EXHIBIT 10.2
Form of Tanger Management Agreement
SHOPPING CENTER
MANAGEMENT AGREEMENT
THIS SHOPPING CENTER MANAGEMENT AGREEMENT (the "Agreement") is entered
into and made effective as of __________________, 2003 (the "Effective Date")
between the entities set forth on Exhibit A (each an "Owner"; collectively
referred to herein as "Owners"), and TANGER PROPERTIES LIMITED PARTNERSHIP, a
North Carolina limited partnership ("Property Manager") having its principal
office in Greensboro, North Carolina (such office herein referred to sometimes
as the "Corporate Office"). Owners and Property Manager are sometimes referred
to in this Agreement collectively as the "Parties" and individually as a
"Party".
RECITALS
A. Owners are the owners or lessees of those certain retail outlet
shopping centers listed on Exhibit B attached hereto together with the building
and other improvements located thereon (each a "Center"'; collectively referred
to herein as the "Centers"). The allocated gross leaseable area for each Center
is set forth on Exhibit B, with an aggregate of 3,273,041 square feet of gross
leaseable area for all of the Centers ("GLA").
B. Owners and Property Manager wish to enter into this Agreement
pursuant to which Property Manager will manage the Centers upon the terms and
conditions set forth below.
NOW, THEREFORE, in consideration of the mutual agreements herein
contained, the parties hereto agree as follows:
1. APPOINTMENT AND TERM. Owners hereby grant to Property Manager, as an
independent contractor, and Property Manager accepts, the sole and
exclusive right to manage, operate and lease the Centers subject to the
terms and provisions of this Agreement.
1.1 Term. The term of this Agreement shall begin on ____________, 2003 (the
"Commencement Date") and shall continue in full force and effect until
December 31, 2009 (the "Primary Term") unless otherwise terminated as
provided herein. Unless either Party notifies the other Party in writing
that it does not wish to extend the term of this Agreement at least one
hundred twenty (120) days prior to the end of the then pending term, the
term of this Agreement shall be extended for successive one calendar year
terms (an "Extended Term") upon the same terms and conditions set forth
herein for the Primary Term including the payment of Compensation
calculated in the same manner as the Compensation for the Primary Term.
2. COMPENSATION
2.1 Management Leasing Fee. As compensation for services to be provided by
Property Manager pursuant to this Agreement ----------------------
("Compensation"), Owners shall pay Property Manager:
(a) Management and Leasing Fee. An annual "Management and Leasing Fee" in
an amount equal to the product of (x) One Dollar ($1.00) and (y) the
GLA, as the same may be reduced pursuant to the terms of this
Agreement; plus
(b) Incentive Fee.
(i) An annual management "Incentive Fee" in an amount equal to 33.33%
of the amount by which Net Operating Income (as defined herein)
for the Centers in any calendar year exceeds the Net Operating
Income for the twelve calendar months ending on July 31, 2003
(the "Base Period"); provided however, the Net Operating Income
for the Base Period shall be adjusted by
increasing or decreasing the management fee payable during the
Base Period to an amount equal to $1.00 per square foot of GLA);
and provided, further, the annual Incentive Fee shall in
no event exceed $800,000.00 (the "NOI Cap") or
such reduced amount in the event one or more Centers are not
subject to this Agreement as more particularly described in
Section 2.1(c). If the Commencement Date occurs on a date other
than January 1 or this Agreement terminates on a date other than
December 31, the Incentive Fee for either the first year or the
last year of this Agreement or both, to the extent applicable,
shall be prorated and equal to 33.33% of the amount by which Net
Operating Income for that portion of the calendar year exceeds
Net Operating Income for the same portion of the calendar year in
the Base Period but not to exceed a prorated portion of the NOI
Cap. A calculation of the Net Operating Income for the Base
Period, with the management fee adjustment described above is
attached hereto as Exhibit C. ---------
(ii) For purposes of this Agreement "Net Operating Income" shall mean
for any period, the Operating Revenues (as defined below) for
such period less Operating Expenses (as defined below) for such
period.
"Operating Revenues" shall mean all operating revenues of the
Centers calculated on the accrual basis in accordance with
generally accepted accounting principals ("GAAP") other than
straight lining of rents including, payments from a tenant for
the early termination of a tenant lease, business interruption
insurance proceeds, vending income but excluding (i)
extraordinary items of income as defined under GAAP applied on a
consistent basis, (ii) sales, excise or any similar taxes
collected, (iii) proceeds of sales involving dispositions of
capital assets, furniture and equipment or operating equipment,
(iv) proceeds from any financing, (v) any capital contributions
or loans made by Owner or the equityholders in Owner, (vi)
security deposits delivered by tenants (unless applied to rental
income upon termination of a lease), (vii) rents paid for more
than one month in advance, (viii) proceeds under that certain
Amended and Restated Private Redevelopment Contract Pursuant to
Tuscola, Illinois Redevelopment Project Area Tax Increment dated
November 22, 1999 (except, and to the same extent that, any
portion thereof was included in income for the Base Period) and
(ix) proceeds from condemnation or sale in lieu of or under
threat of condemnation, proceeds of insurance (other than
business interruption insurance proceeds).
