SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934
Filed by the Registrant <checked-box>
Filed by a Party other than the Registrant <square>
Check the appropriate box:
<square> Preliminary Proxy Statement <square> Confidential, For Use of
the Commission Only (as
Permit-ted by Rule 14a-6
(e) (2))
<checked-box> Definitive Proxy Statement
<square> Definitive Additional Materials
<square> Soliciting Material Pursuant to Rule 14a-11 (c) or Rule 14a-12
Merry Land Properties, Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
<checked-box> No fee required.
<square> Fee computed on table below per Exchange Act Rules 14a-
6(I)(1) 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:
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<square> Fee paid previously with preliminary materials.
<square> Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-ll(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:
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(4) Date Filed:
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<PAGE>
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
APRIL 20, 2000
TO THE STOCKHOLDERS OF MERRY LAND PROPERTIES, INC.
The Annual Meeting of Stockholders of Merry Land Properties, Inc. will
be held at the company's corporate office located at 624 ELLIS STREET,
AUGUSTA, GEORGIA, ON THURSDAY, APRIL 20, 2000, AT 10:00 A.M. for the
following purposes:
1 TO ELECT TWO DIRECTORS TO TERMS EXPIRING AT THE 2003 ANNUAL MEETING OF
STOCKHOLDERS.
2. TO VOTE UPON THE 2000 MANAGEMENT INCENTIVE PLAN.
3. TO TRANSACT SUCH OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE
MEETING OR ANY ADJOURNMENT.
The close of business on March 6, 2000 has been set by the directors as
the record date for determination of the stockholders of the company who
are entitled to notice of and to vote at the meeting. A copy of the 1999
Annual Report is enclosed.
ALL STOCKHOLDERS, ESPECIALLY THOSE WHO DO NOT EXPECT TO ATTEND THE
MEETING IN PERSON, ARE REQUESTED TO DATE, VOTE AND SIGN THE ENCLOSED PROXY
CARD, INDICATING ANY VOTING INSTRUCTIONS, AND TO RETURN IT IN THE
ACCOMPANYING ENVELOPE.
By order of the Board of Directors,
DORRIE E. GREEN
Secretary
March 22, 2000
PLEASE VOTE AND RETURN THE ENCLOSED
PROXY CARD PROMPTLY
<PAGE>
MERRY LAND PROPERTIES, INC.
PROXY STATEMENT
GENERAL.This proxy statement is furnished in connection with the
solicitation of proxies on behalf of the Board of Directors to be used at
the Annual Meeting of Stockholders of Merry Land Properties, Inc. to be
held Thursday, April 20, 2000 at the company's corporate offices located at
624 Ellis Street, Augusta, Georgia 30901 at 10:00. Our telephone number is
706/722-6756. This proxy statement and the enclosed proxy are being first
mailed to the company's stockholders on or about March 22, 2000.
VOTING.When proxies are properly executed and returned, the shares of
common stock they represent will be voted or abstained at the meeting as
directed. If no directions are noted, they will be voted to elect the
directors nominated by the Board and to vote for the 2000 Management
Incentive Plan. While the company's management knows of no other matters to
be considered at the meeting, the proxies named will have the authority to
vote on any other matter which may properly be presented at the meeting. In
addition, the proxies will have the authority to vote for any person for
election as a director in lieu of the nominated individual, if the nominee
is unable to serve.
The following rules govern voting at the Annual Meeting:
<circle> A majority of the shares of common stock entitled to vote will
constitute a quorum. Shares of common stock are counted for quorum pur-
poses if they are represented for any purpose at the meeting other than
solely to object to holding the meeting or transacting business at the
meeting.
<circle> For the election of directors a quorum must be present, either
in person or by proxy, and a PLURALITY of the shares voting must vote in
the affirmative.
<circle>To approve the 2000 Management Incentive Plan a quorum must be
present, either in person or by proxy, and a MAJORITY of the shares
voting must vote in the affirmative.
<circle> Abstentions and broker non-votes are neither counted for purposes
of determining the number of affirmative votes required for the election
of directors nor voted for or against matters presented for shareholder
consideration. Consequently, so long as a quorum is present, abstentions
and broker non-votes have no effect on the outcome of any vote.
REVOCATION OF PROXIES.Execution of the enclosed proxy will not affect
the shareholder's right to attend the meeting and vote in person. A
shareholder may revoke a proxy at any time before it is voted.
SOLICITATION.The accompanying proxy is solicited by the company. The
expense of solicitation, which is not expected to exceed the normal expense
of a proxy solicitation for a meeting at which directors are elected, will
be borne by the company.
