EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT is entered into and made effective as of
January 1, 2004 between TANGER PROPERTIES LIMITED PARTNERSHIP, a North Carolina
Limited Partnership, (the "Company") and FRANK C. MARCHISELLO, Jr, a resident of
North Carolina, ("Marchisello").
RECITALS
A. Company and Marchisello entered into an employment agreement dated as of July
1, 2003 (the "Existing Employment Contract"). The term of the Existing
Employment Contract has been extended by its terms to end on December 31, 2006.
B. The Company and Marchisello wish to modify and amend the Existing Employment
Contract and to extend its term as provided herein.
NOW THEREFORE, in consideration of the promises contained herein and
other valuable consideration, the parties agree as follows:
1. Certain Definitions.
(a) "Annual Base Salary" is defined in Section 5(a).
(b) "Annual Bonus" is defined in Section 5(b).
(c) "Benefits" is defined in Section 5(b)(iv).
(d) "Cause": For purposes of this Agreement, the Company shall have "Cause"
to terminate Marchisello's employment hereunder upon (i) Marchisello causing
material harm to the Company through a material act of dishonesty in the
performance of his duties hereunder, (ii) his conviction of a felony involving
moral turpitude, fraud or embezzlement, or (iii) his willful failure to perform
his material duties under this Agreement (other than a failure due to
disability) after written notice specifying the failure and a reasonable
opportunity to cure (it being understood that if his failure to perform is not
of a type requiring a single action to cure fully, that he may commence the cure
promptly after such written notice and thereafter diligently prosecute such cure
to completion).
(e) "Change of Control" shall mean (A) the sale, lease, exchange or other
transfer (other than pursuant to internal reorganization) by the Company or
Tanger Factory Outlet Centers, Inc. (the "TFOC") of more than 50% of its assets
to a single purchaser or to a group of associated purchasers; (B) a merger,
consolidation or similar transaction in which TFOC or the Company does not
survive as an independent, publicly owned corporation or TFOC or an entity
wholly owned by TFOC ceases to be the sole general partner of the Company; or
(C) the acquisition of securities of TFOC or the Company in one or a related
series of transactions (other than pursuant to an internal reorganization) by a
single purchaser or a group of associated purchasers (other than Marchisello or
any of his lineal descendants, lineal ancestors or siblings) which results in
their ownership of twenty-five (25%) percent or more of the number of Common
Shares of TFOC (treating any Partnership Units or Preferred Shares acquired by
such purchaser or purchasers as if they had been converted to Common Shares)
that would be outstanding if all of the Partnership Units and Preferred Shares
were converted into Common Shares; (D) a merger involving TFOC if, immediately
following the merger, the holders of TFOC's shares immediately prior to the
merger own less than fifty (50%) of the surviving company's outstanding shares
having unlimited voting rights or less than fifty percent (50%) of the value of
all of the surviving company's outstanding shares; or (E) a majority of the
members of the Company's Board of Directors are replaced during any twelve month
period by directors whose appointment or election is not endorsed by a majority
of the members of the Board prior to the date of the appointment or election.
(f) "Disability" shall mean the absence of Marchisello from Marchisello's
duties to the Company and/or TFOC on a full-time basis for a total of 16
consecutive weeks during any 12 month period as a result of incapacity due to
mental or physical illness which is determined to be total and permanent by a
physician selected by the Company and acceptable to Marchisello or Marchisello's
legal representative (such agreement as to acceptability not to be withheld
unreasonably).
(g) A "Contract Year" shall be a calendar year.
(h) "Good Reason": Marchisello shall have Good Reason to terminate his
employment upon the occurrence of any of the following events:
(1) any material adverse change in his job titles, duties,
responsibilities, perquisites granted hereunder, or authority
without his consent;
(2) if, after a Change of Control, either the principal duties of
Marchisello are required to be performed at a location other than
the Greensboro, North Carolina metropolitan area without his
consent;
(3) a material breach of this Employment Agreement by the Company,
including without limitation, the failure to pay compensation or
benefits when due hereunder if such failure is not cured within
30 days after delivery to the Company of Marchisello's written
demand for payment thereof; or
(4) if Marchisello elects to terminate his employment by written
notice to the Company within the 180 day period following a
Change of Control.
(i) "Contract Term " is defined in Section 2(b).
2. EMPLOYMENT.
(a) Marchisello's employment by the Company is continued under this
Agreement, which supercedes and replaces the Existing Employment Contract,
during the Contract Term (as defined below) upon the terms and conditions herein
provided, unless Marchisello's employment is terminated earlier as provided in
Section 6 hereof.
