calendar year period for each of the Tangers is
$100,000, and will be paid if FFO per share (after payment of such bonuses)
equals or exceeds the annual minimum target for such year. The annual minimum
target for years beginning after December 31, 1996 is the average FFO per share
for the three previous calendar years. The annual minimum target, however, will
never fall below $1.552 per share. The Tangers will receive additional bonus
payments, based on the percentage by which actual FFO per share exceeds the
annual minimum target, up to a maximum of 100% of base salary. If the employment
of either of Messrs. Tanger terminates without Cause, as defined in the
agreement, or such employment is terminated by the executive with Good Reason,
as defined in the agreement, the terminated executive shall receive a severance
benefit equal to 300% of the sum of (a) his annual base salary (b) the higher of
(i) the prior year's annual bonus and (ii) the average annual bonus for the
preceding three years, and (c) his automobile allowance for the current year. If
employment terminates by reason of death or disability, the executive or his
estate shall receive a lump sum amount equal to his annual base salary that
would have been paid for the remaining contract term if employment had not
terminated, and in addition, will receive an amount equal to the executive's
annual bonus which would have been paid during the year of termination had the
executive not terminated, multiplied by the fraction the numerator of which is
the number of days in the year prior to termination and the denominator of which
is 365.
The employment agreements with Stanley K. Tanger and Steven B. Tanger
also grant them certain registration rights with respect to the shares of Common
Shares that they beneficially own.
Rochelle G. Simpson and Willard A. Chafin each currently have an
employment contract with the Company expiring December 31, 1998. Each contract
may be extended by an additional three year period by mutual written agreement
between the executive and the Company. The contracts establish base salaries of
$175,000 for Ms. Simpson and $185,000 for Mr. Chafin for the year ending
December 31, 1997, which amounts will be increased by $10,000 each year
thereafter during the contract term. If the employment of either executive is
terminated due to death or disability or if the term of employment is not
extended for an additional three years, the executive will receive a severance
payment of $125,000. Further, if the employer materially breaches the employment
contract and the employment contract is terminated or rescinded by the
executive, the Company will pay the executive compensation due for the remainder
of the contract term plus $125,000. During the term of employment and for a
period of one year thereafter, each executive is prohibited from engaging
directly or indirectly in any aspect of the factory outlet business within a
radius of 100 miles of, or in the same state as, any factory outlet center owned
or operated by the Company.
10
<PAGE>
Stanley K. Tanger and Steven B. Tanger are employed and compensated by
both the Operating Partnership and the Company. Management believes that the
allocation of such persons' compensation as between the Company and the
Operating Partnership reflects the services provided by such persons with
respect to each entity. The remainder of the employees are employed solely by
the Operating Partnership.
PROPOSAL 2
APPROVAL OF THE AMENDED AND RESTATED SHARE OPTION PLAN AND UNIT OPTION PLAN
The following information summarizes the material provisions of the
Share Option Plan and the Unit Option Plan, each as amended and restated, and is
qualified in its entirety by reference to the full text of the Plans, copies of
which are attached hereto as Appendices A and B, respectively, and incorporated
herein by this reference. Unless otherwise defined, capitalized terms used
herein have the meanings ascribed to them in the Plans.
On May 28, 1993, the Board adopted the Share Option Plan and the
Operating Partnership adopted the Unit Option Plan. Each Plan was approved by
the shareholders of the Company on May 28, 1993. The Plans have subsequently
been amended from time to time as approved by the Company's shareholders. In
order to (i) reflect amendments previously approved by shareholders, (ii)
conform the Plans to changes to Rule 16b-3 of the Exchange Act with respect to
Options granted to officers and directors of the Company, (iii) permit the grant
of Options intended to qualify as "performance-based compensation" under Section
162(m) of the Code, (iv) permit discretionary Option grants to Independent
Directors and (v) amend the Plans in certain other respects, the Option
Committee and the Board have adopted an amendment and restatement of the Share
Option Plan and have caused the Operating Partnership to adopt an amendment and
restatement of the Unit Option Plan, both subject to shareholder approval as
provided herein.
Shares and Units Available under the Plans
Without giving effect to the proposed increase to the number of Units
and Common Shares reserved for issuance in the aggregate under the Plans
(submitted for shareholder approval under separate action - See Proposal 3 -
Approval of Amendments to Increase Shares and Units under the Plans), the number
of Units and Common Shares reserved for issuance under the Plans is 1,500,000,
in the aggregate (subject to certain antidilution provisions). The maximum
number of Units or Common Shares subject to Options granted to one individual in
any calendar year may not exceed 60,000 and the Plans further provide that the
grant and exercise of Options shall not cause the Company to fail to qualify as
a REIT for federal income tax purposes.
General Nature and Purpose
The Plans were adopted to (i) provide incentives to directors and
executive and key employees of the Company and the Operating Partnership and
(ii) enable the Company and the Operating Partnership to obtain and retain the
services of the type of directors and executive and key employees considered
essential to the long-range success of the Company. Options granted under the
Share Option Plan to Company employees may be either incentive share options
within the meaning of Section 422(b) of the Internal Revenue Code of 1986
("Incentive Share Options") or non-qualified share options ("Non-Qualified Share
Options"). Options granted under the Unit Option Plan and options granted under
the Share Option Plan to persons other than Company employees will be
Non-Qualified Share Options.
Amendment and Termination of the Plans
The Plans may be amended or otherwise modified, suspended or terminated
at any time or from time to time by the Board or the Option Committee, subject
to shareholder approval if such approval is then required by applicable law or
in order for options granted under the Plans to continue to satisfy the
requirements of Rule 16b-3 under the Exchange Act, Code Section 162(m) or Code
Section 422. No Option may be granted under a Plan during any period of
suspension or after termination of such Plan, and in no event may any Incentive
Share Option be granted under the Plans after May 28, 2003.
11
<PAGE>
Administration of the Plans; Terms of Options
The Option Committee administers the Plans with respect to Options
granted to employees of the Company and the Operating Partnership, and the full
Board administers the Share Option Plan with respect to Options granted to
Independent Directors. Subject to the terms and conditions of the Plans, the
Option Committee (the Board with respect to Independent Directors) has the
authority to select the employees (or Independent Directors) to whom Options
will be granted, to determine the number of shares to be subject thereto and the
terms and conditions thereof The Board may, in its discretion, exercise any of
the rights or duties of the Option Committee under the Plans, except with
respect to matters which under Rule 16b-3 or Section 162(m) of the Code are
required to be determined at the sole discretion of the Option Committee.
Eligibility and Participation
Any employee designated by the Option Committee as an executive or key
Company employee or as an employee of the Operating Partnership shall be
eligible to be granted Options, as determined by the Option Committee in its
discretion. Each Independent Director of the Company shall be eligible to be
granted Options as determined by the full Board in its discretion.
Vesting of Options
Options granted under the Plans shall become exercisable at such times
and in such installments (which may be cumulative) as the Option Committee (the
Board with respect to Options granted to Independent Directors) provides in the
terms of each individual Option Agreement. The Option Committee (or Board with
respect to Options granted to Independent Directors), on such terms and
conditions as it deems appropriate, may accelerate the time at which an Option
or any portion thereof may be exercised. Notwithstanding the foregoing, no
portion of an Option which is unexercisable at Termination of Employment or
Termination of Directorship shall thereafter become exercisable, except as may
otherwise be provided by the Option Committee (or Board, where applicable).
Further, to the extent the aggregate fair market value of the Company's Common
Shares with respect to which Incentive Share Options are exercisable for the
first time by an Optionee during any calendar year (under the Share Option Plan
and all other incentive share option plans of the Company and any Subsidiary)
exceeds $100,000, such options shall be treated as Non-Qualified Options.
Expiration of Options
The Option Committee (the Board with respect to Options granted to
Independent Directors) shall provide in the terms of each individual Option
Agreement when such Option expires and becomes unexercisable; provided, however,
that in no event will an Incentive Share Option be exercisable following the
tenth anniversary from the date such Incentive Share Option is granted, or the
fifth anniversary from such date if the Incentive Share Option is granted to an
individual then owning more than 10% of the Company or any Subsidiary. The
Option Committee (the Board with respect to Options granted to Independent
Directors) may provide, in the terms of individual Option Agreements, that said
Options expire immediately upon a Termination of Employment or Termination of
Directorship.
Consideration for Granting Options
In consideration of the granting of an Option, the Optionee shall
agree, in a written Option Agreement, to remain in the employ of (or to serve as
an Independent Director of) the Company or the Operating Partnership, as
applicable, for a period of at least one year after the Option is granted.
Nothing in the Plans or in any Option Agreement will confer upon any Optionee
any right to continue in the employ of the Company or the Operating Partnership.
Purchase Price of Shares Subject to Options
The price of the shares subject to each Option granted under the Plans
shall be set by the Option Committee (the Board with respect to Options granted
to Independent Directors); provided, however, that such price shall be not less
than the Fair Market Value of a Common Share on the date the Option is granted,
and, in the case of Incentive Share Options granted to an individual then owning
(within the meaning of Section 424(d) of the Code)
12
<PAGE>
more than 10% of the total combined voting power of all classes of shares of the
Company or any Subsidiary or parent corporation thereof (within the meaning of
Section 422 of the Code) such price shall not be less than 110% of the Fair
Market Value of a Common Share on the date the Option is granted.
Manner of Option Exercise
Options are exercisable in whole or in part by written notice to the
Company, specifying the number of shares or Units being purchased and
accompanied by payment (to the Operating Partnership for Unit Options and to the
Company for Share Options) of the exercise price for such shares or Units.
Payment of the exercise price may be made in cash which, with the consent of the
Option Committee (or of the Board, in the case of Options granted to Independent
Directors), may include (except with respect to Incentive Share Options) an
assignment of the right to receive the cash proceeds from the sale of Common
Shares subject to the Option (or exchangeable for Units) or by surrender of
Common Shares or Units issuable upon exercise of the option (pursuant to a
"cashless exercise" procedure) or, with the consent of the Option Committee, by
delivery of then held Units or Common Shares or by delivery of other property,
or by a recourse promissory note payable to the Company, or by a combination of
the foregoing. As a condition to the exercise of any Option, the Option
Committee may require that the Optionee deliver such representations and
documents as it deems necessary to effect compliance with applicable federal and
state securities laws and regulations. Units received upon exercise of Options
under the Unit Option Plan are exchangeable for Common Shares.
Transfer Restrictions
No Option or interest or right therein or part thereof shall be liable
for the debts, contracts or engagements of the Optionee or his successors in
interest or shall be subject to disposition by transfer, alienation, pledge,
encumbrance, assignment or any other means, whether voluntary, involuntary or by
operation of law (other than as security for a promissory note given as
consideration for full or partial payment for such Option); provided, however,
that Options may be transferred by will or by the laws of descent and
distribution and, with the consent of the Committee, may be transferred to a
member of the Optionee's immediate family or to a trust, partnership or other
entity the sole beneficiaries, partners or other members of which are members of
the Optionee's immediate family. During an Optionee's lifetime, Options are
exercisable only by the Optionee unless such Options have been disposed of
pursuant to the foregoing sentence. The Option Committee, in its sole
discretion, may impose such other restrictions on the transferability of the
Common Shares and Units purchasable upon the exercise of an Option as it deems
appropriate.
No Rights as Shareholders
The holders of Options shall not be, nor have any of the rights or
privileges of, shareholders of the Company in respect to any Common Shares or
Units purchasable upon the exercise of any part of an Option unless and until
certificates representing such Common Shares have been issued by the Company to
such holders.