<PAGE>
DIRECTORS AND EXECUTIVE OFFICERS
Merry Land's Bylaws provide for a Board of Directors consisting of not
less than five nor more than nine members. The number of directors is fixed
at five for the current year. Directors of the company are divided into
three classes, consisting of two directors whose terms expire at the 2000
Annual Meeting of Stockholders, two directors whose terms expire at the
2001 Annual Meeting, and one director whose term expires at the 2002 Annual
Meeting. At the 2000 Annual Meeting, two directors will be elected to hold
office until their successors are elected and qualify. Boone A. Knox, a
current director of the company, and Michael N. Thompson, a current
director and Chief Operating Officer of the company, are the nominees for
election as directors for a term which expires in 2003. Unless instructed
to the contrary, the accompanying proxy will be voted to elect Messrs. Knox
and Thompson as directors. The proxies may not be voted for more than two
directors.
All executive officers of the company are elected annually for terms of
one year and hold office until their successors are elected and qualify.
<PAGE>
The table below provides information about the company's directors and
executive officers.
<TABLE>
<CAPTION>
YEAR COMMON STOCK
NAME, BUSINESS POSITION DIRECTOR'S DIRECTOR STOCK BENEFICIALLY
EXPERIENCE AND WITH TERM OR OFFICER OWNED
COMMITTEES AGE COMPANY EXPIRES SINCE AMOUNT(1) PERCENTAGE(2)
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
DAVID W. COBB 51 Director 2001 1998 7,000 0.26%
Member of Audit and Compensation Committee. President of Provident Capital Fund-
ing, a division of The Provident Bank. Previously, Chairman, President, and
Chief Executive Officer of National Capital Holdings,Inc. from January 1997 to
December 1998. President, mortgage finance subsidiaries of Furman Selz LLC from
October 1995 through January 1997. President of Raymond James Mortgage Capital
from January 1993 through October 1995.
DORRIE E. GREEN 41 Vice N/A 1998 77,824(3)(4) 2.94%
President,
Chief
Financial
Officer
Chief Financial Officer of Merry Land & Investment Company, Inc. (8) from
January 1998 to October 1998. Vice President of Merry Land & Investment
Company, Inc. from January 1995 to October 1998. Employee of Merry Land &
Investment Company, Inc. since 1994. Chief Financial Officer of JG Financial
Management Services from September 1992 to October 1994.
W. TENNENT HOUSTON 49 Chairman 2002 1998 609,532(3)(5) 23.03%
of the
Board,
Chief
Executive
Officer
Member of Executive Committee. Chief Executive Officer of Merry Land & Invest-
ment Company, Inc. (8) from December 1996 to October 1998. President and Chief
Operating Officer of Merry Land & Investment Company from 1985 to October 1998.
BOONE A. KNOX 63 Director 2000 1998 132,260(6) 5.00%
Member of Executive Committee, Audit and Compensation Committee. Chairman of the
Board of Regions Bank, Central Georgia since 1997. Chairman of the Board of
Merry Land & Investment Company,Inc. (8) from December 1996 to October 1998.
Previously, Chairman of the Board and Chief Executive Officer of Allied Banks-
shares, Inc. from 1984 to 1997. Director of Cousins Properties Incorporated and
Intercept Group, Inc., and a trustee of Equity Residential Properties Trust.
STEWART R. SPEED 35 Director 2001 1998 3,300 0.12%
Member of Audit and Compensation Committee. Development Manager with Southeast
Capital Partners,Inc. Vice President of EastGroup Properties, Inc. from February
1997 to January 2000. Previously, employee of Merry Land & Investment Compan
Inc. (8) from April 1993 to February 1997.
MICHAEL N. THOMPSON 51 Director, 2000 1998 237,370(3)(7) 8.97%
President,
Chief
Operating
Officer
Executive Committee. Executive Vice President of Merry Land & Investment
Company, Inc. (8) from January 1997 to October 1998. Chief Operating Officer of
Merry Land & Investment Company,Inc. from December 1996 to October 1998. Vice
President of Merry Land & Investment Company, Inc. from August 1992 to January
1997. Trustee of Equity Residential Properties Trust.
</TABLE>
(1) The shares shown were owned directly by the named person as of March
6, 2000 unless otherwise indicated.
(2) Assumes 2,646,966 outstanding shares as of March 6, 2000.
(3) On October 19, 1998, Messrs. Houston and Thompson each received a
grant of 107,527 restricted common stock shares, and Mr. Green received a
grant of 53,764 restricted common stock shares. One-fifteenth of these
restricted common stock shares vests on each anniversary date beginning on
the date granted provided that they are still employed by the company. On
January 20, 2000, Messrs. Houston and Thompson each received a grant of
20,000 restricted common stock shares, and Mr. Green received a grant of
10,000 restricted common stock shares. One-fifth of these shares vest on
each anniversary date beginning January 20, 2001 provided that they are
still employed by the company. In the event the employee terminates service
prior to vesting in the shares, the restricted common stock shares will be
forfeitable. Messrs. Houston, Thompson, and Green will be entitled to vote
and to receive any dividends declared with respect to both vested and
unvested shares.