(b) The initial Contract Term of this Employment Agreement shall begin as
of January 1, 2004 (the "Commencement Date") and shall end on December 31, 2006
(the "Initial Contract Term"). On January 1, 2005 and on the first day of
January of each calendar year thereafter (an "Extension Date"), the Contract
Term shall be automatically extended by one year unless (i) Marchisello's
employment has been earlier terminated as provided in Section 6 or (ii) the
Company gives written notice to Marchisello one hundred eighty (180) days prior
to the Extension Date that the Contract Term shall not be automatically
extended. For purposes of illustration, if Marchisello's employment has not been
terminated as provided in Section 6 and if the Company has not given written
notice to Marchisello at least 180 days prior to January 1, 2005 that the
Contract Term will not be extended, on January 1, 2005, the Contract Term will
be extended to and including December 31, 2007.
If the Contract Term is extended as provided herein, Marchisello's
employment may be terminated (other than upon expiration) only as provided in
Section 6. References herein to the "Contract Term" shall refer to the Initial
Contract Term as extended pursuant to this Section 2.
3. Position and Duties. Marchisello shall serve in the following manner:
(a) During Marchisello's employment hereunder, he shall serve as:
(1) an executive employee of the Company and shall report to a
designated senior executive officer of the Company, and
(2) the Executive Vice President and Chief Financial Officer of
TFOC and shall have such duties, functions, responsibilities
and authority as are consistent with those positions.
4. Competition.
(a) Marchisello shall be prohibited from engaging in Competition (as
defined in subsection 4(b) below) with the Company or TFOC during the following
described periods: (i) during the period beginning on the date hereof and
extending through the date on which Marchisello's employment hereunder is
terminated; (ii) if Marchisello's employment is terminated by the Company for
Cause or by Marchisello without Good Reason, from the date of such termination
through the date of the first anniversary of such termination date and (iii) if
Marchisello receives the Severance Payment described in Section 7(a) because of
a termination of his employment by the Company without Cause or by Marchisello
for Good Reason, from the date of such termination through the date of the third
anniversary of such termination date.
(b) During the period prior to the termination of Marchisello's employment
hereunder, the term "Competition" for purposes of this Agreement shall mean
Marchisello's management, development or construction of any factory outlet
centers or competing retail commercial property outside the Company and TFOC or
any other active or passive investment in property connected with a factory
outlet center or a competing retail commercial property outside the Company and
TFOC, with the exception of
(1) the ownership of up to 1% of any class of securities of any
publicly traded company, and
(2) service on the board of directors of any publicly traded company,
whether or not such company engages in Competition as defined in
this subsection 4(b).
Provided however, for any period following the termination of Marchisello's
employment, Marchisello shall be considered as engaging in "Competition"
prohibited by this Section only if Marchisello engages in the prohibited
activities with respect to a property that is within a fifty (50) mile radius of
the site of any commercial property owned, leased or operated by TFOC and/or the
Company on the date Marchisello's employment terminated or with respect to a
property that is within a fifty (50) mile radius of any commercial property
which TFOC and/or Company actively negotiated to acquire, lease or operate
within the six (6) month period ending on the date of the termination of
Marchisello's employment.
(c) Marchisello covenants that a breach of subsection 4(a) above would
immediately and irreparably harm the Company and TFOC and that a remedy at law
would be inadequate to compensate the Company and TFOC for their losses by
reason of such breach and therefore that the Company and/or TFOC shall, in
addition to any other rights and remedies available under this Agreement, at law
or otherwise, be entitled to an injunction to be issued by any court of
competent jurisdiction enjoining and restraining Marchisello from committing any
violation of subsection 4(a) above, and Marchisello hereby consents to the
issuance of such injunction.
5. Compensation and Related Matters. During Marchisello's employment hereunder,
Marchisello shall be paid the compensation and shall be provided with the
benefits described below:
(a) Annual Base Salary. Marchisello's annual base compensation ("Annual
Base Salary") payable with respect to the Contract Year ending December 31, 2004
shall be $275,000.00. The amount of Annual Base Salary payable to Marchisello
with respect to each Contract Year thereafter shall be an amount negotiated
between and agreed upon by Marchisello and the Company but in no event less than
Marchisello's Annual Base Salary for the prior Contract Year.
(b) Annual Bonus. As additional compensation for services rendered,
Marchisello shall receive such bonus or bonuses as the Company's Board of
Directors may from time to time approve including without limitations awards
under the Company's Incentive Award Plan.
(c) Benefits. Marchisello shall be entitled to (i) receive stock options
(incentive or nonqualified) under the Company's Unit Option Plan; (ii)
participate in the Company's 401(k) Savings Plan; (iii) receive vacation during
each Contract Year in accordance with the policy of the Company; and (iv)
participate in or receive benefits under any employee benefit plan or other
arrangement made available by the Company to any of its employees generally and
for which Marchisello is eligible (collectively "Benefits").
(d) Expenses. The Company shall promptly reimburse Marchisello for all
reasonable travel and other business expenses incurred by Marchisello in the
performance of his duties to the Company hereunder.