"Operating Expenses" shall mean all costs and expenses of the
Centers calculated on an accrual basis in accordance with GAAP,
including, without limitation, the Management and Leasing Fee
payable hereunder, real estate taxes, insurance premiums and
employee costs but excluding (i) depreciation and amortization,
(ii) income taxes, (iii) interest expense and (iv) other items
which would be capitalized under GAAP, such as, tenant allowances
and property improvements.
(c) Reductions in Management and Leasing Fee and Incentive Fee. In
the event one or more Centers are no longer subject to this
Agreement,
(i) the NOI Cap shall be reduced by an amount equal to the
product of (x) the NOI Cap and (y) the percentage for such
Center as set forth in the column entitled "Base Year NOI
Percentage" on Exhibit B attached hereto;
(ii) the total GLA shall be reduced by an amount equal to the
allocated GLA for each Center no longer subject to this
Agreement as set forth on the column entitled "Allocated
GLA" on Exhibit B attached hereto; and
(iii)the Net Operating Income for any such Center shall be
excluded from the calculation of the Base Period Net
Operating Income and all subsequent years for purposes of
determining the Incentive Fee.
2.2 Payment of Fees.
(a) Management and Leasing Fee. The annual Management and Leasing Fee
payable to Property Manager pursuant to this Agreement shall be
paid by Owners to Property Manager in equal monthly installments
in advance on the first day of each calendar month; provided,
however, in the event the GLA is reduced pursuant to this
Agreement, the annual Management and Leasing Fee shall be
adjusted accordingly and subsequent monthly payments for that
current calendar year following such reduction shall equal the
product of (x) $1 and (y) the adjusted GLA divided by 12.
(b) Incentive Fee. The Incentive Fee shall be payable annually on or
before March 1 of each calendar year.
3. RESPONSIBILITIES OF PROPERTY MANAGER.
3.1 Management Standards. Subject to the availability of funds, Property
Manager will operate, manage and maintain the Centers in a manner
consistent with the current standards, practices, policies, and
procedures now in effect and which have historically been in effect
and used in the management and operation of Tanger Factory Outlet
Shopping Centers (the "Management Standard"). Property Manager shall
(i) act with due care in Property Manager's management of Owners'
funds and property and (ii) avoid conflicts of interest or
self-dealing; provided, Owners acknowledge that Property Manager owns
and manages other retail shopping centers and nothing herein will
affect, limit or restrict its continued ownership and management of
those and additional Centers except as expressly provided in Section
7.8 hereof. In carrying out its responsibilities under the Management
Standard, Property Manager shall act in a (i) fiduciary capacity with
respect to funds of Owners in its possession and (ii) commercially
reasonable manner to do the following on behalf of Owners:
(a) Operations. Enter into contracts with and supervise persons or
firms providing maintenance, repair, custodial and trash removal
services for common areas of the Center including the sidewalks,
parking lots, landscaped areas and public bathrooms; provided,
however, Property Manager shall not enter into any such contracts
not cancellable on 30 days' notice without Owners prior written
consent. All expenditures under such contracts shall be
consistent with the approved Operating Budget. All contracts
shall be assignable to Owners' nominee and, if this Agreement is
terminated pursuant to Section 6, Property Manager shall, at
Owners' discretion, assign to the applicable Owner or Owner's
nominee all service and other contracts pertaining to the
relevant Centers. Owners, at their cost and expense, shall
acquire and maintain for the benefit of Owners (and Property
Manager as an additional named insured) public liability
insurance and fire and extended coverage insurance on the
improvements which are part of the Centers in amounts to be
determined by Owners. At any Owner's request, Property Manager
shall remit premiums for such insurance coverage as part of the
services provided by Property Manager.
(b) Marketing. Enter into contracts with and assist and
supervise persons and firms providing advertising services
for the Centers through newspapers, brochures, radio,
television, billboards and other promotional avenues.