(4) Includes 682 shares held in Mr. Green's account in the company's ESOP
and 56,596 grant shares which are not yet vested.
(5) Includes 204,276 shares owned by a family limited partnership of which
W. Tennent Houston is the sole general partner, 113,190 grant shares
which are not yet vested, and 4,947 shares held in Mr. Houston's
account in the company's ESOP. The amount also includes 267,097 shares
in the ESOP which have not been allocated to the account of any
company employee and for which Mr. Houston holds voting power as sole
trustee of the ESOP, but in which he has no economic interest.
(6) Includes 110,750 shares owned by a family limited partnership, of
which Boone A. Knox is a managing general partner, 11,046 shares owned
by a charitable trust, of which Boone A. Knox is a trustee, 319 shares
held by BT Investments, of which Boone A. Knox is a general partner,
293 shares held in his wife's name, and 40 shares held by his niece
and nephew.
(7) Includes 286 shares owned by Mr. Thompson's wife and children, 1,572
shares held in Mr. Thompson's account in the company's ESOP, and 113,190
restricted common stock shares which are not vested.
(8) Merry Land Properties, Inc. was formed on September 3, 1998 as a
corporate subsidiary of Merry Land & Investment Company, Inc. in connection
with a transaction in which Merry Land & Investment Company was merged into
Equity Residential Properties Trust on October 19, 1998. On October 15,
1998, the common stock of Merry Land Properties was spun off to the common
stockholders of Merry Land & Investment Company. When the merger was
completed, Merry Land Properties began operating as an independent public
company.
<PAGE>
THE BOARD AND ITS COMMITTEES
The Board met five times in 1999. The Board maintains an Executive
Committee, an Audit and Compensation Committee but no Nominating Committee.
The Executive Committee is empowered to conduct the business of the company
between Board meetings and met eight times in 1999. The Audit and
Compensation Committee supervises the company's independent public
accounting firm and determines the compensation for the Executive Officers
of the company. They met once in 1999. All directors attended all of the
meetings of the Board and the committees on which they served in 1999.
Directors, with the exception of Messrs. Houston and Thompson, receive
fees of $1,000 for each Board meeting and Audit and Compensation Committee
meeting attended, and $250 for each Executive Committee Meeting attended.
In addition, the Board approved a Directors Stock Compensation Plan and
awarded 2,000 shares of company common stock in 1999 to each Director with
the exception of Messrs. Houston and Thompson. Messrs. Houston and
Thompson, who are company employees, received no compensation in 1999 for
their service on the Board or its committees.
REPORT OF THE BOARD OF DIRECTORS ON EXECUTIVE COMPENSATION
COMPENSATION POLICIES
The company's Audit and Compensation Committee acts on compensation
matters for the Chairman and President as well as for Directors. The Board
of Directors acts as a whole on compensation matters for the other
executive officers and the administration of stock grants.
The Board's goal in setting executive compensation is to link pay to
company performance by making stock-based compensation a significant
component of executive pay and by paying discretionary bonuses on the basis
of company as well as individual performance. In determining all forms of
compensation the Board evaluates competitors' levels of base salary,
bonuses and stock-based plans, the level of compensation necessary to
attract and retain executive talent and the executive officer's
contribution toward the achievement of the company's goals of increasing
shareholder value. Company performance is measured by several indicators,
including stock price performance and growth in funds from operations. The
Board does not establish specific performance criteria but instead
subjectively considers the company's performance and each executive
officer's contribution toward the achievement of the company goals.
In order to lessen the company's overhead burden for its first year of
operation, neither the Chief Executive Officer nor the Chief Operating
Officer received any base pay in 1999. The company is paying base salaries
to these individuals in 2000.
In October 1998, the stockholders of the company approved the 1998
Management Incentive Plan under which the stock grants described above were
made available to its executives and other key employees. Fifteen
employees, including the company's three executive officers, received
restricted stock grants for a total of 446,318 shares of the company's
common stock at this time. The Board's objective in awarding these stock
grants was to attract an experienced cadre of apartment professionals to
staff the newly formed company. The Board also wished to link a substantial
portion of employee compensation to the value of the company's common
stock, thereby aligning the interests of its key employees and executive
officers with those of its stockholders, and also to retain its employees
through the long-term vesting of the grants. In January 2000, the three
executive officers received restricted stock grants for a total of 50,000
shares of the company's common stock. These grants were made in lieu of
cash bonuses in consideration of the officers contribution to the company's
successful operations in 1999. Unvested portions of these grants are
forfeited if the holder's employment is terminated.