Extraordinary Corporate Events
The Plan provides the Option Committee (the Board with respect to
options granted to Independent Directors) discretion to amend the terms (such as
exercise price, number of shares and vesting) of outstanding Options and future
grants that may be made under the Plans upon the occurrence of a
recapitalization, stock split, reorganization, merger, consolidation,
liquidation, dissolution, or sale, transfer, exchange or other disposition of
all or substantially all of the assets of the Company or other similar corporate
event. In addition, the Option Committee (or Board with respect to options
granted to Independent Directors) has discretion under the Plans to provide that
Options will expire at specified times following, or become exercisable in full
upon, the occurrence of certain specified extraordinary corporate events; and in
such event the Option Committee may also accelerate the vesting of Options.
Notwithstanding the above, upon a change in control, all options granted to
Independent Directors shall become immediately exercisable in full.
13
<PAGE>
Certain Federal Income Tax Consequences
The following discussion is a general summary of the material federal
income tax consequences to the Company, the Partnership and Optionees and is
intended for general information only. The discussion is based on the Code,
regulations thereunder and rulings and decisions now in effect, all of which are
subject to change.
Non-Qualified Options. Holders of Non-Qualified Options generally do
not recognize income as a result of the grant of Non-Qualified Options, but
normally recognize compensation income taxable at ordinary income rates upon the
Non-Qualified Options' exercise, to the extent that the fair market value of the
shares (or Units) on the date of the exercise exceeds the exercise price paid.
The Company (or the Operating Partnership) will generally be entitled to a tax
deduction in an amount equal to the amount that the Optionee is required to
include in ordinary income at the time of such inclusion and may be required to
withhold taxes on such ordinary income. The Optionee's initial tax basis for
shares acquired upon the exercise of a Non-Qualified Share Option will be the
option exercise price paid plus the amount recognized as ordinary income. Any
subsequent appreciation in the value of such shares may qualify for capital
gains treatment depending upon the applicable holding period.
The tax consequences resulting from the exercise of Non-Qualified Share
Options through delivery of already-owned shares of Common Shares are not
completely certain. In published rulings, the Internal Revenue Service has taken
the position that, to the extent an equivalent value of shares is acquired, the
employee will recognize no gain on the already-owned shares and the employee's
basis in the shares acquired upon such exercise will be equal to the employee's
basis in the surrendered shares; that any additional shares acquired upon such
exercise are compensation to the employee taxable under the rules described
above and that the employee's basis in any such additional shares is their then
fair market value.
Incentive Share Options. Holders of Incentive Share Options generally
do not recognize income upon either the grant of an Incentive Share Option or
its exercise. Upon the sale or other taxable disposition of the Common Shares
acquired by Option exercise, the Optionee will generally recognize income
taxable at capital gains rates (depending on the applicable holding period)
equal to the difference between the amount realized upon such disposition and
the option exercise price, provided no disposition of the shares has taken place
within either (a) two years from the date of grant of the Incentive Share Option
or (b) one year from the date of transfer of Common Shares to the Optionee upon
exercise. If the Common Shares are sold or otherwise disposed of before the end
of the one-year or two-year periods, the difference between the Incentive Share
Option exercise price and the fair market value of the shares on the date of the
Option's exercise will be taxable as ordinary income; the balance of the gain,
if any, will be taxed as capital gain. If the Common Shares are disposed of
before the expiration of the one-year or two-year periods in a sale or exchange
on which a loss would be permitted to be recognized and the amount realized is
less than the fair market value of the shares at the date of exercise, the
Optionee's ordinary income would be limited to the amount realized less the
option exercise price paid. The Company will generally be entitled to a tax
deduction with respect to an Incentive Share Option only to the extent the
Optionee recognizes ordinary income upon sale or other disposition of the Common
Shares. The difference between the fair market value of the Common Shares on the
exercise date and the exercise price of an Incentive Share Option is deemed to
be a "tax preference" under the alternative minimum tax rules of the Code.
The tax consequences resulting from the exercise of an Incentive Share
Option through delivery of already-owned Common Shares are not completely
certain. In published rulings and proposed regulations, the Internal Revenue
Service has taken the position that generally the Optionee will recognize no
income upon such share-for-share exercise (subject to the discussion above),
that, to the extent an equivalent number of Common Shares is acquired, the
Optionee's basis in the Common Shares acquired upon such exercise is equal to
the Optionee's basis in the surrendered shares increased by any compensation
income recognized by the Optionee, that the Optionee's basis in any additional
Common Shares acquired upon such exercise is zero and that any sale or other
disposition of the acquired shares within the one-year or two-year periods
described above will be viewed as a disposition of the shares with the lowest
basis first.
The Board of Directors of the Company recommends a vote FOR the Amendment and
Restatement of the Plans.
14
<PAGE>
PROPOSAL 3
AMENDMENT TO INCREASE THE NUMBER OF COMMON SHARES AND UNITS AVAILABLE
UNDER THE SHARE OPTION PLAN AND UNIT OPTION PLAN
It is proposed that the Company's Share Option Plan and Unit Option
Plan be amended to increase the number of the Company's Common Shares which may
be issued under the Share Option Plan and the number of units of the Operating
Partnership which may be issued under the Unit Option Plan from 1,500,000 in the
aggregate to 1,750,000 in the aggregate.
The Board of Directors recommends voting "FOR" the ratification of the amendment
to increase the number of Common Shares and Units Available Under the Share
Option Plan and Unit Option Plan.
Certain Relationships and Related Transactions
The Company manages for a fee three factory outlet centers owned by
joint ventures, in which Stanley K. Tanger and a third party each have a fifty
percent interest. As a result, certain conflicts of interest may arise between
Mr. Tanger's duties and responsibilities to the Company and his duties and
responsibilities to the joint ventures in ensuring the adequate provision of
services. In addition, conflicts of interest may arise over the allocation of
management resources between the Company's properties and the joint venture
properties. However, the arrangement under which the Company provides services
to the joint ventures can be terminated by either party, with or without cause,
upon 30 days' notice. To minimize potential conflicts of interest, all
significant transactions between the Company and the joint ventures, including
continuing the arrangement for providing management services, will be approved
by a disinterested majority of the Company's Board of Directors. As a general
matter, the Company does not expect to engage in any other transactions with any
member of management in his or her individual capacity. Revenues from managing
the joint ventures accounted for less than one-tenth of one percent of the
Company's revenues in 1997.
The Company did not grant any share or unit options during 1997. During
1996, the Operating Partnership granted 50,000 options to purchase Units to Mr.
Stanley K. Tanger, 35,000 options to purchase Units to Mr. Steven B. Tanger and
options to acquire a total of 149,700 Units to certain officers and employees of
the Operating Partnership.
General -
Appointment of Independent Auditors. The Board of Directors has
appointed the firm of Coopers & Lybrand L.L.P. to audit the accounts of the
Company with respect to its operations for the fiscal year ending on December
31, 1998 and to perform such other services as may be required. Should the firm
be unable to perform these services for any reason, the Board of Directors will
appoint other independent auditors to perform these services. Coopers & Lybrand
L.L.P. served as independent auditors of the Company for the fiscal year ended
December 31, 1997. Representatives of Coopers & Lybrand L.L.P. are expected to
be present at the Annual Meeting, will have an opportunity to make a statement
if they desire to do so and will be available to respond to appropriate
questions from shareholders.
Section 16(a) Compliance. Section 16(a) of the Exchange Act requires
the Company's officers and directors, and persons who own more than ten percent
of a registered class of the Company's equity securities, to file reports of the
ownership and changes in the ownership (Forms 3, 4 and 5) with the SEC and the
New York Stock Exchange. Officers, directors and beneficial owners of more than
ten percent of the Company's shares are required by SEC regulation to furnish
the Company with copies of all such forms which they file.
Based solely on the Company's review of the copies of Forms 3, 4 and 5
and the amendments thereto received by it for the period ended December 31,
1997, or written representations from certain reporting persons, no Forms 3, 4
or 5 were filed delinquently by those persons.
15
<PAGE>
Shareholders' Proposals. This Proxy Statement and form of proxy will be
sent to shareholders in an initial mailing on or about April 8, 1998. Proposals
of shareholders intended to be presented at the Company's Annual Meeting of
Shareholders to be held in 1999 must be received by the Company no later than
November 30, 1998. Such proposals must comply with the requirements as to form
and substance established by the SEC for such proposals in order to be included
in the proxy statement.
Other Business. All shares represented by the accompanying proxy will
be voted in accordance with the proxy. The Company knows of no other business
which will come before the Meeting for action. However, as to any such business,
the persons designated as proxies will have discretionary authority to act in
their best judgment.
16
<PAGE>
APPENDIX A
THE AMENDED AND RESTATED SHARE OPTION PLAN
FOR DIRECTORS AND EXECUTIVE AND KEY EMPLOYEES OF
TANGER FACTORY OUTLET CENTERS, INC.
Tanger Factory Outlet Centers, Inc., a corporation organized under the
laws of the state of North Carolina (the "Company"), adopted the Stock Option
Plan for Directors and Executive and Key Employees of Tanger Factory Outlet
Centers, Inc., (the "Plan") on May 28, 1993. The Plan has subsequently been
amended from time to time. In order to conform the Plan document to such
amendments and to further amend the Plan in certain respects, the Plan has been
amended and restated, effective as of January 6, 1998. This Amended and Restated
Share Option Plan for Directors and Executive and Key Employees of Tanger
Factory Outlet Centers, Inc., constitutes a complete amendment and restatement
of the Plan in its entirety and a continuation of the Plan.
The purposes of this Plan are as follows:
(1) To further the growth, development and financial success of the
Company by providing additional incentives to certain of its Directors, and
executive and key Employees (as defined below) who have been or will be given
responsibility for the management or administration of the Company's business
affairs, by assisting them to become owners of the Company's Common Shares and
thus to benefit directly from such growth, development and financial success.
(2) To enable the Company to obtain and retain the services of the
types of professional, technical and managerial employees and directors
considered essential to the long range success of the Company by providing and
offering them an opportunity to become owners of the Company's Common Shares
under options, including options that are intended to qualify as "incentive
stock options" under Section 422 of the Code (as defined below).
ARTICLE I.
DEFINITIONS
Wherever the following terms are used in this Plan they shall have the
meanings specified below, unless the context clearly indicates otherwise. The
masculine pronoun shall include the feminine and neuter and the singular shall
include the plural, where the context so indicates.
Section 1.1. Award Limit
"Award Limit" shall mean 60,000 Common Shares.
Section 1.2. Board
"Board" shall mean the Board of Directors of the Company.
Section 1.3. Change in Control
"Change in Control" shall mean a change in ownership or control of the
Company effected through either of the following transactions:
(a) any person or related group of persons (other than the Company or a
person that directly or indirectly controls, is controlled by, or is under
common control with, the Company) directly or indirectly acquires beneficial
ownership (within the meaning of Rule 13d-3 under the Exchange Act) of
A-1
<PAGE>
securities possessing more than fifty percent (50%) of the total combined voting
power of the Company's outstanding securities pursuant to a tender or exchange
offer made directly to the Company's shareholders which the Board does not
recommend such shareholders to accept; or
(b) there is a change in the composition of the Board over a period of
thirty-six (36) consecutive months (or less) such that a majority of the Board
members (rounded up to the nearest whole number) ceases, by reason of one or
more proxy contests for the election of Board members, to be comprised of
individuals who either (i) have been Board members continuously since the
beginning of such period or (ii) have been elected or nominated for election as
Board members during such period by at least a majority of the Board members
described in clause (i) who were still in office at the time such election or
nomination was approved by the Board.
Section 1.4. Code
"Code" shall mean the Internal Revenue Code of 1986, as amended.
Section 1.5. Committee
"Committee" shall mean the Share and Unit Option Committee of the
Board, appointed as provided in Section 6.1.