Property Manager provides services customarily provided by
outside advertising agencies and shall be paid compensation
therefor on a monthly basis a marketing fee in an amount
equal to fifteen percent (15%) of all of the expenditures
incurred for the marketing, advertising and promotion of the
Centers, but only to the extent paid from a marketing fund
consisting of funds collected from tenants or contributed by
Owner, at its election, pursuant to an approved Operating
Budget. No fee shall be otherwise payable by Owners to
Property Manager in connection with the performance of such
marketing activities.
(c) Leasing.
(i) Solicit replacement tenants for vacant retail space in
the Centers, solicit extensions of leases by existing
tenants by renewal leases or modifications of leases,
negotiate replacement or renewal leases, supervise the
preparation and execution of a standard form of lease
approved by Owners (including any modifications thereof
approved by Owners) and coordinate any legal services
required in connection with the negotiation and
execution of leases on the standard form lease.
Property Manager will submit the economic terms of each
proposed lease to Owner for approval (an "Economic
Approval Request"), which approval may be given or
withheld in Owner's sole discretion. A lease
substantially in the form of the lease approved by
Owners for the Centers which contains (x) economic
terms consistent with the economic terms described in
the Economic Approval Request and (y) does not impose
any other material obligations on the relevant Owner,
shall be deemed approved by such Owner. Owners will use
diligent effort to execute and return such lease
executed by the prospective tenant to Property Manager
within seven business days. Property Manager shall use
diligent efforts to collect (but makes no guarantee
with respect to such collection) all rents (including
percentage rentals and escalation billings resulting
from tenant participation in increases in expenses,
taxes and common area maintenance charges) and other
charges which may become due at any time from any
tenant or from others for services provided in
connection with or for the use of any Center or any
portion thereof. Property Manager may not terminate any
lease, lock out a tenant, institute suit for rent or
for the possession of the premises without prior
written approval of the Owners.
(ii) Owners will approve a standard form of lease for use in
leasing retail space within the Centers and any
modifications thereto with respect to a particular
location within a Center. All leases must be signed, or
approved in writing, by the applicable Owner. Property
Manager shall not be responsible for and Owners shall
pay the charges of all persons and firms contracted
with and/or retained by Property Manager to provide
services in the operation of the Centers other than
Property Manager's customary employees who are not
located at the Centers so long as such charges are
reflected on the Operating Budget. With the approval of
Owners, Property Manager may engage the services of
attorneys selected by Property Manager to represent
Owners in connection with the Property Manager's
leasing and collection activities for the Centers.
Owners shall be responsible for and shall promptly pay
the fees charged and costs advanced by such legal
counsel.
(d) Repairs. Subject to the annual Operating Budget, Property
Manager shall supervise, coordinate and administer the
making and supervision of all ordinary and extraordinary
repairs, alterations and decorations of the Centers.
(e) Accounting; Financial. Property Manager shall pay bills and
generate statements/reports as follows (or reports generated
by Property Manager's property management system from time
to time and which contain substantially similar
information):
Statement/Report Delivery Schedule
- ----------------------------------------- -------------------------- ----------
Rent Roll consisting of Monthly Tenant Monthly - 10th business day following
Charges end of calendar month
- ----------------------------------------- -------------------------------------
Tenant Aged Delinquency Report Monthly - 10th business day following
end of calendar month
- ----------------------------------------- -------------------------------------
Monthly and Quarterly Balance Sheet Monthly - 10th business day following
end of calendar month
Quarterly - 10th business day
following end of each fiscal quarter
- ----------------------------------------- -------------------------------------
Monthly and Year-to-Date Actual vs Budget Monthly - 10th business day
Income Statement - Summary following end of calendar month
- ----------------------------------------- -------------------------------------
Monthly and Year-to-Date Actual vs Budget Monthly - 10th business day
Income Statement - Detailed month following end of calendar
- ----------------------------------------- -------------------------------------
Monthly and Year-to-Date Comparative Monthly - 10th business day following
Sales Report end of calendar month
- ----------------------------------------- -------------------------------------
Monthly Expense Distribution Report Monthly - 10th business day following
(Check Register) end of calendar month
- ----------------------------------------- -------------------------------------
Proposed Business Plan for Next No later than November 1 for the
calendar Year following year commencing with
January 1
- ----------------------------------------- --------------------------------------
Quarterly Operating Statements (showing Within 45 days following the end
quarterly activity, year-to-date activity each calendar quarter
and stating operating revenues, operating
expenses, capital expenditures, net
operating income and net cash flow for
the Centers for the calendar quarter
just ended
- ----------------------------------------- --------------------------------------
Annual Reporting - Current balance sheet, Within 60 days following the end of
a detailed operating statement stating each fiscal year
operating revenues, operating expenses,
capital expenditures, net operating
income and net cash flow for the Centers
- ----------------------------------------- --------------------------------------
Such additional information regarding Within 30 days after Owners'request
the Centers that Owners may reasonably
request and Property Manager can
reasonably obtain
- ----------------------------------------- --------------------------------------
(f) Compliance With Laws. To the extent it receives notice thereof or
has knowledge thereof, Property Manager shall be responsible for
alerting Owner as to any violation of federal, state and
municipal laws, ordinances, regulations and orders relative to
the renting, use, operation, repair and maintenance of the
Centers and with the rules, regulations or orders of the local
Board of Fire Underwriters or other similar body (collectively,
"Applicable Laws"). Property Manager will use all commercially
reasonable efforts to ensure that the Centers comply with
Applicable Laws. Property Manager shall not in the performance of
its services hereunder violate the terms of any mortgage, deed of
trust or other security instrument binding on or affecting the
Centers, but Property Manager shall not be required to make any
payment or incur any liability in order to comply with the terms
or conditions of any such mortgage, deed of trust or other
security instrument and Property Manager shall in no event be
liable in any respect to Owner's lender(s) and shall have no
liability to any party in respect to any amounts owed by Owner to
its lender(s), except in connection with those loan documents to
which Property Manager is a direct party.