The Board has recommended the approval of the 2000 Management Incentive
Plan subject to the stockholders' approval under which an additional
250,000 common stock shares will be made available for grants as described
above. The Board's objective is to continue to attract, compensate and
retain directors, executive officers and key employees in a very
competitive employment market and to provide them with appropriate
incentives and performance rewards, while aligning their interests with the
interests of the stockholders.
The Omnibus Budget Reconciliation Act of 1993 provides that compensation
in excess of $1 million per year paid to the chief executive officer of a
company as well as the other named executive officers listed in the
company's proxy statement will not be deductible unless the compensation is
"performance-based" and the related compensation plans are approved by
stockholders. The company does not anticipate that its executive
compensation will come within the reach of this legislation.
COMPENSATION OF THE CHIEF EXECUTIVE OFFICER
Although the Audit and Compensation Committee has not established any
policy that would maintain the overall executive compensation level within
any particular range of industry norms, the intent of the Board is that
compensation of the Chief Executive Officer should be no more than is
typical for chief executives of similar companies of similar size. The
Committee believes that its stock grant program is a key element in
motivating the Chief Executive Officer to achieve the company's financial
and operational objectives. Under this program a substantial portion of
compensation is tied to continued employment by the company and to
increases in the price of the company's common stock and the payment of
cash dividends, if any.
Mr. Houston did not receive any base pay or cash bonus in 1999 but will
receive a base salary of $100,000 in 2000. In 1998, he received grants for
107,527 shares of restricted common stock which had a value of $4.44 per
share, based on the average of the high and low prices of the common stock
on October 19, the date of the grant. In 2000, he received in lieu of a
cash bonus for 1999 as described above grants for 20,000 shares of
restricted stock which had a value of $4.85 per share, based on the average
of the high and the low prices of the common stock, on January 20. If he is
still employed by the company, one fifteenth of the October 1998 restricted
common stock grants become vested on each anniversary date of the award
beginning on the date granted and one fifth of the January 2000 restricted
common stock grants become vested on each anniversary date of the award
beginning in January 2001. At the market price of $5.625 per share on March
6, 2000, the value of the 14,337 shares currently vested would be
approximately $80,645. The value of the total awards once vested using the
value at the time of each grant would be $574,420. Mr. Houston is entitled
to vote and to receive any dividends declared with respect to both vested
and unvested shares. He will also be entitled to further compensation and
awards as may be approved in the future by the board.
David W. Cobb
W. Tennent Houston
Boone A. Knox
Stewart R. Speed
Michael N. Thompson
<PAGE>
EXECUTIVE COMPENSATION
The following table sets forth the compensation paid or accrued for
services by the company's three executive officers for the period from
October 15, 1998 (the date Merry Land began operating as an independent
company) to December 31, 1999.
<TABLE>
<CAPTION>
Long-Term
Annual Compensation(1) Compensation
------------------------- -------------------
<S> <C> <C> <C> <C> <C>
Restricted
Stock All Other
Salary Bonus Awards(2) Compensation(3)
- --------------------------------------------------------------------------------
W. TENNENT HOUSTON 1999 - - - $3,600
Chairman of the Board and 1998 - - $477,420 $716
Chief Executive Officer
MICHAEL N. THOMPSON 1999 - - - $3,600
President and Chief 1998 - - $477,420 $716
Operating Officer
DORRIE E. GREEN 1999 $100,000 $50,000 - $18,600(4)
Vice President and Chief 1998 $16,923 $4,000 $238,710 $2,408(4)
Financial Officer
- -----------------------------------------------------------------------------
</TABLE>
(1) Messrs. Houston and Thompson did not receive any base pay or cash bonus
from Merry Land Properties in 1999 or 1998. Includes amounts paid for the
period from October 15, 1998 to December 31, 1999. On October 15, 1998, the
shares of Merry Land Properties, Inc., a newly created subsidiary of Merry
Land & Investment Company, Inc. were spun out as a dividend to that firm's
stockholders in conjunction with old Merry Land's merger into Equity
Residential Properties Trust.
(2) See footnote 3 on page 4. Based upon the average of the high and low
prices on the date of the grant of $4.44 per Common Stock share, the
restricted common stock shares vested to each of Messrs. Houston and
Thompson had a market value of $63,656, and the restricted common stock
shares vested to Mr. Green had a market value of $31,828. The value of
vested shares of each such grant, based on the closing price of $5.25 per
share of the company's common stock shares on December 31, 1999, was
$75,269 for Messrs. Houston and Thompson, and $37,635 for Mr. Green. Based
upon the average of the high and low prices on the date of the grant of
$4.44 per Common stock share, the market value of the vested and unvested
shares to Messrs. Houston, Thompson and Green were $477,420, $477,420, and
$238,710, respectively.