Section 1.6. Common Shares
"Common Shares" shall mean the Common Shares of the Company, par value
$0.01 per share.
Section 1.7. Company
"Company" shall mean Tanger Factory Outlet Centers, Inc., a North
Carolina corporation.
Section 1.8. Director
"Director" shall mean a member of the Board.
Section 1.9. Employee
"Employee" shall mean any employee (as defined in accordance with
Section 3401(c) of the Code) of the Company, or of any corporation which is a
Subsidiary.
Section 1.10. Exchange Act
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
Section 1.11. Fair Market Value
"Fair Market Value" of a Common Share as of a given date shall be (i)
the closing price of the Common Shares on the principal exchange on which Common
Shares are trading on the trading day previous to such date, or, if Common
Shares were not traded on the day previous to such date, then on the next
preceding trading day during which a sale occurred; (ii) if such Common Shares
are not traded on an exchange but are quoted on NASDAQ or a successor quotation
system, (A) the last sales price (if the Common Shares are then listed as
National Market Issue under the NASD National Market System) or (B) the mean
between the closing representative bid and asked prices for the Common Shares on
the trading day previous to such date as reported by NASDAQ or such successor
quotation system; or (iii) if such Common Shares are is not publicly traded on
an exchange and not quoted on NASDAQ or
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a successor quotation system, the fair market value of a Common Share as
established by the Committee (or the Board in the case of Options granted to
Independent Directors) acting in good faith.
Section 1.12. Incentive Share Option
"Incentive Share Option" shall mean an option which conforms to the
applicable provisions of Section 422 of the Code and which is designated as an
Incentive Share Option by the Committee.
Section 1.13. Independent Director
"Independent Director" shall mean a member of the Board who is not an
Employee of the Company.
Section 1.14. Non-Qualified Share Option
"Non-Qualified Share Option" shall mean an Option which is not
designated as an Incentive Share Option by the Committee.
Section 1.15. Operating Partnership
"Operating Partnership" shall mean Tanger Properties Limited
Partnership, a partnership organized under the laws of the state of North
Carolina
Section 1.16. Option
"Option" shall mean an option to purchase Common Shares granted under
Article III of this Plan. An Option granted under this Plan shall, as determined
by the Committee, be either a Non-Qualified Share Option or an Incentive Share
Option; provided, however, that Options granted to Independent Directors shall
be Non-Qualified Share Options.
Section 1.17. Optionee
"Optionee" shall mean an Employee or Independent Director granted an
Option under this Plan.
Section 1.18. Plan
"Plan" shall mean The Amended and Restated Share Option Plan for
Directors and Executive and Key Employees of Tanger Factory Outlet Centers, Inc.
Section 1.19. Rule 16b-3
"Rule 16b-3" shall mean that certain Rule 16b-3 under the Exchange Act,
as such Rule may be amended from time to time.
Section 1.20. Secretary
"Secretary" shall mean the Secretary of the Company.
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Section 1.21. Section 162(m) Participant
"Section 162(m) Participant" shall mean any Company Employee designated
by the Committee as a Company Employee whose compensation for the fiscal year in
which the Company Employee is so designated or a future fiscal year may be
subject to the limit on deductible compensation imposed by Section 162(m) of the
Code.
Section 1.22. Subsidiary
"Subsidiary" shall mean any corporation in an unbroken chain of
corporations beginning with the Company if each of the corporations other than
the last corporation in the unbroken chain then owns securities possessing 50
percent or more of the total combined voting power of all classes of securities
in one of the other corporations in such chain.
Section 1.23. Termination of Directorship
"Termination of Directorship" shall mean the time when an Optionee who
is an Independent Director ceases to be a Director for any reason, including,
but not by way of limitation, a termination by resignation, failure to be
elected, death or retirement. The Board, in its sole discretion, shall determine
the effect of all matters and questions relating to Termination of Directorship
with respect to Independent Directors.
Section 1.24. Termination of Employment
"Termination of Employment" shall mean the time when the
employee-employer relationship between an Optionee and the Company, the
Operating Partnership or any subsidiary of either of them is terminated for any
reason, with or without cause, including, but not by way of limitation, a
termination by resignation, discharge, death, disability or retirement; but
excluding (i) a termination where there is a simultaneous reemployment or
continuing employment of such Optionee by the Company, the Operating Partnership
or any subsidiary of either of them, (ii) at the discretion of the Committee,
termination which results in a temporary severance of the employee-employer
relationship, and (iii) at the discretion of the Committee, a termination which
is followed by the simultaneous establishment of a consulting relationship by
the Company, the Operating Partnership or any subsidiary of either of them with
the former employee. The Committee, in its sole discretion, shall determine the
effect of all matters and questions relating to Termination of Employment,
including, but not by way of limitation, the question of whether a Termination
of Employment resulted from a discharge for good cause, and all questions of
whether a particular leave of absence constitutes a Termination of Employment;
provided, however, that, unless otherwise determined by the Committee in its
discretion, a leave of absence, change in status from an employee to an
independent contractor or other change in the employee-employer relationship
shall constitute a Termination of Employment if, and to the extent that, such
leave of absence, change in status or other change interrupts employment for the
purposes of Section 422(a)(2) of the Code and the then applicable regulations
and revenue rulings under said Section. Notwithstanding any other provision of
this Plan, the Company, the Operating Partnership and any subsidiary has an
absolute and unrestricted right to terminate an Employee's employment at any
time for any reason whatsoever, with or without cause, except to the extent
expressly provided otherwise in writing.
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ARTICLE II.
SHARES SUBJECT TO PLAN
Section 2.1. Shares Subject to Plan
(a) The aggregate number of Common Shares which may be issued upon
exercise of Options under the Plan shall not exceed 1,500,000; provided, that
effective as of the date of the next succeeding annual meeting of shareholders
such number shall be increased to 1,750,000 if the shareholders approve such
increase at such annual meeting. Such aggregate number shall be reduced by one
for each unit in the Operating Partnership that is issued pursuant to the
Operating Partnership's Unit Option Plan. The Common Shares issuable upon
exercise of Options may be either previously authorized but unissued shares or
treasury shares.
(b) The maximum number of Common Shares which may be subject to Options
granted under the Plan to any individual in any calendar year shall not exceed
the Award Limit. To the extent required by Section 162(m) of the Code, shares
subject to Options which are canceled continue to be counted against the Award
Limit and if, after grant of an Option, the price of shares subject to such
Option is reduced, the transaction will be treated as a cancellation of the
Option and a grant of a new Option and both the Option deemed to be canceled and
the Option deemed to be granted will be counted against the Award Limit.
Section 2.2. Add-back of Options
If any Option expires or is canceled without having been fully
exercised, the number of shares subject to such Option but as to which such
Option was not exercised prior to its expiration, cancellation or exercise may
again be optioned, granted or awarded hereunder, subject to the limitations of
Section 2.1. Common Shares which are delivered by the Optionee or withheld by
the Company upon the exercise of any Option or other award under this Plan, in
payment of the exercise price thereof, may again be optioned, granted or awarded
hereunder, subject to the limitations of Section 2.1. Furthermore, any Common
Shares subject to Options which are adjusted pursuant to Section 7.3 and become
exercisable with respect to equity interests of another entity shall be
considered canceled and may again be optioned, granted or awarded hereunder,
subject to the limitations of Section 2.1.
ARTICLE III.
GRANTING OF OPTIONS
Section 3.1. Eligibility
Any Employee selected by the Committee pursuant to Section 3.3(a)(i)
shall be eligible to be granted an Option. Any Independent Director selected by
the Board pursuant to Section 3.3(b)(i) shall be eligible to be granted an
Option.
Section 3.2. Qualification of Incentive Share Options
No Incentive Share Option shall be granted to any person who is not an
Employee.
Section 3.3. Granting of Options
(a) The Committee shall from time to time, in its sole discretion, and
subject to applicable limitations of this Plan:
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(i) Determine which Employees are executive or other key
Employees and select from among them (including Employees who have
previously received Options) such of them as in its opinion should be
granted Options;
(ii) Subject to the Award Limit, determine the number of
shares to be subject to such Options granted to the selected Employees;
(iii) Subject to Section 3.2, determine whether such Options
are to be Incentive Share Options or Non-Qualified Share Options and
whether such Options are to qualify as performance-based compensation
as described in Section 162(m)(4)(C) of the Code; and
(iv) Determine the terms and conditions of such Options,
consistent with this Plan; provided, however, that the terms and
conditions of Options intended to qualify as performance-based
compensation as described in Section 162(m)(4)(C) of the Code shall
include, but not be limited to, such terms and conditions as may be
necessary to meet the applicable provisions of Section 162(m) of the
Code.
(b) The Board shall from time to time, in its sole discretion, and
subject to applicable limitations of this Plan:
(i) Determine which Independent Directors (including
Independent Directors who have previously received Options) such of
them as in its opinion should be granted Options; and
(ii) Determine the terms and conditions of such Options,
consistent with this Plan.
(c) Upon the selection of an Employee or Independent Director to be
granted an Option, the Committee (or Board, as applicable) shall instruct the
Secretary to issue the Option and may impose such conditions on the grant of the
Option as it deems appropriate. Without limiting the generality of the preceding
sentence, the Committee (or Board, as applicable) may, in its discretion and on
such terms as it deems appropriate, require as a condition on the grant of an
Option that the Optionee surrender for cancellation some or all of the
unexercised Options or other rights which have been previously granted to him
under this Plan or otherwise. An Option, the grant of which is conditioned upon
such surrender, may have an exercise price lower (or higher) than the exercise
price of such surrendered Option or other right, may cover the same (or a lesser
or greater) number of shares as such surrendered Option or other right, may
contain such other terms as the Committee deems appropriate, and shall be
exercisable in accordance with its terms, without regard to the number of
shares, exercise price, exercise period or any other term or condition of such
surrendered Option or other right.
ARTICLE IV.
TERMS OF OPTIONS
Section 4.1. Option Agreement
Each Option shall be evidenced by a written Option Agreement, which
shall be executed by the Optionee and an authorized officer of the Company and
which shall contain such terms and conditions as the Committee (the Board in the
case of Options granted to Independent Directors) shall determine, and which may
be amended by agreement of the parties thereto, consistent with this Plan.
Option Agreements evidencing Options intended to qualify as performance-based
compensation as described in Section 162(m)(4)(C) of the Code shall contain such
terms and conditions as may be necessary to meet the applicable provisions of
Section 162(m) of the Code, and Option Agreements evidencing Incentive Share
Options shall contain such terms and conditions as may be necessary to meet the
applicable provisions of Section 422 of the Code.
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Section 4.2. Exercise Price
The exercise price per share of the shares subject to each Option shall
be set by the Committee in its discretion (the Board with respect to Options
granted to Independent Directors); provided, however, that such price shall be
no less than the Fair Market Value of a Common Share on the date the Option is
granted, and, in the case of Incentive Share Options granted to an individual
then owning (within the meaning of Section 424(d) of the Code) more than 10% of
the total combined voting power of all classes of shares of the Company or any
Subsidiary or parent corporation thereof (within the meaning of Section 422 of
the Code) such price shall not be less than 110% of the Fair Market Value of a
Common Share on the date the Option is granted.
Section 4.3. Option Term
The term of an Option shall be set by the Committee (the Board in the
case of Options granted to Independent Directors) in its discretion; provided,
however, that (i) in the case of Incentive Share Options, the term shall not be
more than ten (10) years from the date the Incentive Share Option is granted, or
five (5) years from such date if the Incentive Share Option is granted to an
individual then owning (within the meaning of Section 424(d) of the Code) more
than 10% of the total combined voting power of all classes of shares of the
Company or any Subsidiary or parent corporation thereof (within the meaning of
Section 422 of the Code). Except as limited by requirements of Section 422 of
the Code and regulations and rulings thereunder applicable to Incentive Share
Options, the Committee (the Board in the case of Options granted to Independent
Directors) may extend the term of any outstanding Option in connection with any
Termination of Employment or Termination of Directorship, or amend any other
term or condition of such Option relating to such a termination.