(g) Insurance. Property Manager shall secure and maintain, at its
sole cost and expense, with one or more insurance companies,
satisfactory to Owners workers' compensation and employer's
liability insurance covering all employees of Property Manager in
accordance with the laws of the state in which the Centers are
located and Property Manager shall furnish satisfactory evidence
of the foregoing insurance to Owners.
4. PROPERTY PERSONNEL.
4.1 Property Personnel. Property Manager shall hire, employ, compensate,
supervise and discharge all employees required in connection with the
operation and management of the Center. All such personnel shall, in every
instance, be employees of Property Manager or a subsidiary or affiliate of
Property Manager. Property Manager shall be solely responsible for the
recruiting, hiring, training and supervising of all Center staff. Property
Manager shall take such actions as may be necessary to comply with the
provisions of wage, hour, safety, health, income tax, social security,
unemployment compensation, workman's compensation and similar laws,
regulations and requirements relating to the Center staff. The "Operating
Budget" (as defined below) shall include as a line item the salary and
benefits of such employees which are to be paid or reimbursed to Property
Manager and the payment of such salaries and benefits shall be at Owners'
expense. Employees of the Centers may include the following:
(a) Center Manager. To increase sales and traffic at the Centers through:
management of the physical facility; implementation of the marketing
plan; providing the shopper a pleasant shopping environment; and
development of positive and productive relationships with vendors,
tenants, shoppers and the local community.
(b) Operations/Assistant Manager. To manage the operation of the physical
facility and ensure customers are provided with customer service under
the direction of the Center Manager. The Assistant Manager will assist
Center Manager in managing the center and share the responsibility for
operations and marketing. The Assistant Manager supports the
activities by assisting with supervising maintenance, office support,
customer service and implementing marketing efforts.
(c) Administrative Assistant. Provide administrative support to the Center
Manager by assisting with the implementation of operations efforts and
marketing activities.
(d) Customer Service Representative. To assist customers with questions or
problems to ensure a pleasant shopping experience and perform general
office duties.
(e) Maintenance Staff. To maintain the cleanliness and good operating
order of the Center. This involves basic janitorial duties, repairs,
preventative maintenance and support for promotional programs.
(f) Trolley Driver. To provide customers with transportation between
stores and answer questions thereby ensuring a pleasant shopping
experience.
4.2 Off-site Personnel. Owners shall not be responsible for the payment of
any salaries or benefits in connection with off-site personnel of Property
Manager, including without limitation, general management personnel,
accountants (except if there is no on-site accountant) and auditors (except
for third party auditors hired to prepare statements for the Centers).
5. OPERATING BUDGETS; BUSINESS PLANS AND OPERATING ACCOUNTS
5.1 Operating Budgets and Business Plan.
(a) Property Manager shall on or before November 1st of each calendar
year, prepare and submit to Owners for approval a proposed
Business Plan for the ensuing calendar year. The Business Plan
shall include, without limitation, each of the following items
containing the most current information with regard thereto then
available: (i) a comprehensive survey of the market in which each
Center is competing, (ii) a detailed description of the
renovation, refurbishment, maintenance, repair and management of
the Centers, including, without limitation, any planned or
required improvements to the Centers, (iii) a forecast of the
capital spending requirements of each Owner for the succeeding
three year period, (iv) a detailed Operating Budget, (v) a
detailed marketing report, and (vi) a detailed Income Projection.