6 . Termination. Marchisello's employment hereunder may be terminated prior to
the end of the Contract Term by the Company or Marchisello, as applicable,
without any breach of this Agreement only under the following circumstances:
(a) Death. Marchisello's employment hereunder shall terminate upon his
death.
(b) Disability. If the Disability of Marchisello has occurred during the
Contract Term, the Company may give Marchisello written notice of its intention
to terminate Marchisello's employment. In such event, Marchisello's employment
with the Company shall terminate effective on the 30th day after receipt of such
notice by Marchisello, provided that within the 30 days after such receipt,
Marchisello shall not have returned to full-time performance of his duties.
(c) Cause. The Company may terminate Marchisello's employment hereunder for
Cause.
(d) Good Reason. Marchisello may terminate his employment for Good Reason.
(e) Without Cause. The Company may terminate Marchisello's employment
hereunder without Cause upon 30 days notice.
(f) Resignation without Good Reason. Marchisello may resign his employment
without Good Reason upon 90 days written notice to the Company.
(g) Notice of Termination. Any termination of Marchisello's employment
hereunder by the Company or Marchisello (other than by reason of Marchisello's
death) shall be communicated by a notice of termination to the other party
hereto. For purposes of this Agreement, a "notice of termination" shall mean a
written notice which (i) indicates the specific termination provision in the
Agreement relied upon, (ii) sets forth in reasonable detail any facts and
circumstances claimed to provide a basis for termination of Marchisello's
employment under the provision indicated and (iii) specifies the effective date
of the termination.
7. Severance Benefits.
(a) Termination without Cause or for Good Reason: If Marchisello's
employment shall be terminated (i) by the Company other than for Cause (as
defined above) or (ii) by Marchisello for Good Reason (as defined above), the
Company shall pay Marchisello an amount equal to 300% of the sum of (x) his
Annual Base Salary and (y) (B) his Deemed Annual Bonus for the Contract Year in
which the termination occurs. Such amount shall be paid in equal consecutive
monthly or bi-weekly installments in accordance with the Company's regular pay
schedule over a 36 month period beginning on the effective date of the
termination of Marchisello's employment. For these purposes, Marchisello's
Deemed Annual Bonus for any Contract Year shall be the greater of (i) his
Average Annual Bonus for that Contract Year and (ii) his Annual Bonus for the
prior Contract Year. Marchisello's Average Annual Bonus for a Contract Year
shall be an amount equal to the sum of all Annual Bonuses earned by Marchisello
for the Contract Years immediately preceding the Contract Year for which the
calculation is being made (not exceeding three (3) Contract Years) divided by
the number of such Annual Bonuses. In calculating Marchisello's Annual Bonus or
Average Annual Bonus for a Contract Year, the amount of any share-based award
under the Incentive Award Plan that Marchisello is required to recognize as
income for federal income tax purposes in a Contract Year shall be included as
part of Marchisello's Annual Bonus for that Contract Year.
(b) Termination by Death or Disability. Upon the termination of
Marchisello's employment by reason of his death or Disability, the Company shall
pay to Marchisello or to the personal representatives of his estate (i) within
thirty (30) days after the termination, a lump-sum amount equal to the amount of
Annual Base Salary for the Contract Year within which such termination occurs
and (ii) on or before the day on which Marchisello's Annual Bonus for the
Contract Year in which the termination occurs would have been payable if the
termination had not occurred, an amount equal to the Annual Bonus Marchisello
would have received for that Contract Year if the termination had not occurred
multiplied by a fraction the numerator of which is the number of days in that
Contract Year before the date of termination and the denominator of which is
365. This subsection 9(b) shall not limit the entitlement of Marchisello, his
estate or beneficiaries to any disability or other benefits then available to
Marchisello under any life, disability insurance or other benefit plan or policy
which is maintained by the Company for his benefit.
(c) Termination for Cause or Without Good Reason. If Marchisello's
employment is terminated by the Company for Cause or by Marchisello without Good
Reason, Marchisello shall be entitled to all Annual Base Salary and all Benefits
accrued through the date of termination.
(d) Survival. Neither the termination of Marchisello's employment hereunder
nor the expiration of the Contract Term shall impair the rights or obligations
of any party hereto which shall have accrued hereunder prior to such termination
or expiration.
(e) Mitigation of Damages. In the event of any termination of Marchisello's
employment by the Company, Marchisello shall not be required to seek other
employment to mitigate damages, and any income earned by Marchisello from other
employment or self-employment shall not be offset against any obligations of the
Company to Marchisello under this Agreement.