Section 4.4. Option Vesting
(a) The period during which the right to exercise an Option in whole or
in part vests in the Optionee shall be set by the Committee (the Board with
respect to Options granted to Independent Directors) and the Committee (or
Board, as applicable) may determine that an Option may not be exercised in whole
or in part for a specified period after it is granted. At any time after grant
of an Option, the Committee (the Board with respect to Options granted to an
Independent Directors) may, in its sole discretion and subject to whatever terms
and conditions it selects, accelerate the period during which an Option vests.
(b) No portion of an Option which is unexercisable at Termination of
Employment or Termination of Directorship shall thereafter become exercisable,
except as may be otherwise provided by the Committee (other than with respect to
Options granted to Independent Directors) either in the Option Agreement or by
action of the Committee following the grant of the Option.
(c) To the extent that the aggregate fair market value of shares with
respect to which "incentive stock options" (within the meaning of Section 422 of
the Code, but without regard to Section 422(d) of the Code) are exercisable for
the first time by an Optionee during any calendar year (under the Plan and all
other incentive stock option plans of the Company and any Subsidiary) exceeds
$100,000, such options shall be treated as non-qualified stock options to the
extent required by Section 422 of the Code. The rule set forth in the preceding
sentence shall be applied by taking options into account in the order in which
they were granted. For purposes of this Section 4.4(c), the fair market value of
shares shall be determined as of the time the option with respect to such shares
is granted.
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Section 4.5. Consideration
In consideration of the granting of an Option, the Optionee shall
agree, in the written Option Agreement, to remain in the employ of the Company,
the Operating Partnership or a subsidiary of either of them for a period of one
year from the date of Option grant. Nothing in this Plan or in any Option
Agreement hereunder shall confer upon any Optionee any right to continue in the
employ of or as a director of the Company, the Operating Partnership or any
subsidiary of either of them, or shall interfere with or restrict in any way the
rights of the Company, the Partnership or any such subsidiary, which are hereby
expressly reserved, to discharge any Optionee at any time for any reason
whatsoever, with or without good cause.
ARTICLE V.
EXERCISE OF OPTIONS
Section 5.1. Partial Exercise
An exercisable Option may be exercised in whole or in part. However, an
Option shall not be exercisable with respect to fractional shares and the
Committee (or the Board, in the case of Options granted to Independent
Directors) may require that, by the terms of the Option, a partial exercise be
with respect to a minimum number of shares.
Section 5.2. Manner of Exercise
All or a portion of an exercisable Option shall be deemed exercised
upon delivery of all of the following to the Secretary or his office prior to
the time when such Option or such portion becomes unexercisable under the Plan
or the applicable Option Agreement:
(a) A written notice complying with the applicable rules established by
the Committee (or the Board, in the case of Options granted to Independent
Directors) stating that the Option, or a portion thereof, is exercised. The
notice shall be signed by the Optionee or other person then entitled to exercise
the Option or such portion of the Option;
(b) Such representations and documents as the Committee (or the Board,
in the case of Options granted to Independent Directors), in its sole
discretion, deems necessary or advisable to effect compliance with all
applicable provisions of the Securities Act of 1933, as amended, and any other
federal or state securities laws or regulations. The Committee or Board may, in
its sole discretion, also take whatever additional actions it deems appropriate
to effect such compliance including, without limitation, placing legends on
share certificates and issuing stop-transfer notices to agents and registrars;
(c) In the event that the Option shall be exercised pursuant to Section
7.1 by any person or persons other than the Optionee, appropriate proof of the
right of such person or persons to exercise the Option; and
(d) Full cash payment to the Secretary for the shares with respect to
which the Option, or portion thereof, is exercised. However, the Committee (or
the Board, in the case of Options granted to Independent Directors), may in its
discretion (i) allow a delay in payment up to thirty (30) days from the date the
Option, or portion thereof, is exercised; (ii) allow payment, in whole or in
part, through the delivery of Common Shares owned by the Optionee, duly endorsed
for transfer to the Company with a Fair Market Value on the date of delivery
equal to the aggregate exercise price of the Option or exercised portion
thereof; (iii) allow payment, in whole or in part, through the surrender of
Common Shares then issuable upon exercise of the Option having a Fair Market
Value on the date of Option exercise equal to the aggregate exercise price of
the Option or exercised portion thereof; (iv) allow payment, in whole or
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in part, through the delivery of property of any kind which constitutes good and
valuable consideration; (v) allow payment, in whole or in part, through the
delivery of a full recourse promissory note bearing interest (at no less than
such rate as shall then preclude the imputation of interest under the Code) and
payable upon such terms as may be prescribed by the Committee or the Board; (vi)
allow payment, in whole or in part, through the delivery of a notice that the
Optionee has placed a market sell order with a broker with respect to Common
Shares then issuable upon exercise of the Option, and that the broker has been
directed to pay a sufficient portion of the net proceeds of the sale to the
Company in satisfaction of the Option exercise price; or (vii) allow payment
through any combination of the consideration provided in the foregoing
subparagraphs (ii), (iii), (iv), (v) and (vi). In the case of a promissory note,
the Committee (or the Board, in the case of Options granted to Independent
Directors) may also prescribe the form of such note and the security to be given
for such note. The Option may not be exercised, however, by delivery of a
promissory note or by a loan from the Company when or where such loan or other
extension of credit is prohibited by law.
Section 5.3. Conditions to Issuance of Share Certificates
The Company shall not be required to issue or deliver any certificate
for Common Shares purchased upon the exercise of any Option or portion thereof
prior to fulfillment of all of the following conditions:
(a) The admission of such shares to listing on all stock exchanges on
which such series or class of shares is then listed;
(b) The completion of any registration or other qualification of such
shares under any state or federal law, or under the rulings or regulations of
the Securities and Exchange Commission or any other governmental regulatory body
which the Committee or Board shall, in its sole discretion, deem necessary or
advisable;
(c) The obtaining of any approval or other clearance from any state or
federal governmental agency which the Committee (or Board, in the case of
Options granted to Independent Directors) shall, in its sole discretion,
determine to be necessary or advisable;
(d) The lapse of such reasonable period of time following the exercise
of the Option as the Committee (or Board, in the case of Options granted to
Independent Directors) may establish from time to time for reasons of
administrative convenience; and
(e) The receipt by the Company of full payment for such shares,
including payment of any applicable withholding tax;
provided that under no circumstance may an Optionee exercise an Option and
acquire a Common Share, and if an Optionee does exercise an Option, such
exercise shall be null and void and of no effect, if such exercise could, in the
sole discretion of the Committee, result in income to the Company which, when
considered in light of the Company's other income, could cause the Company to
fail to satisfy the gross income limitations set forth in Code Section 856(c) or
otherwise impair the Company's status as a REIT.
Section 5.4. Rights as Shareholders
The holders of Options shall not be, nor have any of the rights or
privileges of, shareholders of the Company in respect of any shares purchasable
upon the exercise of any part of an Option unless and until certificates
representing such shares have been issued by the Company to such holders.
Section 5.5. Ownership and Transfer Restrictions
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The Committee (or Board, in the case of Options granted to Independent
Directors), in its sole discretion, may impose such restrictions on the
ownership and transferability of the shares purchasable upon the exercise of an
Option as it deems appropriate. Any such restriction shall be set forth in the
respective Option Agreement or other written agreement between the Company and
the Optionee and may be referred to on the certificates evidencing such shares.
ARTICLE VI.
ADMINISTRATION
Section 6.1. Share and Unit Option Committee
The Share and Unit Option Committee shall consist of two or more
Directors, appointed by and holding office at the pleasure of the Board, none of
whom shall be an Employee and each of whom is both a "non-employee director" as
defined by Rule 16b-3 and an "outside director" for purposes of Section 162(m)
of the Code. Appointment of Committee members shall be effective upon acceptance
of appointment. Committee members may resign at any time by delivering written
notice to the Board. Vacancies in the Committee may be filled by the Board.
Section 6.2. Duties and Powers of Committee
It shall be the duty of the Committee to conduct the general
administration of this Plan in accordance with its provisions. The Committee
shall have the power to interpret this Plan, the Option Agreements and to adopt
such rules for the administration, interpretation and application of this Plan
as are consistent therewith and to interpret, amend or revoke any such rules.
Any such interpretations and rules with respect to Incentive Share Options shall
be consistent with the provisions of Section 422 of the Code. Notwithstanding
the foregoing, the full Board, acting by a majority of its members in office,
shall conduct the general administration of the Plan with respect to Options
granted to Independent Directors. Any grant or award under this Plan need not be
the same with respect to each Optionee. In its sole discretion, the Board may at
any time and from time to time exercise any and all rights and duties of the
Committee under this Plan except with respect to matters which under Rule 16b-3
or Section 162(m) of the Code (as each may be applicable), or any regulations or
rules issued thereunder, are required to be determined in the sole discretion of
the Committee
Section 6.3. Majority Rule
The Committee shall act by a majority of its members in attendance at a
meeting where quorum is present or by a memorandum or other written instrument
signed by all members of the Committee.
Section 6.4. Compensation; Professional Assistance; Good Faith Actions
Members of the Committee shall receive such compensation for their
services as members as may be determined by the Board. All expenses and
liabilities which members of the Committee incur in connection with the
administration of this Plan shall be borne by the Company. The Committee may,
with the approval of the Board, employ attorneys, consultants, accountants,
appraisers, brokers or other persons. The Committee, the Company and the
Company's officers and Directors shall be entitled to rely upon the advice,
opinions or valuations of any such persons. All actions taken and all
interpretations and determinations made by the Committee or the Board in good
faith shall be final and binding upon all Optionees, the Company and all other
interested persons. No members of the Committee or the Board shall be personally
liable for any action, determination or interpretation made in good faith with
respect to this Plan or any Option, and all members of the Committee and the
Board shall be fully protected by the Company in respect of any such action,
determination or interpretation.
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ARTICLE VII.
MISCELLANEOUS PROVISIONS
Section 7.1. Not Transferable
(a) Options under this Plan may not be sold, pledged, assigned, or
transferred in any manner other than by will or the laws of descent and
distribution or, with the consent of the Committee, pursuant to a transfer to
the spouse and/or lineal descendants of the Optionee and/or to a trust,
partnership or other entity the sole beneficiaries, partners or other members of
which are such Optionee's spouse and/or lineal descendants, unless and until
such Options have been exercised, or the shares underlying such Options have
been issued, and all restrictions applicable to such shares have lapsed. No
Option or interest or right therein shall be liable for the debts, contracts or
engagements of the Optionee or his successors in interest or shall be subject to
disposition by transfer, alienation, anticipation, pledge, encumbrance,
assignment or any other means whether such disposition be voluntary or
involuntary or by operation of law by judgment, levy, attachment, garnishment or
any other legal or equitable proceedings (including bankruptcy), and any
attempted disposition thereof shall be null and void and of no effect, except to
the extent that such disposition is permitted by the preceding sentence.
(b) During the lifetime of the Optionee, only he may exercise an Option
(or any portion thereof) granted to him under the Plan, unless it has been
disposed of pursuant to the foregoing paragraph. After the death of the Optionee
(or transferee), any exercisable portion of an Option may, prior to the time
when such portion becomes unexercisable under the Plan or the applicable Option
Agreement or other agreement, be exercised by the personal representative of, or
by any person empowered to do so under, the deceased Optionee's (or
transferee's) will or under the then applicable laws of descent and
distribution.