(b) Following receipt of the proposed Business Plan, Owners shall
deliver a notice to Property Manager either approving such
Business Plan or stating any objections to any information
contained in or omitted from such Business Plan and setting forth
the nature of such objection. Upon receipt of such notice, Owners
and Property Manager shall in good faith attempt to resolve any
differences with respect to the proposed Business Plan.
(c) If a Business Plan for any calendar year has not been approved by
January 1st of that year, Property Manager shall continue to
operate the Centers under the Business Plan for the previous year
until a new Business Plan is approved by Owners, with such
adjustments to the Operating Budget contained therein as may be
necessary to reflect approved contracts or leases, deletion of
non-recurring expense items set forth on the previous Operating
Budget and increased insurance costs, taxes, utility costs and
debt service payments.
(d) Property Manager shall operate the Centers under annual Operating
Budgets which shall be prepared and submitted by Property Manager
to Owners for approval.
(e) For purposes of this Agreement:
(i) "Business Plan" means the annual plan to be adopted by
Owners for the renovation, refurbishment, operating,
marketing, leasing, refinancing and/or disposition of the
Centers, which shall include and incorporate the Operating
Budget and Income Projection prepared in form and manner
consistent with Property Manager's then current standards,
practices, policies and procedures.
(ii) "Operating Budget" means the annual budget, prepared by the
Property Manager, and approved in writing by Owners, and
setting forth the estimated capital and operating expenses
of Owners for the then-current or immediately succeeding
fiscal year and for each month and each quarter of each such
fiscal year, in such detail as Owners shall require.
(iii) "Income Projection" means the projected income on a monthly
and quarterly basis from all sources in connection with the
use and operation of the Centers, including, but not limited
to, income from rent, percentage rent, additional rent,
common area maintenance reimbursement, promotion
reimbursement, and other income.
5.2 Payment of Expenses. Expenses for the Center which do not exceed the
projected expenses in the approved Operating Budget may be paid by Property
Manager from the Operating Account for the Centers subject to the following
limitations and conditions:
(a) Major Expenditures. Expenditures in excess of $10,000 (other
than mortgage payments, payment for real estate taxes,
utilities and insurance and payments required to be made to
tenants as part of Owner's obligations under a lease or
license agreement and payments of the compensation payable
to Property Manager under this Agreement) shall be paid only
with the prior written approval of Owner.
(b) Emergency Expenditures. Property Manager may pay an expense
of up to $25,000 which is required by reason of an emergency
although the expense is not included within the approved
Operating Budget provided Property Manager has been unable
to contact Owner after reasonable efforts and provided that
Property Manager continuously endeavors by reasonable
efforts to keep Owner informed of the nature of the
emergency and the necessity of each such expenditure. All
costs of ownership and operation of the Centers shall be
borne by Owners. In performing its duties hereunder,
Property Manager shall not be obligated to expend or advance
any of its own funds and shall be excused from such duties
which involve (i) an expenditure that is not in the approved
Operating Budget or otherwise approved by Owners or (ii) any
expenditure if there are not sufficient funds in the
Operating Accounts to pay it.
5.3 Operating Account; Security Deposit Account.
(a) Property Manager shall maintain an operating account (the
"Operating Account") in a bank having an office in Greensboro,
North Carolina selected by Owners (the "Bank"). The Operating
Account shall be in the name of, and the property of, Owners and
shall be solely for the deposit of monies belonging to Owners and
not for deposit for monies of Property Manager or others. The
signature of an officer (two officers for withdrawals of over
$5,000.00) or the authorized signature(s) of a manager or agent
of Owners shall be required for withdrawal of monies from the
Operating Account. The names of such officers of Property Manager
shall be promptly furnished to Owners. Property Manager is
authorized to maintain one or more lockboxes for receipt of
income from the Centers.
(b) On or before the tenth (10th) day of each calendar month,
Property Manager shall remit to Owners (or otherwise pursuant to
written instructions from Owners) all funds on hand in the
Operating Account as of the last day of the immediately preceding
month less the Reserve (as defined below) and any other funds
designated by Owner to be retained in the Operating Account.
Unless otherwise agreed by Owners and Property Manager, the
Property Manager shall retain an amount (the "Reserve") in the
Operating Account equal to at least $50,000.00 per Center plus
(i) expected expenditures within the next 30 days for approved
capital projects (including tenant improvement allowance),
insurance premiums and real estate taxes, (ii) tenant security
deposits, and (iii) mortgage payment if Property Manager is
responsible for making such payment. Without the prior written
approval of Owners, Property Manager shall retain no funds in the
Operating Account other than the Reserve and any other funds
designated by Owners to be retained in the Operating Account and
those collected subsequent to the last day of the immediately
preceding month.