(3) Messrs. Houston, Thompson, and Green each receive $300 per month for an
auto allowance, as do all employees of the company who frequently use their
car on company business.
(4) The company contributed $15,000 and $1,692 to the ESOP account of Mr.
Green for 1999 and 1998, respectively.
<PAGE>
STOCK PRICE PERFORMANCE GRAPH
The graph below compares the cumulative total return to the shareholders
of Merry Land Properties, Inc. to the S&P 500 Index and a Peer Group
constructed by the company and assumes the reinvestment of all dividends at
the market price on the day the dividend was paid for the period beginning
October 15, 1998 and ending December 31, 1999.
<TABLE>
<CAPTION>
Date Merry Land S&P 500 Peer
-------------- ---------------- -------------- --------------
<S> <C> <C> <C>
10/15/98 $100 $100 $100
12/31/98 $ 82 $116 $ 96
3/31/99 $132 $121 $ 95
6/30/99 $111 $129 $107
9/30/99 $124 $121 $103
12/31/99 $130 $128 $102
</TABLE>
Assumes $100 Invested on October 15, 1998 in Merry Land Properties, Inc.,
S&P 500 and the Peer Group. The Peer Group consists of publicly traded
companies which are engaged principally or in significant part in the
development, ownership, and management of multi-family residential real
estate in the Southern United States. The peer group consists of
Cornerstone Realty Income Trust, Echelon International Corp., Gables
Residential Trust, Mid America Apartment Communities, Inc., Post
Properties, Inc., Roberts Realty Investors, Inc., Summit Properties Inc.,
and United Dominion Realty Trust Inc. The returns of each company have
been weighted according to their respective stock market capitalization for
purposes of arriving at a Peer Group average.
<PAGE>
VOTING SECURITIES AND PRINCIPAL HOLDERS
The close of business on March 6, 2000 has been set as the record date
for determination of stockholders entitled to notice of and to vote at the
meeting. On March 6, 2000, the total number of outstanding shares of the
company's Common stock (the only voting securities of the company) was
2,646,966, each of which is entitled to one vote. The table below sets
forth certain information concerning the only persons known to the company
to beneficially own more than 5% of the outstanding Common stock, and the
beneficial ownership of Common stock of the directors and executive
officers as a group:
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF
NAME AND ADDRESS OF BENEFICIAL OWNERSHIP AS OF PERCENT OF
BENEFICIAL OWNER MARCH 6, 2000(1) OF CLASS(2)
- -------------------------------------------------------------------------------
<S> <C> <C>
W. Tennent Houston 609,532 23.03%
2821 Hillcrest Ave.
Augusta, GA 30909
Michael N. Thompson 237,370 8.97%
5 Brigantine Court
Savannah, GA 31410
Boone A. Knox 132,260 5.00%
149 Main Street
Thomson, GA 30824
All Directors 1,067,286 40.32%
Directors and
Officers
as a Group
</TABLE>
- --------------
(1) Assumes 2,646,966 outstanding shares.
(2)See "Directors and Executive Officers."
<PAGE>
2000 MANAGEMENT INCENTIVE PLAN
BACKGROUND
The Merry Land Properties, Inc. Board of Directors has approved, subject
to the approval of the stockholders, the 2000 Management Incentive Plan. A
copy of the 2000 Management Incentive Plan is attached as Appendix A. The
purpose of the 2000 Management Incentive Plan is to continue to align the
interests of Merry Land's directors, executive officers and employees with
those of the stockholders and to enable Merry Land to continue to attract,
compensate and retain directors, executive officers and employees and to
provide them with appropriate incentives and rewards for their performance.
Shares authorized by the 1998 Management Incentive Plan were depleted by
issuance during the formation of the company and the recruitment of its
initial officers and staff. The officers, directors and employees of Merry
Land who receive awards under the 2000 Management Incentive Plan are
further motivated to work for the success of the company since they would
receive a greater economic benefit to the extent the fair market value of
Merry Land Common stock increases. The issuance of a substantial number of
shares of Merry Land Common stock under the 2000 Management Incentive Plan
or their sale in the public market might adversely affect prevailing market
prices for such shares.
Awards to directors, executive officers and other employees under the
2000 Management Incentive Plan may take the form of share options
("Options"), including corresponding share appreciation rights ("SAR's")
and reload options, restricted share awards, dividend rights and stock loan
awards.