Section 7.2. Amendment, Suspension or Termination of this Plan
Except as otherwise provided in this Section 7.2, this Plan may be
wholly or partially amended or otherwise modified, suspended or terminated at
any time or from time to time by the Board or the Committee. However, without
approval of the Company's shareholders given within twelve months before or
after the action by the Board or the Committee, no action of the Board or the
Committee may, except as provided in Section 7.3, increase the limits imposed in
Section 2.1 on the maximum number of shares which may be issued under this Plan,
and no action of the Board or the Committee may be taken that would otherwise
require shareholder approval as a matter of applicable law, regulation or rule.
The Award Limit may be increased by the Board or the Committee at any time and
from time to time, and Options may be granted with respect to a number of shares
not in excess of such increased Award Limit; provided, however, that no such
increase of the Award Limit shall be effective unless and until such increase is
approved by the Company's shareholders and if such approval is not obtained all
Options granted with respect to a number of shares in excess of the Award Limit
in effect prior to such increase shall be canceled and shall become null and
void. No amendment, suspension or termination of this Plan shall, without the
consent of the Optionee alter or impair any rights or obligations under any
Options theretofore granted, unless the Option Agreement itself otherwise
expressly so provides. No Option may be granted during any period of suspension
or after termination of this Plan, and in no event may any Incentive Share
Option be granted under this Plan after May 28, 2003.
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Section 7.3. Changes in Common Shares or Assets of the Company,
Acquisition or Liquidation of the Company and Other Corporate
Events
(a) Subject to Section 7.3(d), in the event that the Committee (or the
Board, in the case of Options granted to Independent Directors) determines that
any dividend or other distribution (whether in the form of cash, Common Shares,
other securities, or other property), recapitalization, reclassification, share
split, reverse share split, reorganization, merger, consolidation, split-up,
spin-off, combination, repurchase, liquidation, dissolution, or sale, transfer,
exchange or other disposition of all or substantially all of the assets of the
Company (including, but not limited to, a Change in Control), or exchange of
Common Shares or other securities of the Company, issuance of warrants or other
rights to purchase Common Shares or other securities of the Company, or other
similar corporate transaction or event, in the Committee's sole discretion (or
in the case of Options granted to Independent Directors, the Board's sole
discretion), affects the Common Shares such that an adjustment is determined by
the Committee to be appropriate in order to prevent dilution or enlargement of
the benefits or potential benefits intended to be made available under the Plan
or with respect to an Option, then the Committee (or the Board, in the case of
Options granted to Independent Directors) shall, in such manner as it may deem
equitable, adjust any or all of
(i) the number and kind of Common Shares (or other securities
or property) with respect to which Options may be granted (including,
but not limited to, adjustments of the limitations in Section 2.1 on
the maximum number and kind of shares which may be issued and
adjustments of the Award Limit),
(ii) the number and kind of Common Shares (or other securities
or property) subject to outstanding Options, and
(iii) the grant or exercise price with respect to any Option.
(b) Subject to Sections 7.3(b)(vi) or Section 7.3(d), in the event of
any Change in Control or other transaction or event described in Section 7.3(a)
or any unusual or nonrecurring transactions or events affecting the Company, any
affiliate of the Company, or the financial statements of the Company or any
affiliate, or of changes in applicable laws, regulations, or accounting
principles, the Committee (or the Board, in the case of Options granted to
Independent Directors) in its discretion is hereby authorized to take any one or
more of the following actions whenever the Committee (or the Board, in the case
of Options granted to Independent Directors) determines that such action is
appropriate in order to prevent dilution or enlargement of the benefits or
potential benefits intended to be made available under the Plan or with respect
to any Option, to facilitate such transactions or events or to give effect to
such changes in laws, regulations or principles:
(i) In its sole discretion, and on such terms and conditions
as it deems appropriate, the Committee (or the Board, in the case of
Options granted to Independent Directors) may provide, either by the
terms of the Option Agreement or by action taken prior to the
occurrence of such transaction or event and either automatically or
upon the request of the Optionee, for either the purchase of any such
Option for an amount of cash equal to the amount that could have been
attained upon the exercise of such Option had such Option been
currently exercisable or payable or fully vested or the replacement of
such Option with other rights or property selected by the Committee (or
the Board, in the case of Options granted to Independent Directors) in
its sole discretion;
(ii) In its sole discretion, the Committee (or the Board, in
the case of Options granted to Independent Directors) may provide,
either by the terms of such Option or by action
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taken prior to the occurrence of such transaction or event that it
cannot be exercised after such event;
(iii) In its sole discretion, and on such terms and conditions
as it deems appropriate, the Committee (or the Board, in the case of
Options granted to Independent Directors) may provide, either by the
terms of such Option or by action taken prior to the occurrence of such
transaction or event, that for a specified period of time prior to such
transaction or event, such Option shall be exercisable as to all shares
covered thereby, notwithstanding anything to the contrary in (i)
Section 4.4 or (ii) the provisions of such Option;
(iv) In its sole discretion, and on such terms and conditions
as it deems appropriate, the Committee (or the Board, in the case of
Options granted to Independent Directors) may provide, either by the
terms of such Option or by action taken prior to the occurrence of such
transaction or event, that upon such event, such Option be assumed by
the successor or survivor corporation, or a parent or subsidiary
thereof, or shall be substituted for by similar options covering the
shares of the successor or survivor corporation, or a parent or
subsidiary thereof, with appropriate adjustments as to the number and
kind of shares and prices; and
(v) In its sole discretion, and on such terms and conditions
as it deems appropriate, the Committee (or the Board, in the case of
Options granted to Independent Directors) may make adjustments in the
number and type of Common Shares (or other securities or property)
subject to outstanding Options and/or in the terms and conditions of
(including the grant or exercise price), and the criteria included in,
outstanding Options and Options which may be granted in the future.
(vi) None of the foregoing discretionary actions taken under
this Section 7.3(b) shall be permitted with respect to Options granted
under Section 3.3(b) to Independent Directors to the extent that such
discretion would be inconsistent with the applicable exemptive
conditions of Rule 16b-3. In the event of a Change in Control, each
Option granted to an Independent Director shall be exercisable as to
all shares covered thereby immediately prior to the consummation of
such Change in Control and subject to such consummation,
notwithstanding anything to the contrary in Section 4.4 or the vesting
schedule of such Options.
(c) Subject to Section 7.3(d) and 7.6, the Committee (or the Board, in
the case of Options granted to Independent Directors) may, in its discretion,
include such further provisions and limitations in any Option agreement or
certificate, as it may deem equitable and in the best interests of the Company.
(d) With respect to any Option granted to any Section 162(m)
Participant that is intended to qualify as performance-based compensation under
Section 162(m)(4)(C), no adjustment or action described in this Section 7.3 or
in any other provision of the Plan shall be authorized to the extent that such
adjustment or action would cause such Option to fail to so qualify under Section
162(m)(4)(C), or any successor provision thereto unless the Committee determines
that such Option should no longer so qualify. Furthermore, no such adjustment or
action shall be authorized to the extent such adjustment or action would result
in short-swing profits liability under Section 16 or violate the exemptive
conditions of Rule 16b-3 unless the Committee (or the Board, in the case of
Options granted to Independent Directors) determines that the Option is not to
comply with such exemptive conditions. The number of Common Shares subject to
any Option shall always be rounded to the next whole number.
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Section 7.4. Tax Withholding
The Company shall be entitled to require payment in cash or deduction
from other compensation payable to each Optionee of any sums required by
federal, state or local tax law to be withheld with respect to the issuance,
vesting, exercise or payment of any Option. The Committee (or the Board, in the
case of Options granted to Independent Directors) may in its discretion and in
satisfaction of the foregoing requirement allow such Optionee to elect to have
the Company withhold Common Shares otherwise issuable under such Option (or
allow the return of Common Shares) having a Fair Market Value equal to the sums
required to be withheld.
Section 7.5. Loans
The Committee may, in its discretion, extend one or more loans to
Employees in connection with the exercise or receipt of an Option granted under
this Plan. The terms and conditions of any such loan shall be set by the
Committee.
Section 7.6. Limitations Applicable to Section 16 Persons and
Performance-Based Compensation
Notwithstanding any other provision of this Plan, this Plan, and any
Option granted to any individual who is then subject to Section 16 of the
Exchange Act, shall be subject to any additional limitations set forth in any
applicable exemptive rule under Section 16 of the Exchange Act (including any
amendment to Rule 16b-3 of the Exchange Act) that are requirements for the
application of such exemptive rule. To the extent permitted by applicable law,
the Plan and Options granted hereunder shall be deemed amended to the extent
necessary to conform to such applicable exemptive rule. Furthermore,
notwithstanding any other provision of this Plan, any Option which is granted to
a Section 162(m) Participant and is intended to qualify as performance-based
compensation as described in Section 162(m)(4)(C) of the Code shall be subject
to any additional limitations set forth in Section 162(m) of the Code (including
any amendment to Section 162(m) of the Code) or any regulations or rulings
issued thereunder that are requirements for qualification as performance-based
compensation as described in Section 162(m)(4)(C) of the Code, and this Plan
shall be deemed amended to the extent necessary to conform to such requirements.
Section 7.7. Effect of Plan Upon Options and Compensation Plans
The adoption of this Plan shall not affect any other compensation or
incentive plans in effect for the Company or any Subsidiary. Nothing in this
Plan shall be construed to limit the right of the Company (i) to establish any
other forms of incentives or compensation for Employees or Directors of the
Company or any Subsidiary or (ii) to grant or assume Options or other rights or
awards otherwise than under this Plan in connection with any proper corporate
purpose including but not by way of limitation, the grant or assumption of
Options in connection with the acquisition by purchase, lease, merger,
consolidation or otherwise, of the business, securities or assets of any
corporation, partnership, limited liability company, firm or association.
Section 7.8. Compliance with Laws
This Plan, the granting and vesting of Options under this Plan and the
issuance and delivery of Common Shares and the payment of money under this Plan
or under Options granted hereunder are subject to compliance with all applicable
federal and state laws, rules and regulations (including but not limited to
state and federal securities law and federal margin requirements) and to such
approvals by any listing, regulatory or governmental authority as may, in the
opinion of counsel for the Company, be necessary or advisable in connection
therewith. Any securities delivered under this Plan shall be subject to such
restrictions, and the person acquiring such securities shall, if requested by
the Company, provide
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such assurances and representations to the Company as the Company may deem
necessary or desirable to assure compliance with all applicable legal
requirements. To the extent permitted by applicable law, the Plan, or Options
granted hereunder shall be deemed amended to the extent necessary to conform to
such laws, rules and regulations.
Section 7.9. Titles
Titles are provided herein for convenience only and are not to serve as
a basis for interpretation or construction of this Plan.
Section 7.10. Governing Law
This Plan and any agreements hereunder shall be administered,
interpreted and enforced under the internal laws of the State of North Carolina
without regard to conflicts of laws thereof.
* * * * *
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APPENDIX B
THE AMENDED AND RESTATED UNIT
OPTION PLAN FOR EMPLOYEES OF
TANGER PROPERTIES LIMITED PARTNERSHIP
Tanger Properties Limited Partnership, a partnership organized under
the laws of the state of North Carolina (the "Partnership") adopted the
Partnership Unit Option Plan for Executive and Key Employees of Tanger
Properties Limited Partnership (the "Plan") on May 28, 1993. The Plan has
subsequently been amended from time to time. In order to conform the Plan
document to such amendments and to further amend the Plan in certain respects,
the Plan has been amended and restated, effective as of January 6, 1998. This
Amended and Restated Unit Option Plan for Employees of Tanger Properties Limited
Partnership constitutes a complete amendment and restatement of the Plan in its
entirety and a continuation of the Plan.