(c) Notwithstanding the foregoing, (i) Property Manager agrees to
abide by the terms of any loan in connection with the Centers and
deposit all funds received by Property Manager in connection with
the operation of the Centers to the extent required by the terms
of the underlying loan agreement and (ii) Property Manager shall
prepare all financial and property related reports for delivery
to any lender as required pursuant to the terms of any loan
affecting the Centers.
6. TERMINATION
6.1 Owner's Rights of Termination. Notwithstanding anything to the
contrary contained in this Agreement, Owners may terminate this
Agreement immediately upon written notice to Property Manager upon the
occurrence of any of the following events which shall be referred to
as a "Property Manager Event of Default":
(a) Property Manager's failure to observe or perform any or all of
the material covenants and provisions of this Agreement which
involves the misapplication of funds, willful misconduct, fraud
or a breach of a fiduciary duty;
(b) the occurrence of a "Minimum Return Failure Event" (as defined in
the Limited Liability Company Agreement of COROC Holdings L.L.C.
dated as of October 3, 2003) has occurred;
(c) filing of a petition for bankruptcy by or against Property
Manager, or in the event that Property Manager shall make an
assignment for the benefit of creditors or take advantage of any
insolvency act;
(d) violation by Property Manager or any affiliate of the radius
restrictions more particularly described in Section 7.8; and
(e) failure by Property Manager to observe or perform any or all of
monetary covenants and provisions of this Agreement upon ten (10)
days' written notice delivered to Property Manger or failure to
observe or perform any other material covenant and provision of
this Agreement if Property Manager has not cured such default
within 30 days of written notice from Owner or such default has
not been waived by Owner within such 30 day period.
6.2 Property Manager's Right of Termination. Notwithstanding anything to
the contrary contained in this Agreement, Property Manager may
terminate this Agreement upon the occurrence of any of the following
events which events are herein referred to as "Owner Event of
Default":
(a) failure by any Owner to observe or perform any or all of the
non-monetary covenants and provisions of this Agreement within
thirty (30) days after written notice of such default, if such
Owner has not cured such default within 30 days of written notice
from Property Manager or such default has not been waived by
Property Manager within such 30 day period;
(b) failure by any Owner to observe or perform any or all of the
monetary covenants and provisions of this Agreement upon ten (10)
days' written notice delivered to such Owner, including but not
limited to failure to pay expenditures which are in the Operating
Budget or which have otherwise been approved by Owners (this
grace period is not in addition to but is co-existent with any
other applicable grace period provided in this Agreement); and
(c) filing of a petition for bankruptcy by or against any Owner, or
in the event that any Owner shall make an assignment for the
benefit of creditors or take advantage of any insolvency act.
6.3 Mutual Termination Rights.
(a) Either party may terminate this Agreement upon written notice to the
other (i) upon a sale or other disposition of all of the Centers, (ii)
if COROC Holding, L.L.C., directly or indirectly, ceases to own at
least 50% of the outstanding membership interest of Owner whether
through a sale or otherwise, or (iii) otherwise as set forth in this
Agreement.
(b) Either party may terminate this Agreement upon written notice to the
other as it relates to one or more Centers upon a sale or other
disposition of any such Center. In the event this Agreement is
terminated as it relates to one or more Center, such Center shall be
deemed deleted from this Agreement for all purposes and except for
such modification, this Agreement shall remain in full force and
effect.
6.4 Final Accounting. Upon termination of this Agreement for any reason,
Property Manager shall deliver to Owners within 60 days of termination
the following documentation with respect to the Centers:
(a) A final accounting, reflecting the balance of income and expenses
of the Property as of the date of termination or withdrawal;
(b) Any balance of monies of Owners or tenant security deposits, or
both, held by Property Manager with respect to the Centers; and
(c) All records, contracts, leases, receipts for deposits, unpaid
bills or other papers or documents which pertain to the Centers.
7. MISCELLANEOUS PROVISIONS
7.1 Notices. All notices, requests, demands, claims, and other
communications hereunder will be in writing. Any notice, request,
demand, claim, or other communication hereunder shall be deemed duly
given if (and then two business days after) it is sent by registered
or certified mail, return receipt requested, postage prepaid, and
addressed to the intended recipient as set forth below:
If to Property Manager, to:
Tanger Properties Limited Partnership
3200 Northline Avenue, Suite 360
P.O. Box 10889 Greensboro, North Carolina 27408
Attention: Mr. Steven B. Tanger
If to Owners, to:
---------
c/o Blackstone Real Estate Acquisitions
345 Park Avenue, 32nd Floor
New York, New York 10154
Attention: Mr. Gary M. Sumers
Any Party may send any notice, request, demand, claim, or other communication
hereunder to the intended recipient at the address set forth above (using any
other means, including personal delivery, expedited courier, messenger service,
telecopy, telex, ordinary mail, or electronic mail), but no such notice,
request, demand, claim, or other communication shall be deemed to have been duly
given unless and until it actually is received by the intended recipient. Any
Party may change the address to which notices, requests, demands, claims, and
other communications hereunder are to be delivered by giving the other Party
notice in the manner herein set forth.