8. Limitation on Severance Benefits.
(a) Notwithstanding any other provision of this Agreement, and except as
provided in paragraph 8(b) below, payments and benefits to which Executive would
otherwise be entitled under the provisions of this Agreement will be reduced (or
Marchisello shall make reimbursement of amounts previously paid) to the extent
necessary to prevent Marchisello from having any liability for the federal
excise tax levied on certain "excess parachute payments" under section 4999 of
the Internal Revenue Code as it exists as of the date of this Agreement.
(b) Marchisello may determine the amount (if any) of reduction for each
payment or benefit that he would otherwise be entitled to receive. The extent to
which the payments or benefits to Marchisello are to be reduced pursuant to
paragraph 8(a) will be determined by the accounting firm servicing the Company
on the date that Marchisello's employment is terminated. The Company shall pay
the cost of such determination.
(c) If the final determination of any reduction in any benefit or payment
pursuant to this Section has not been made at the time that Marchisello is
entitled to receive such benefit or payment, the Company shall pay or provide an
estimated amount based on a recommendation by the accounting firm making the
determination under subparagraph 8(b). When the final determination is made, the
Company shall pay Marchisello any additional amounts that may be due or
Marchisello shall reimburse the Company for any estimated amounts paid to
Marchisello that were in excess of the amount payable hereunder.
9. Miscellaneous.
.1 Binding on Successors. This Agreement shall be binding upon and inure to
the benefit of the Company and Marchisello and their respective successors,
assigns, personal and legal representatives, executors, administrators, heirs,
distributees, devisees, and legatees, as applicable.
.2 Governing Law. This Agreement is being made and executed in and is
intended to be performed in the State of North Carolina, and shall be governed,
construed, interpreted and enforced in accordance with the substantive laws of
the State of North Carolina without any reference to principles of conflicts or
choice of law under which the law of any other jurisdiction would apply.
.3 Validity. The invalidity or unenforceability of any provision or
provisions of this Agreement shall not affect the validity or enforceability of
any other provision of this Agreement, which shall remain in full force and
effect.
.4 Notices. Any notice, request, claim, demand, document and other
communication hereunder to any party shall be effective upon receipt (or refusal
of receipt) and shall be in writing and delivered personally or sent by telex,
telecopy, or certified or registered mail, postage prepaid, as follows:
(a) If to the Company, to: Mr. Stanley K. Tanger
Tanger Properties Limited Partnership
3200 Northline Avenue, Suite 360 or P.O. Box 10889
Greensboro, NC 27408
(b) If to Marchisello, to: Mr. Frank C. Marchisello, Jr.
600 Brookfield Drive
Gibsonville, NC 27249
or at any other address as any party shall have specified by notice in writing
to the other parties.
.5 Counterparts. This Agreement may be executed in several counterparts,
each of which shall be deemed to be an original, but all of which together will
constitute one and the same Agreement.
.6 Entire Agreement. The terms of this Agreement are intended by the
parties to be the final expression of their agreement with respect to the
employment of Marchisello by the Company and may not be contradicted by evidence
of any prior or contemporaneous agreement. The parties further intend that this
Agreement shall constitute the complete and exclusive statement of its terms and
that no extrinsic evidence whatsoever may be introduced in any judicial,
administrative, or other legal proceeding to vary the terms of this Agreement.
.7 Amendments; Waivers. This Agreement may not be modified, amended, or
terminated except by an instrument in writing, signed by Marchisello and the
Company. By an instrument in writing similarly executed, Marchisello or the
Company may waive compliance by the other party with any provision of this
Agreement that such other party was or is obligated to comply with or perform,
provided, however, that such waiver shall not operate as a waiver of, or
estoppel with respect to, any other or subsequent failure. No failure to
exercise and no delay in exercising any right, remedy, or power hereunder
preclude any other or further exercise of any other right, remedy, or power
provided herein or by law or in equity.
.8 No Effect on Other Contractual Rights. Notwithstanding Section 6, the
provisions of this Agreement, and any other payment provided for hereunder,
shall not reduce any amounts otherwise payable to Marchisello under any other
agreement between Marchisello and the Company, or in any way diminish
Marchisello's rights under any employee benefit plan, program or arrangement of
the Company to which he may be entitled as an employee of the Company.
.9 No Inconsistent Actions. The parties hereto shall not voluntarily
undertake or fail to undertake any action or course of action inconsistent with
the provisions or essential intent of this Agreement. Furthermore, it is the
intent of the parties hereto to act in a fair and reasonable manner with respect
to the interpretation and application of the provisions of this Agreement.
IN WITNESS WHEREOF, the parties have executed or caused this Agreement
to be executed as of the day and year first above written.
TANGER PROPERTIES LIMITED PARTNERSHIP, a
North Carolina Limited Partnership
By: TANGER GP TRUST, its sole General Partner
By: ____________________________________
Stanley K. Tanger, Chief Executive Officer
and Chairman of the Board
(SEAL) FRANK C. MARCHISELLO, JR.