The purposes of this Plan are as follows:
(1) To further the growth, development and financial success of the
Partnership by providing additional incentives to certain of its Employees (as
defined below) who have been or will be given responsibility for the management
or administration of the Partnership's business affairs, by assisting them to
become owners of Units (as defined below) and thus to benefit directly from such
growth, development and financial success.
(2) To enable the Partnership to obtain and retain the services of the
types of professional, technical and managerial employees considered essential
to the long range success of the Partnership by providing and offering them an
opportunity to become owners of Units under options.
(3) To allow certain Employees the ability, at their election, upon the
simultaneous exercise of options under the Plan and of their conversion rights
under the Partnership Agreement (as defined below) to be issued and have
delivered to them directly from Tanger Factory Outlet Centers, Inc. (the
"Company") common shares of the Company.
ARTICLE I.
DEFINITIONS
Wherever the following terms are used in this Plan they shall have the
meanings specified below, unless the context clearly indicates otherwise. The
masculine pronoun shall include the feminine and neuter and the singular shall
include the plural, where the context so indicates.
Section 1.1. Award Limit
"Award Limit" shall mean 60,000 Common Shares.
Section 1.2. Board
"Board" shall mean the Board of Directors of the Company.
Section 1.3. Change in Control
"Change in Control" shall mean a change in ownership or control of the
Company effected through either of the following transactions:
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(a) any person or related group of persons (other than the Company or a
person that directly or indirectly controls, is controlled by, or is under
common control with, the Company) directly or indirectly acquires beneficial
ownership (within the meaning of Rule 13d-3 under the Exchange Act) of
securities possessing more than fifty percent (50%) of the total combined voting
power of the Company's outstanding securities pursuant to a tender or exchange
offer made directly to the Company's shareholders which the Board does not
recommend such shareholders to accept; or
(b) there is a change in the composition of the Board over a period of
thirty-six (36) consecutive months (or less) such that a majority of the Board
members (rounded up to the nearest whole number) ceases, by reason of one or
more proxy contests for the election of Board members, to be comprised of
individuals who either (i) have been Board members continuously since the
beginning of such period or (ii) have been elected or nominated for election as
Board members during such period by at least a majority of the Board members
described in clause (i) who were still in office at the time such election or
nomination was approved by the Board.
Section 1.4. Code
"Code" shall mean the Internal Revenue Code of 1986, as amended.
Section 1.5. Committee
"Committee" shall mean the Share and Unit Option Committee of the
Board, appointed as provided in Section 6.1.
Section 1.6. Common Shares
"Common Shares" shall mean the Common Shares of the Company, par value
$0.01 per share.
Section 1.7. Company
"Company" shall mean Tanger Factory Outlet Centers, Inc., a North
Carolina corporation.
Section 1.8. Company Plan
"Company Plan" shall mean the Amended and Restated Share Option Plan
for Directors and Executive and Key Employees of Tanger Factory Outlet Centers,
Inc., as amended from time to time.
Section 1.9. Director
"Director" shall mean a member of the Board.
Section 1.10. Employee
"Employee" shall mean any employee (as defined in accordance with
Section 3401(c) of the Code) of the Partnership or of any entity which is a
subsidiary of the Partnership.
Section 1.11. Exchange Act
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
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Section 1.12. Fair Market Value
"Fair Market Value" of a Unit for purposes of this Plan as of a given
date shall be the fair market value of a Common Share into which it may be
converted, where the fair market value of a Common Share as of such date shall
mean (i) the closing price of the Common Shares on the principal exchange on
which Common Shares are trading on the trading day previous to such date, or, if
Common Shares were not traded on the day previous to such date, then on the next
preceding trading day during which a sale occurred; (ii) if such Common Shares
are not traded on an exchange but are quoted on NASDAQ or a successor quotation
system, (A) the last sales price (if the Common Shares are then listed as
National Market Issue under the NASD National Market System) or (B) the mean
between the closing representative bid and asked prices for the Common Shares on
the trading day previous to such date as reported by NASDAQ or such successor
quotation system; or (iii) if such Common Shares are is not publicly traded on
an exchange and not quoted on NASDAQ or a successor quotation system, the fair
market value of a Common Share as established by the Committee acting in good
faith.
Section 1.13. Option
"Option" shall mean an option to purchase a Unit and to receive cash to
be applied to such purchase, granted under Article III of this Plan. All Options
granted under this Plan shall be non-qualified options, not intended to conform
to the provisions of Section 422 of the Code.
Section 1.14. Optionee
"Optionee" shall mean an Employee granted an Option under this Plan.
Section 1.15. Partnership
"Partnership" shall mean Tanger Properties Limited Partnership, a
partnership organized under the laws of the state of North Carolina.
Section 1.16. Partnership Agreement
"Partnership Agreement" shall mean the Amended and Restated Agreement
of Limited Partnership of Tanger Properties Limited Partnership dated as of
December 16, 1993, as amended from time to time.
Section 1.17. Partnership Unit; Unit
"Partnership Unit" shall have the meaning ascribed to such term in the
Partnership Agreement, and may be referred to herein as a "Unit."
Section 1.18. Plan
"Plan" shall mean the Amended and Restated Unit Option Plan for
Employees of Tanger Properties Limited Partnership.
Section 1.19. Rule 16b-3
"Rule 16b-3" shall mean that certain Rule 16b-3 under the Exchange Act,
as such Rule may be amended from time to time.
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Section 1.20. Section 162(m) Participant
"Section 162(m) Participant" shall mean any Company Employee designated
by the Committee as a Company Employee whose compensation for the fiscal year in
which the Company Employee is so designated or a future fiscal year may be
subject to the limit on deductible compensation imposed by Section 162(m) of the
Code.
Section 1.21. Termination of Employment
"Termination of Employment" shall mean the time when the
employee-employer relationship between an Optionee and the Partnership, the
Company or any subsidiary of either of them is terminated for any reason, with
or without cause, including, but not by way of limitation, a termination by
resignation, discharge, death, disability or retirement; but excluding (i) a
termination where there is a simultaneous reemployment or continuing employment
of such Optionee by the Partnership, (ii) at the discretion of the Committee,
termination which results in a temporary severance of the employee-employer
relationship, and (iii) at the discretion of the Committee, a termination which
is followed by the simultaneous establishment of a consulting relationship by
the Partnership, the Company or any subsidiary of either of them with the former
employee. The Committee, in its sole discretion, shall determine the effect of
all matters and questions relating to Termination of Employment, including, but
not by way of limitation, the question of whether a Termination of Employment
resulted from a discharge for good cause, and all questions of whether a
particular leave of absence constitutes a Termination of Employment.
Notwithstanding any other provision of this Plan, the Partnership or the Company
or the subsidiary has an absolute and unrestricted right to terminate an
Employee's employment at any time for any reason whatsoever, with or without
cause, except to the extent expressly provided otherwise in writing.
ARTICLE II.
UNITS SUBJECT TO PLAN
Section 2.1. Units Subject to Plan
(a) The aggregate number of Units which may be issued upon exercise of
Options under the Plan shall not exceed 1,500,000; provided, that effective as
of the date of the next succeeding annual meeting of shareholders such number
shall be increased to 1,750,000 if the shareholders approve such increase at
such annual meeting. Such aggregate number shall be reduced by one for each
Common Share that is issued pursuant to the exercise of options under the
Company's Share Option Plan.
(b) The maximum number of Units which may be subject to Options granted
under the Plan to any individual in any calendar year shall not exceed the Award
Limit. To the extent required by Section 162(m) of the Code, Units subject to
Options which are canceled continue to be counted against the Award Limit and
if, after grant of an Option, the price of Units subject to such Option is
reduced, the transaction will be treated as a cancellation of the Option and a
grant of a new Option and both the Option deemed to be canceled and the Option
deemed to be granted will be counted against the Award Limit.
Section 2.2. Add-back of Options
If any Option expires or is canceled without having been fully
exercised, the number of Units subject to such Option but as to which such
Option was not exercised prior to its expiration, cancellation or exercise may
again be optioned, granted or awarded hereunder, subject to the limitations of
Section 2.1. Units which are delivered by the Optionee or withheld by the
Partnership upon the exercise of any Option or other award under this Plan, in
payment of the exercise price thereof, may again be optioned,
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granted or awarded hereunder, subject to the limitations of Section 2.1.
Furthermore, any Units subject to Options which are adjusted pursuant to Section
7.3 and become exercisable with respect to equity interests of another entity
shall be considered canceled and may again be optioned, granted or awarded
hereunder, subject to the limitations of Section 2.1.
ARTICLE III.
GRANTING OF OPTIONS
Section 3.1. Eligibility
Any Employee selected by the Committee pursuant to Section 3.2(a)(i)
shall be eligible to be granted an Option.
Section 3.2. Granting of Options
(a) The Committee shall from time to time, in its sole discretion, and
subject to applicable limitations of this Plan:
(i) Select from among the Employees (including Employees who
have previously received Options) such of them as in its opinion should
be granted Options;
(ii) Subject to the Award Limit, determine the number of
shares to be subject to such Options granted to the selected Employees;
(iii) Determine whether such Options are to qualify as
performance-based compensation as described in Section 162(m)(4)(C) of
the Code; and
(iv) Determine the terms and conditions of such Options,
consistent with this Plan; provided, however, that the terms and
conditions of Options intended to qualify as performance-based
compensation as described in Section 162(m)(4)(C) of the Code shall
include, but not be limited to, such terms and conditions as may be
necessary to meet the applicable provisions of Section 162(m) of the
Code.
(b) Upon the selection of an Employee to be granted an Option, the
Committee shall instruct the Partnership to issue the Option and may impose such
conditions on the grant of the Option as it deems appropriate. Without limiting
the generality of the preceding sentence, the Committee may, in its discretion
and on such terms as it deems appropriate, require as a condition on the grant
of an Option that the Optionee surrender for cancellation some or all of the
unexercised Options or other rights which have been previously granted to him
under this Plan or otherwise. An Option, the grant of which is conditioned upon
such surrender, may have an exercise price lower (or higher) than the exercise
price of such surrendered Option or other right, may cover the same (or a lesser
or greater) number of Units as such surrendered Option or other right, may
contain such other terms as the Committee deems appropriate, and shall be
exercisable in accordance with its terms, without regard to the number of Units,
exercise price, exercise period or any other term or condition of such
surrendered Option or other right.
ARTICLE IV.
TERMS OF OPTIONS
Section 4.1. Option Agreement
Each Option shall be evidenced by a written Option Agreement, which
shall be executed by the Optionee and the Partnership and which shall contain
such terms and conditions as the Committee shall determine, and which may be
amended by agreement of the parties thereto, consistent with this Plan.
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Option Agreements evidencing Options intended to qualify as performance-based
compensation as described in Section 162(m)(4)(C) of the Code shall contain such
terms and conditions as may be necessary to meet the applicable provisions of
Section 162(m) of the Code, and Option Agreements evidencing Incentive Share
Options shall contain such terms and conditions as may be necessary to meet the
applicable provisions of Section 422 of the Code.
Section 4.2. Exercise Price
The exercise price per Unit subject to each Option shall be set by the
Committee in its discretion; provided, however, that such price shall be no less
than the Fair Market Value of a Unit on the date the Option is granted.
Section 4.3. Option Term
The term of an Option shall be set by the Committee in its discretion;
provided, however, that, the Committee may extend the term of any outstanding
Option in connection with any Termination of Employment, or amend any other term
or condition of such Option relating to such a termination.
Section 4.4. Option Vesting
(a) The period during which the right to exercise an Option in whole or
in part vests in the Optionee shall be set by the Committee and the Committee
may determine that an Option may not be exercised in whole or in part for a
specified period after it is granted. At any time after grant of an Option, the
Committee may, in its sole discretion and subject to whatever terms and
conditions it selects, accelerate the period during which an Option vests.