7.2 Relationship. Notwithstanding anything to the contrary contained
herein, Property Manager shall be an independent contractor performing
management functions for Owners but shall, at all times, be subject to
the provisions of this Agreement with respect to managerial decisions.
Nothing herein shall create an agency coupled with an interest.
7.3 Insufficient Income. If at any time the cash in the Operating Account
for the Centers shall not be sufficient to pay the bills and charges
incurred in connection with the operation of the Centers, Property
Manager shall notify Owners immediately of such condition or the
potential of such condition. Property Manager shall also provide to
Owners a sources and uses statement to document such cash shortages
and Owners shall provide sufficient monies to eliminate such cash
shortage.
7.4 Limited Liability. This Agreement and all documents, agreements,
understandings and arrangements relating to this transaction have been
negotiated, executed and delivered on behalf of Tanger Properties
Limited Partnership by its authorized agent or by Tanger GP Trust, its
sole general partner or officers thereof in their representative
capacity and not individually, and bind only Tanger Properties Limited
Partnership. No employee, agent, officer, partner or shareholder of
Tanger Properties Limited Partnership, Tanger GP Trust or Tanger
Factory Outlet Centers, Inc. shall be bound or held to any personal
liability in connection with the obligations of Tanger Properties
Limited Partnership hereunder, and any person or entity dealing with
Tanger Properties Limited Partnership in connection therewith shall
look solely to Tanger Properties Limited Partnership for the payment
of any claim or for the performance of any obligation hereunder. The
foregoing shall also apply to any future documents, agreements,
understandings, and arrangements which may relate to this transaction.
7.5 State Law. This Agreement shall be construed, interpreted and applied
in accordance with, and shall be governed by, the laws of the State of
Delaware, except with respect to local law applicable to Property
Manager's authority to conduct business or business practices in
connection with the management of the Centers.
7.6 Assignment.
(a) Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of Property Manager and Owners and their
respective successors and permitted assigns.
(b) Assignment by Owner. Owners may assign its rights and obligations
under this Agreement to any successor person or entity to the
entity currently constituting Owner, any person who shall acquire
all or substantially all of Owners' assets and any purchaser of
all of the Centers. If any such successor entity assumes all
obligations of the Owners hereunder, Owners shall be thereafter
fully relieved and fully discharged from any liability or
responsibility in connection with the matters set forth in this
Agreement arising on and after the later of (i) the date of such
assignment and assumption, or (ii) the date Property Manager is
notified in writing of such assignment and assumption.
(c) Assignment by Property Manager. Property Manager may not assign
this Agreement without the prior written consent of Owners,
provided that so long as Property Manager remains primarily
responsible, Property Manager may without Owners' prior written
consent, subcontract, at no additional cost to Owners, with any
affiliate of Property Manager for the performance of any of the
services to be performed by Property Manager hereunder. The
transfer of a majority in interest of the voting stock or general
partnership interests in Property Manager or any material change
in the individuals having operating responsibility for Property
Manager shall not be deemed an assignment of this Agreement.
7.7 Approval. When agreement, approval or consent of Owners is required
under the terms of this Agreement, such agreement, approval or consent
shall not be unreasonably withheld, conditioned or delayed. Any
request for agreement, approval or consent of Owner shall be directed
by Property Manager to an officer of Owners. The Owners may designate
one of its officers as a representative of Owners with respect to this
Agreement. Property Manager shall be entitled to rely upon
communications to and from that designated officer until Property
Manager receives written notice from Owners of the election or
appointment of another or a successor officer as the representative of
Owners with respect to this Agreement.
7.8 Non-Competition. Property Manager hereby agrees that neither Property
Manager nor any Affiliate of Property Manager shall, directly or
indirectly, develop, finance, operate, manage or acquire any direct or
indirect interest in any retail outlet shopping center (other than the
existing center located in Myrtle Beach, South Carolina) located
within a 15 mile radius of the Center (a "Competing Center") without
the prior written consent of the Owner.