AWARDS AND ADMINISTRATION OF PLAN
If approved, the 2000 Management Incentive Plan would make 250,000
shares of Merry Land Properties, Inc. common stock available for issuance
with the number of shares being subject to adjustment to reflect changes in
Merry Land's capitalization such as stock dividends, stock splits,
recapitalization, merger, consolidation or reorganization of Merry Land.
Under the 2000 Management Incentive Plan, grants of any combination of
incentive stock options, nonstatutory stock options, reload options, stock
loan rights, dividend rights, and restricted stock grants up to an
aggregate of 250,000 shares of Merry Land common stock may be awarded.
The 2000 Management Incentive Plan will be administered by the Merry
Land Board of Directors which may delegate its authority to a committee of
the Merry Land Board consisting of directors who are not Merry Land
employees or officers. Only key, full-time Merry Land employees and
directors may be selected by the Board of Directors to receive awards.
Merry Land does not expect that more than 20 employees will be selected to
receive these additional awards. The Board of Directors is otherwise given
absolute discretion under the 2000 Management Incentive Plan to select
persons to whom awards will be granted and to determine the number and type
of awards to be granted to each.
The Board of Directors has authority to fix the terms of all awards
(which need not be identical) and to take such other action it deems
appropriate. Merry Land may amend the 2000 Management Incentive Plan,
except that no amendment will be effective unless approved by the
stockholders within 12 months of any amendment which will increase the
number of shares of Merry Land common stock as to which Incentive Stock
Options ("ISOs") may be granted, which materially increases the cost to
Merry Land of awards other than ISOs, or which changes the class of
participants eligible to participate in the 2000 Management Incentive Plan.
INCENTIVE STOCK OPTIONS AND NONSTATUTORY STOCK OPTIONS
TERMS OF EXERCISE. Options to buy stock may be granted to eligible
employees or directors under the 2000 Management Incentive Plan as either
ISOs, which are intended to qualify for favorable tax treatment under
Federal tax law, or nonstatutory stock options ("NSOs"). The 2000
Management Incentive Plan requires that the exercise price of ISOs be equal
to or greater than the fair market value of Merry Land common stock on the
date of the grant and the exercise price of NSOs will be set by the Merry
Land Board of Directors. The term of each option will be set by the Merry
Land Board of Directors, but the term of any ISO cannot exceed ten years
from date of grant. The options are not transferable, except by will or the
laws of descent and distribution. Options may be exercised in any order.
The 2000 Management Incentive Plan provides that the aggregate fair market
value (determined at the time of grant) of stock for which ISOs first
become exercisable in any calendar year cannot exceed $100,000 for any
employee. Any excess options are treated as NSOs. All options vest upon a
change in control.
EXERCISE PRICE. The exercise price of an option is payable in cash or,
if permitted by the Merry Land Board of Directors, by surrendering shares
of Merry Land common stock already owned by the optionee, or with a
combination of cash and shares. The terms of an option may require, and if
not, the Merry Land Board of Directors otherwise may (but except in an
event of change in control would not be required to) accept the surrender
of the right to exercise an option in consideration for payment by Merry
Land of an amount equal to the excess of the fair market value of the
shares subject to the option so surrendered over the option price of the
shares. Payment may be made in cash or in shares of Merry Land common stock
or partly in cash and partly in shares of Merry Land common stock.
TERMINATION OF EMPLOYMENT. If the optionee of an ISO ceases to be
employed by Merry Land or a subsidiary for any reason other than death or
disability, the ISO shall terminate no later than three months following
the termination of employment. However, an optionee whose employment is
terminated by retirement in accordance with the normal retirement policies
of the Merry Land or an optionee whose employment is voluntarily terminated
or terminated without cause within one year following a change in control
of Merry Land will be permitted to exercise the option for a period of
three months after the date of termination, but no later than the date on
which such option would otherwise expire. The Merry Land Board of Directors
has discretion to determine the effect of an optionee's termination of
employment in the terms of each NSO.