(b) No portion of an Option which is unexercisable at Termination of
Employment shall thereafter become exercisable, except as may be otherwise
provided by the Committee either in the Option Agreement or by action of the
Committee following the grant of the Option.
Section 4.5. Consideration
In consideration of the granting of an Option, the Optionee shall
agree, in the written Option Agreement, to remain in the employ of the
Partnership, the Company, or a subsidiary of either of them for a period of one
year from the date of Option grant. Nothing in this Plan or in any Option
Agreement hereunder shall confer upon any Optionee any right to continue in the
employ of the Partnership, the Company or a subsidiary of either of them, or
shall interfere with or restrict in any way the rights of the Partnership, the
Company or such subsidiary, which are hereby expressly reserved, to discharge
any Optionee at any time for any reason whatsoever, with or without good cause.
ARTICLE V.
EXERCISE OF OPTIONS
Section 5.1. Partial Exercise
An exercisable Option may be exercised in whole or in part. However, an
Option shall not be exercisable with respect to fractional Units and the
Committee may require that, by the terms of the Option, a partial exercise be
with respect to a minimum number of Units.
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Section 5.2. Payment Upon Exercise
As part of the exercise of an Option pursuant to this Section 5.2, the
Partnership shall pay to the Optionee, as additional compensation for his
services to the Partnership, cash (the "Appreciation Consideration") equal to
the excess, if any, of the Fair Market Value of a Unit on the date of exercise
and the exercise price of the Option. In addition to the exercise price, the
Appreciation Consideration shall be applied to the purchase of a Unit pursuant
to Section 5.3(d).
Section 5.3. Manner of Exercise
All or a portion of an exercisable Option shall be deemed exercised
upon delivery of all of the following to the Partnership prior to the time when
such Option or such portion becomes unexercisable under the Plan or the
applicable Option Agreement:
(a) A written notice complying with the applicable rules established by
the Committee stating that the Option, or a portion thereof, is exercised. The
notice shall be signed by the Optionee or other person then entitled to exercise
the Option or such portion of the Option;
(b) Such representations and documents as the Committee in its sole
discretion, deems necessary or advisable to effect compliance with all
applicable provisions of the Securities Act of 1933, as amended, and any other
federal or state securities laws or regulations. The Committee may, in its sole
discretion, also take whatever additional actions it deems appropriate to effect
such compliance including, without limitation, placing legends on share
certificates and issuing stop-transfer notices to agents and registrars;
(c) In the event that the Option shall be exercised pursuant to Section
7.1 by any person or persons other than the Optionee, appropriate proof of the
right of such person or persons to exercise the Option; and
(d) Full cash payment to the Partnership for the Units with respect to
which the Option, or portion thereof, is exercised (which payment shall consist
of the entire Appreciation Consideration and the exercise price). However, the
Committee, may in its discretion (i) allow a delay in payment up to thirty (30)
days from the date the Option, or portion thereof, is exercised; (ii) allow
payment, in whole or in part, through the delivery of Units owned by the
Optionee, duly endorsed for transfer to the Partnership with a Fair Market Value
on the date of delivery equal to the aggregate exercise price of the Option or
exercised portion thereof; (iii) allow payment, in whole or in part, through the
surrender of Units then issuable upon exercise of the Option having a Fair
Market Value on the date of Option exercise equal to the aggregate exercise
price of the Option or exercised portion thereof; (iv) allow payment, in whole
or in part, through the delivery of property of any kind which constitutes good
and valuable consideration; (v) allow payment, in whole or in part, through the
delivery of a full recourse promissory note bearing interest (at no less than
such rate as shall then preclude the imputation of interest under the Code) and
payable upon such terms as may be prescribed by the Committee; or (vi) allow
payment through any combination of the consideration provided in the foregoing
subparagraphs (ii), (iii), (iv) and (v). In the case of a promissory note, the
Committee may also prescribe the form of such note and the security to be given
for such note. The Option may not be exercised, however, by delivery of a
promissory note or by a loan from the Partnership when or where such loan or
other extension of credit is prohibited by law.
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Section 5.4. Conditions to Issuance of Unit Certificates
The Partnership shall not be required to issue or deliver any
certificate for Units purchased upon the exercise of any Option or portion
thereof prior to fulfillment of all of the following conditions:
(a) The admission of such Units to listing on all stock exchanges on
which such series or class of Units is then listed;
(b) The completion of any registration or other qualification of such
Units under any state or federal law, or under the rulings or regulations of the
Securities and Exchange Commission or any other governmental regulatory body
which the Committee or Board shall, in its sole discretion, deem necessary or
advisable;
(c) The obtaining of any approval or other clearance from any state or
federal governmental agency which the Committee shall, in its sole discretion,
determine to be necessary or advisable;
(d) The lapse of such reasonable period of time following the exercise
of the Option as the Committee may establish from time to time for reasons of
administrative convenience; and
(e) The receipt by the Partnership of full payment for such Units,
including payment of any applicable withholding tax;
provided that under no circumstance may an Optionee exercise an Option and
acquire a Unit, and if an Optionee does exercise an Option, such exercise shall
be null and void and of no effect, if such exercise could, in the sole
discretion of the Committee, result in income to the Company which, when
considered in light of the Company's other income, could cause the Company to
fail to satisfy the gross income limitations set forth in Code Section 856(c) or
otherwise impair the Company's status as a REIT.
Section 5.5. Rights as Limited Partners
The holders of Options shall not be, nor have any of the rights or
privileges of, limited partners of the Partnership in respect of any Units
purchasable upon the exercise of any part of an Option unless and until
certificates representing such Units have been issued to such holders; provided,
however, that the Partnership shall provide to Optionees, on an annual basis,
such financial and other information as the Partnership provides to its limited
partners.
Section 5.6. Ownership and Transfer Restrictions
The Committee, in its sole discretion, may impose such restrictions on
the ownership and transferability of the Units purchasable upon the exercise of
an Option as it deems appropriate. Any such restriction shall be set forth in
the respective Option Agreement or other written agreement between the
Partnership and the Optionee and may be referred to on the certificates
evidencing such Units. All Options and Units shall be subject to any applicable
transfer restrictions required to preserve the Company's status as a REIT under
the Code and to the restrictions on transfer set forth in the Partnership
Agreement.
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ARTICLE VI.
<PAGE>
ADMINISTRATION
Section 6.1. Share and Unit Option Committee
The Share and Unit Option Committee shall consist of two or more
Directors, appointed by and holding office at the pleasure of the Board, none of
whom shall be an employee of the Company and each of whom is both a
"non-employee director" as defined by Rule 16b-3 and an "outside director" for
purposes of Section 162(m) of the Code. Appointment of Committee members shall
be effective upon acceptance of appointment. Committee members may resign at any
time by delivering written notice to the Board. Vacancies in the Committee may
be filled by the Board.
Section 6.2. Duties and Powers of Committee
It shall be the duty of the Committee to conduct the general
administration of this Plan in accordance with its provisions. The Committee
shall have the power to interpret this Plan, the Option Agreements and to adopt
such rules for the administration, interpretation and application of this Plan
as are consistent therewith and to interpret, amend or revoke any such rules.
Any grant or Option under this Plan need not be the same with respect to each
Optionee. In its sole discretion, the Board may at any time and from time to
time exercise any and all rights and duties of the Committee under this Plan
except with respect to matters which under Rule 16b-3 or Section 162(m) of the
Code (as each may be applicable), or any regulations or rules issued thereunder,
are required to be determined in the sole discretion of the Committee.
Section 6.3. Majority Rule
The Committee shall act by a majority of its members in attendance at a
meeting where quorum is present or by a memorandum or other written instrument
signed by all members of the Committee.
Section 6.4. Compensation; Professional Assistance; Good Faith Actions
Members of the Committee shall receive such compensation for their
services as members as may be determined by the Board. All expenses and
liabilities which members of the Committee incur in connection with the
administration of this Plan shall be borne by the Company. The Committee may,
with the approval of the Board, employ attorneys, consultants, accountants,
appraisers, brokers or other persons. The Committee, the Partnership, the
Company and the Company's officers and Directors shall be entitled to rely upon
the advice, opinions or valuations of any such persons. All actions taken and
all interpretations and determinations made by the Committee or the Board in
good faith shall be final and binding upon all Optionees, the Partnership and
all other interested persons. No members of the Committee or the Board shall be
personally liable for any action, determination or interpretation made in good
faith with respect to this Plan or any Option, and all members of the Committee
and the Board shall be fully protected by the Company in respect of any such
action, determination or interpretation.
ARTICLE VII.
MISCELLANEOUS PROVISIONS
Section 7.1. Not Transferable
(a) Options under this Plan may not be sold, pledged, assigned, or
transferred in any manner other than by will or the laws of descent and
distribution or, with the consent of the Committee, pursuant to a transfer to
the spouse and/or lineal descendants of the Optionee or to a trust, partnership
or other entity the sole beneficiaries, partners or other members of which are
members of the Optionee's spouse
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<PAGE>
and/or lineal descendants, unless and until such Options have been exercised, or
the Units underlying such Options have been issued, and all restrictions
applicable to such Units have lapsed. No Option or interest or right therein
shall be liable for the debts, contracts or engagements of the Optionee or his
successors in interest or shall be subject to disposition by transfer,
alienation, anticipation, pledge, encumbrance, assignment or any other means
whether such disposition be voluntary or involuntary or by operation of law by
judgment, levy, attachment, garnishment or any other legal or equitable
proceedings (including bankruptcy), and any attempted disposition thereof shall
be null and void and of no effect, except to the extent that such disposition is
permitted by the preceding sentence.
(b) During the lifetime of the Optionee, only he may exercise an Option
(or any portion thereof) granted to him under the Plan, unless it has been
disposed of pursuant to the foregoing paragraph. After the death of the Optionee
(or transferee), any exercisable portion of an Option may, prior to the time
when such portion becomes unexercisable under the Plan or the applicable Option
Agreement or other agreement, be exercised by the personal representative of, or
by any person empowered to do so under, the deceased Optionee's (or
transferee's) will or under the then applicable laws of descent and
distribution.
Section 7.2. Amendment, Suspension or Termination of this Plan
Except as otherwise provided in this Section 7.2, this Plan may be
wholly or partially amended or otherwise modified, suspended or terminated at
any time or from time to time by the Committee. However, without approval of the
Company's shareholders given within twelve months before or after the action by
the Committee, no action of the Committee may, except as provided in Section
7.3, increase the limits imposed in Section 2.1 on the maximum number of Units
which may be issued under this Plan, and no action of the Committee may be taken
that would otherwise require shareholder approval as a matter of applicable law,
regulation or rule. The Award Limit may be increased by the Committee at any
time and from time to time, and Options may be granted with respect to a number
of Units not in excess of such increased Award Limit; provided, however, that no
such increase of the Award Limit shall be effective unless and until such
increase is approved by the Company's shareholders and if such approval is not
obtained all Options granted with respect to a number of Units in excess of the
Award Limit in effect prior to such increase shall be canceled and shall become
null and void. No amendment, suspension or termination of this Plan shall,
without the consent of the Optionee alter or impair any rights or obligations
under any Options theretofore granted, unless the Option Agreement itself
otherwise expressly so provides. No Option may be granted during any period of
suspension or after termination of this Plan.