7.9 Subsidiaries and Affiliates. Property Manager shall not engage or pay
any compensation to any affiliate or subsidiary of Property Manager
for the provision of goods or services in connection with this
Agreement unless (a) such party is fully qualified and experienced to
provide the required goods or services, (b) both the scope of services
and the compensation payable to such affiliate or subsidiary for the
goods or services are consistent with then current market standards
for arm's length transactions, (c) Property Manager discloses such
engagement to Owners as a transaction with an affiliate or subsidiary
of Property Manager, and (d) Owners, in its sole and absolute
discretion approves such engagement in writing.
7.10 Amendments. This Agreement may not be changed, modified or amended,
except by a written instrument executed by Property Manager and
Owners.
7.11 Representation. Property Manager represents and warrants that it is
fully qualified and licensed, to the extent required by local law, to
manage real estate and perform all of its duties and obligations
hereunder.
7.12 Enforceability. If any provision of this Agreement or the application
of any provision to any person or circumstances is held invalid or
unenforceable, the remainder, and the application of that provision to
other persons or circumstances, shall remain valid and enforceable, to
the extent permitted.
7.13.Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
7.14 Subordination. To the extent required by any lender loaning money to
the Centers, Owners and Property Manager agree that any rights with
respect to the real property on and in which the Centers are operated
arising by reason of this Agreement shall in all respects be and is
hereby expressly made subordinate and inferior to the liens and/or
security interests of any mortgage or deed of trust hereafter, from
time to time, encumbering all or any portion of the Centers, together
with all other instruments securing payment of the indebtedness
secured by such mortgage or deed of trust and all amendments,
modifications, supplements, extensions and revisions of such mortgage,
deed of trust and such other instruments (collectively, "Mortgage").
Property Manager shall execute any and all subordination agreements,
estoppel certificates and other documents required by the lender under
any such indebtedness secured by the Centers to further evidence the
subordination of Property Manager's rights with respect to the real
property to any such Mortgage. Compensation paid and payable to
Property Manager under this Agreement in the ordinary course of
business shall not be subordinate in any manner to the payment of the
indebtedness evidenced by such Mortgage. Failure to pay such
compensation to Property Manager shall constitute an Owner Event of
Default even if resulting from action or failure to act by the holder
of any such Mortgage and Property Manger shall be entitled to exercise
any rights and remedies available hereunder upon such Owner Event of
Default.
7.15 Third Party Beneficiaries. This Agreement is solely for the benefit of
the parties hereto, and no provision of this Agreement shall be deemed
to confer upon other third parties any remedy, claim, reimbursement,
cause of action or other right.
7.16 No Recording. Neither this Agreement nor any memorandum or notice of
this Agreement may be recorded by Property Manager without the prior
written consent of Owners.
7.17 No Interest in Real Estate. Notwithstanding anything to the contrary
contained herein, Property Manager acknowledges and agrees that
nothing stated in this Agreement shall vest Property Manager with an
interest in real property, including a leasehold estate therein, and
all rights to the use or possession of any Center and the real estate
shall automatically terminate upon the termination of this Agreement.
7.18 ERISA Matters. The parties acknowledge that Owners are indirect
subsidiaries of an entity (the "Parent") that is intended to qualify
as a "real estate operating company" (a "REOC") within the meaning of
the U.S. Department of Labor plan asset regulation (Section
2510.3-101, Part 2510 of Chapter XXV, Title 29 of the Code of Federal
Regulations) and that it is intended that Owners will have the right,
pursuant to this Agreement, to substantially participate directly in
the management and development of the Centers. Without limiting the
generality of the foregoing, notwithstanding any other provision of
this Agreement, and without prejudice to the other rights provided to
Owners under this Agreement, Property Manager agrees (i) to permit
Owners to visit and inspect the Centers and inspect and copy the books
and records of the Centers, at such times as Owners shall reasonably
request; (ii) to periodically (at least quarterly) provide Owners with
information and reports regarding Property Manager's operation and
management of the Centers and the performance of its duties under this
Agreement; (iii) to periodically (at least quarterly) consult with
Owners with respect to the operation and management of the Centers and
the performance of Property Manager's duties under this Agreement and
(iv) to provide Owners with such other rights of participation in the
management or development of the Centers as may reasonably be
determined by Owners to be necessary to enable the Parent to qualify
as a REOC, provided such additional rights do not materially adversely
affect Property Manager's ability to perform its duties under this
Agreement or the economic benefits enjoyed by Property Manager under
this Agreement. Property Manager agrees to consider, in good faith,
the recommendations of Owners in connection with the matters on which
it is consulted as described above.
[Execution on subsequent pages]
IN WITNESS HEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized officers.
PROPERTY MANAGER
TANGER PROPERTIES LIMITED PARTNERSHIP
a North Carolina limited partnership
By: Tanger GP Trust, its sole general partner
By: ______________________
Name:
Title:
OWNERS