CHANGE IN CONTROL. Change in control means a change in control of Merry
Land of a nature that would be required to be reported in response to Item
6(e) of Schedule 14A of Regulation 14A promulgated under the Exchange Act
as in effect on January 1, 1997, provided that such a change in control
will be deemed to have occurred at such time as (i) any "person" (as that
term is used in Sections 13(d) and 14(d)(2) of the Exchange Act), is or
becomes the "beneficial owner" (as defined in Rule 13d-3 under the Exchange
Act) directly or indirectly, of securities representing 30% or more of the
combined voting power for election of directors of the then outstanding
securities of Merry Land or any successor of Merry Land; (ii) during any
period of two consecutive years or less, individuals who at the beginning
of such period constitute the Board of Directors cease, for any reason to
constitute at least a majority of the Merry Land Board of Directors, unless
the election or nomination for election of each new director was approved
by a vote of at least two-thirds of the directors then still in office who
were directors at the beginning of the period; (iii) the shareholders of
Merry Land approve any merger, consolidation or share exchange as a result
of which the Merry Land common stock will be changed, converted or
exchanged (other than a merger with a wholly-owned subsidiary of Merry
Land), or any dissolution or liquidation of Merry Land or any sale or the
disposition of 50% or more of the assets or business of Merry Land; or (iv)
the shareholders of Merry Land approve any merger or consolidation to which
Merry Land is a party or a share exchange in which Merry Land will exchange
its shares for shares of another corporation as a result of which the
persons who were shareholders of Merry Land immediately prior to the
effective date of the merger, consolidation or share exchange will have
beneficial ownership of less than 50% of the combined voting power for
election of directors of the surviving corporation following the effective
date of such merger, consolidation or share exchange. However, a change in
control will not be deemed to occur if one or more of Merry Land's current
executive officers or directors (in office on the date this Plan is
adopted) become the "beneficial owner" of 30% or more of the voting shares.
DEATH OR DISABILITY. If the optionee of an ISO becomes disabled, the
Option may be exercised at any time within one year after the date of
termination of employment due to disability, but not later than the date on
which the Option would otherwise expire. Upon the death of an optionee
while employed by Merry Land, the ISO will expire one year after the date
of death unless by its terms it expires sooner. During this one year, the
ISO may be exercised by the optionee's estate or by the person to whom the
optionee's rights under the ISO pass by will or by the laws of descent and
distribution.
RELOAD OPTIONS
The Merry Land Board of Directors may grant, concurrently with the award
of any option to such participants, one or more reload options to purchase
for cash or, if permissible under the option, shares of Merry Land common
stock, a number of shares of Merry Land common stock equal to the number of
shares of Merry Land common stock delivered (or deemed delivered) by the
participant to Merry Land to exercise the option. Although an option may be
an ISO, a reload option is not intended to qualify as an ISO. A reload
option may be granted in connection with the exercise of an option that is
itself a reload option. Each reload option will have the same expiration
date as the option and an exercise price equal to the fair market value of
the shares of Merry Land common stock on the date of grant of the reload
option. A reload option is exercisable immediately.
Reload options permit a participant to retain, through the term of the
original option, his or her economic interest in the sum of the shares of
Merry Land common stock covered by such options as well as the already-
owned shares of Merry Land common stock that could be used to exercise such
option, by granting options on the number of shares of Merry Land common
stock used to pay the exercise price of the original option and subsequent
reload options. In this way, reload options provide a participant with the
opportunity to build up ownership of shares of Merry Land common stock
covered by an original option earlier during the option term rather than
through a single exercise at or near the end of the option term.
STOCK LOAN RIGHTS
Under the 2000 Management Incentive Plan selected key employees or
directors may receive stock loan rights, consisting of interest free loans
to purchase Merry Land common stock at the then prevailing market price.
The loans are payable on demand, except upon the death or retirement of the
employee or upon a change in control. The loans are secured by the common
stock purchased by the employee, with such percentage as may be set by the
Merry Land Board of Directors of the dividends to be applied against the
principal balance of the loan, and may be made with or without recourse
against the employee. No shares of stock purchased with stock loan rights
may be released to the employee until the loan is repaid in full; provided,
however, the Merry Land Board of Directors may release a portion of said
shares if and to the extent the fair market value of the remaining shares
securing repayment of the loan exceeds 150% of the outstanding principal
balance of the loan. In the event of default, Merry Land's recourse may
either be limited to the shares of stock purchased and pledged under the
stock loan rights and the employee may have no liability or may provide
full recourse against the employee. The stock loans will be forgiven upon a
change in control occurring after the award of the stock loan, except that
if the change in control occurs within four years of the award, the
percentage of the loan forgiven will be limited initially to 20% of the
initial loan amount, and another 20% for each year thereafter. The loans
may be forgiven by the Board of Directors in its discretion upon the death,
disability or retirement of a participant.
DIVIDEND RIGHTS
Selected key employees or directors may also receive dividend rights
based on the dividends declared on Merry Land common stock, to be credited
as of dividend payment dates, during the period between the date of grant
of the dividend right and the date such award is exercised, vests or
expires, under terms as determined by the Merry Land Board of Directors.
Such dividend rights will be converted to cash or additional shares of
Merry Land common stock by such formula and at such time and subject to
such limitations or forfeitable conditions as may be determined by the
Merry Land Board of Directors.