Section 7.3. Changes in Securities or Assets of the Company or the
Partnership, Acquisition or Liquidation of the Company or the
Partnership and Other Events
(a) In the event that the Committee determines that any dividend or
other distribution (whether in the form of cash, Units, Common Shares, other
securities, or other property), recapitalization, reclassification, share split,
reverse share split, reorganization, merger, consolidation, split-up, spin-off,
combination, repurchase, liquidation, dissolution, or sale, transfer, exchange
or other disposition of all or substantially all of the assets of the
Partnership or the Company (including, but not limited to, a Change in Control),
or exchange of Units or Common Shares or other securities of the Partnership or
the Company, issuance of warrants or other rights to purchase Units or Common
Shares or other securities of the Partnership or the Company, or other similar
transaction or event, in the Committee's sole discretion, affects the Units or
Common Shares such that an adjustment is determined by the Committee to be
appropriate in order to prevent dilution or enlargement of the benefits or
potential benefits intended to be made available under the Plan or with respect
to an Option, then the Committee shall, in such manner as it may deem equitable,
adjust any or all of
B-10
<PAGE>
(i) the number and kind of Units (or other securities or
property) with respect to which Options may be granted (including, but
not limited to, adjustments of the limitations in Section 2.1 on the
maximum number and kind of Units which may be issued and adjustments to
the Award Limit),
(ii) the number and kind of Units (or other securities or
property) subject to outstanding Options, and
(iii) the grant or exercise price with respect to any Option.
(b) Subject to Section 7.3(d), in the event of any Change in Control or
other transaction or event described in Section 7.3(a) or any unusual or
nonrecurring transactions or events affecting the Partnership, the Company, any
affiliate of the either of them, or the financial statements of the Partnership,
the Company or any such affiliate, or of changes in applicable laws,
regulations, or accounting principles, the Committee in its discretion is hereby
authorized to take any one or more of the following actions whenever the
Committee determines that such action is appropriate in order to prevent
dilution or enlargement of the benefits or potential benefits intended to be
made available under the Plan or with respect to any Option, to facilitate such
transactions or events or to give effect to such changes in laws, regulations or
principles:
(i) In its sole discretion, and on such terms and conditions
as it deems appropriate, the Committee may provide, either by the terms
of the Option Agreement or by action taken prior to the occurrence of
such transaction or event and either automatically or upon the request
of the Optionee, for either the purchase of any such Option for an
amount of cash equal to the amount that could have been attained upon
the exercise of such Option had such Option been currently exercisable
or payable or fully vested or the replacement of such Option with other
rights or property selected by the Committee in its sole discretion;
(ii) In its sole discretion, the Committee may provide, either
by the terms of such Option or by action taken prior to the occurrence
of such transaction or event that it cannot be exercised after such
event;
(iii) In its sole discretion, and on such terms and conditions
as it deems appropriate, the Committee may provide, either by the terms
of such Option or by action taken prior to the occurrence of such
transaction or event, that for a specified period of time prior to such
transaction or event, such Option shall be exercisable as to all Units
covered thereby, notwithstanding anything to the contrary in (i)
Section 4.4 or (ii) the provisions of such Option;
(iv) In its sole discretion, and on such terms and conditions
as it deems appropriate, the Committee may provide, either by the terms
of such Option or by action taken prior to the occurrence of such
transaction or event, that upon such event, such Option be assumed by
the successor or survivor corporation, or a parent or subsidiary
thereof, or shall be substituted for by similar options covering the
equity securities of the successor or survivor corporation, or a parent
or subsidiary thereof, with appropriate adjustments as to the number
and kind of securities and prices; and
(v) In its sole discretion, and on such terms and conditions
as it deems appropriate, the Committee may make adjustments in the
number and type of Units (or other securities or property) subject to
outstanding Options and/or in the terms and conditions of (including
the grant or exercise price), and the criteria included in, outstanding
Options and Options which may be granted in the future.
B-11
<PAGE>
(c) Subject to Section 7.3(d) and 7.6, the Committee may, in its
discretion, include such further provisions and limitations in any Option
agreement or certificate, as it may deem equitable and in the best interests of
the Company.
(d) With respect to any Option granted to any Section 162(m)
Participant that is intended to qualify as performance-based compensation under
Section 162(m)(4)(C), no adjustment or action described in this Section 7.3 or
in any other provision of the Plan shall be authorized to the extent that such
adjustment or action would cause such Option to fail to so qualify under Section
162(m)(4)(C), or any successor provision thereto unless the Committee determines
that such Option should no longer so qualify. Furthermore, no such adjustment or
action shall be authorized to the extent such adjustment or action would result
in short-swing profits liability under Section 16 or violate the exemptive
conditions of Rule 16b-3 unless the Committee determines that the Option is not
to comply with such exemptive conditions. The number of Units subject to any
Option shall always be rounded to the next whole number.
Section 7.4. Tax Withholding
The Partnership shall be entitled to require payment in cash or
deduction from other compensation payable to each Optionee of any sums required
by federal, state or local tax law to be withheld with respect to the issuance,
vesting, exercise or payment of any Option. The Committee may in its discretion
and in satisfaction of the foregoing requirement allow such Optionee to elect to
have the Partnership withhold Units otherwise issuable under such Option (or
allow the return of Units) having a Fair Market Value equal to the sums required
to be withheld.
Section 7.5. Loans
The Committee may, in its discretion, extend one or more loans to
Employees in connection with the exercise or receipt of an Option granted under
this Plan. The terms and conditions of any such loan shall be set by the
Committee.]
Section 7.6. Limitations Applicable to Section 16 Persons and
Performance-Based Compensation
Notwithstanding any other provision of this Plan, this Plan, and any
Option granted to any individual who is then subject to Section 16 of the
Exchange Act, shall be subject to any additional limitations set forth in any
applicable exemptive rule under Section 16 of the Exchange Act (including any
amendment to Rule 16b-3 of the Exchange Act) that are requirements for the
application of such exemptive rule. To the extent permitted by applicable law,
the Plan and Options granted hereunder shall be deemed amended to the extent
necessary to conform to such applicable exemptive rule. Furthermore,
notwithstanding any other provision of this Plan, any Option which is granted to
a Section 162(m) Participant and is intended to qualify as performance-based
compensation as described in Section 162(m)(4)(C) of the Code shall be subject
to any additional limitations set forth in Section 162(m) of the Code (including
any amendment to Section 162(m) of the Code) or any regulations or rulings
issued thereunder that are requirements for qualification as performance-based
compensation as described in Section 162(m)(4)(C) of the Code, and this Plan
shall be deemed amended to the extent necessary to conform to such requirements.
B-12
<PAGE>
Section 7.7. Effect of Plan Upon Options and Compensation Plans
The adoption of this Plan shall not affect any other compensation or
incentive plans in effect for the Partnership or any subsidiary. Nothing in this
Plan shall be construed to limit the right of the Partnership or any subsidiary
(i) to establish any other forms of incentives or compensation for Employees
(ii) to grant or assume Options or other rights or awards otherwise than under
this Plan in connection with any proper purpose including but not by way of
limitation, the grant or assumption of Options in connection with the
acquisition by purchase, lease, merger, consolidation or otherwise, of the
business, securities or assets of any corporation, partnership, limited
liability company, firm or association.
Section 7.8. Compliance with Laws
This Plan, the granting and vesting of Options under this Plan and the
issuance and delivery of Units and the payment of money under this Plan or under
Options granted hereunder are subject to compliance with all applicable federal
and state laws, rules and regulations (including but not limited to state and
federal securities law and federal margin requirements) and to such approvals by
any listing, regulatory or governmental authority as may, in the opinion of
counsel for the Partnership, be necessary or advisable in connection therewith.
Any securities delivered under this Plan shall be subject to such restrictions,
and the person acquiring such securities shall, if requested by the Partnership,
provide such assurances and representations to the Partnership as the
Partnership may deem necessary or desirable to assure compliance with all
applicable legal requirements. To the extent permitted by applicable law, the
Plan and Options granted hereunder shall be deemed amended to the extent
necessary to conform to such laws, rules and regulations.
Section 7.9. Titles
Titles are provided herein for convenience only and are not to serve as
a basis for interpretation or construction of this Plan.
Section 7.10. Governing Law
This Plan and any agreements hereunder shall be administered,
interpreted and enforced under the internal laws of the State of North Carolina
without regard to conflicts of laws thereof.
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<PAGE>
********************************************************************************
APPENDIX
[FRONT SIDE OF CARD]
TANGER FACTORY OUTLET CENTERS, INC.
Appointment of Proxy for Annual Meeting on May 8, 1998
The undersigned shareholder of TANGER FACTORY OUTLET CENTERS, INC. a North
Carolina corporation, hereby constitutes and appoints Stanley K. Tanger and
Rochelle G. Simpson, and each of them, proxies with full power of substitution
to act for the undersigned and to vote the shares which the undersigned may be
entitled to vote at the Annual Meeting of the Shareholders of such corporation
on May 8, 1998, and at any adjournment or adjournments thereof, as instructed on
the reverse side upon the proposals which are more fully set forth in the Proxy
Statement of Tanger Factory Outlet Centers, Inc. dated April 8, 1998 (receipt of
which is acknowledged) and in their discretion upon any other matters as may
properly come before the meeting, including but not limited to, any proposal to
adjourn or postpone the meeting. Any appointment of proxy heretofore made by the
undersigned for such meeting is hereby revoked.
TANGER FACTORY OUTLET CENTERS, INC. RECOMMENDS A VOTE FOR ALL NOMINEES
LISTED IN PROPOSAL 1, FOR PROPOSAL 2 AND FOR PROPOSAL 3.
(SEE REVERSE CONTINUED AND TO BE SIGNED ON REVERSE SIDE (SEE REVERSE
SIDE) SIDE)
<PAGE>
[BACK SIDE OF CARD]
DETACH HERE
[X] Please mark votes as
in this example.
The shares represented hereby will be voted in accordance with the directions
given in this appointment of proxy. If not otherwise directed herein, shares
represented by this proxy will be voted FOR Proposal 1, FOR Proposal 2 and FOR
Proposal 3, provided however, shares held by a broker or nominee who has not
received specific voting instructions from the beneficial owner will not be
voted FOR or AGAINST the ratification of the amendments to the Option Plans.
1. To elect Directors to serve for the ensuing year.
Nominees: Stanley K. Tanger, Steven B. Tanger, Jack Africk,
William G. Benton and Thomas E. Robinson
FOR WITHHELD
[ ] [ ]
[ ]_________________________________________
For all nominees except as noted above
2. To ratify the amendment and restatement of the Share Option Plan and
the Unit Option Plan (the "Plans") in order to (i) reflect amendments
previously approved by shareholders, (ii) conform the Plans to changes
to Rule 16b-3 of the Exchange Act with respect to Options granted to
officers and directors of the Company, (iii) permit the grant of
Options intended to qualify as "performance-based compensation" under
Section 162(m) of the Code, (iv) permit discretionary Option grants to
Independent Directors and (v) amend the Plans in certain other
respects.
[ ]FOR [ ]AGAINST [ ]ABSTAIN
3. To ratify amendments to the Share Option Plan and the Unit Option Plan
to increase from 1,500,000 to 1,750,000 the aggregate number of Common
Shares and Units which may be issued under the Share Option Plan and
the Unit Option Plan.
[ ]FOR [ ]AGAINST [ ]ABSTAIN
MARK HERE FOR
ADDRESS CHANGE
AND NOTE BELOW
[ ]
PLEASE SIGN, DATE AND MAIL PROMPTLY IN THE POSTAGE-PAID ENVELOPE ENCLOSED.
Please sign exactly as name appears hereon. When
shares are held by joint tenants, both should
sign. When signing as an attorney, executor,
administrator, trustee or guardian, give full
tile as such. If a corporation, sign in full
corporate name by president or other authorized
officer. If a partnership, sign in partnership
name by authorized person.
<TABLE>
<S> <C>
Signature: _________________________ Date: ______ Signature: __________ Date: __________
</TABLE>