RESTRICTED STOCK GRANTS
Shares of restricted stock may be granted to key employees or directors
and may be subject to contractual restrictions established by the Merry
Land Board of Directors to be set forth in a Restricted Stock Agreement.
The Restricted Stock Agreement will set forth the conditions, if any, which
will need to be satisfied before the restricted stock grant will become
effective and the conditions, if any, under which the key employee's
interest in the restricted stock will be forfeited. After a restricted
stock grant becomes effective, the common stock will be registered in the
name of the employee. The employee will have the right to vote and receive
dividends paid with respect to the Restricted Stock. In the event of a
change in control occurring after the award of Restricted Stock Grants, a
participant will become fully vested in the Restricted Stock Grant, except
that if the change in control occurs within four years of the award, the
percentage of the Restricted Stock Grants that become vested will be
limited initially to 20%, and another 20% for each year thereafter. The
common stock related to restricted stock grants that do not become
effective because of a failure to meet the conditions therefor will again
be the subject of Awards under the Plan. The Board of Directors in its
discretion may fully vest a participant's Restricted Stock Grants upon the
participant's death, disability or retirement. See "-- Executive
Compensation" for information with respect to restricted stock grants.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
TAXATION OF ISOS; HOLDING PERIOD REQUIREMENTS. An optionee receiving
ISOs will not recognize income at the time the ISOs are granted or at the
time the ISOs are exercised. However, the excess of the fair market value
over the exercise price of the stock purchased will be an adjustment item
for purposes of the alternative minimum tax in the year the ISOs are
exercised. Provided the holding periods described below are met, when the
shares of stock received pursuant to the exercise of an ISO are sold or
otherwise disposed of in a taxable transaction, gain or loss, measured by
the difference between the exercise price and the amount realized, will be
recognized to the optionee as long-term capital gain or loss. In order for
an optionee to receive this favorable tax treatment, the optionee must make
no disposition of the shares within two years from the date the ISO was
granted nor within one year from the date the ISO was exercised and the
shares were transferred to the Optionee.
ISOS-HOLDING PERIOD REQUIREMENTS NOT SATISFIED. If all of the
requirements for an ISO are met except for the holding period rules set
forth above, the optionee will be required at the time of the disposition
of the stock to treat the lesser of the gain realized or the difference
between the exercise price and the fair market value of the stock at the
date of exercise as ordinary income and the excess, if any, as capital
gain. At that time, Merry Land will be allowed a corresponding business
expense deduction to the extent of the amount of the optionee's ordinary
income.
NSOS AND RELOAD OPTIONS. An optionee receiving NSOs or reload options
will not recognize income at the time the NSOs or reload options are
granted. However, the excess of the fair market value over the exercise
price of the stock purchased will be recognized as income by the optionee
in the year the NSOs or reload options are exercised. Merry Land will be
allowed a corresponding deduction in such amount.
SURRENDER OF ISO OR NSO. If Merry Land makes a payment to the optionee
in cash or in shares of Merry Land common stock in exchange for the
optionee's surrender of the right to exercise an ISO or NSO, then the
optionee will recognize ordinary income in the amount of the cash received
plus the fair market value of the stock received. Merry Land will be
allowed a corresponding deduction in such amount.
STOCK LOAN RIGHTS. For Federal income tax purposes interest will
generally be imputed on an interest free or below market loan extended
under the 2000 Management Incentive Plan. The employee or director is
deemed to have paid the imputed interest to Merry Land and Merry Land is
deemed to have paid said imputed interest back to the employee as
additional compensation. The deemed interest payment is taxable to Merry
Land as income, and may be deductible to the employee to the extent
allowable under the rules relating to investment interest. The deemed
compensation payment to the employee is taxable to the employee and
deductible to Merry Land, but is subject, in the case of employees, to
employment taxes such as FICA and FUTA. The deemed interest and
compensation payments mostly offset each other for income tax purposes for
both Merry Land and, to the extent the employee's or director's investment
interest is deductible, the employee. However, if the loan is a limited
recourse loan, the stock purchase may be recharacterized as an option to
purchase (with no immediate tax consequences) until the circumstances
dictate that option treatment is no longer appropriate.
DIVIDEND RIGHTS. Generally, the amount of cash and the value of shares
of common stock credited to the employee's account will be treated as
taxable income to the employee (and deductible to Merry Land) when the
employee's benefits under the dividend rights are not subject to a
substantial risk of forfeiture.
RESTRICTED STOCK GRANTS. An employee will recognize ordinary income in
an amount equal to the fair market value of the common stock subject to the
restricted stock grants at the time of vesting, unless the employee elects
under Section 83(b) of the Code to recognize ordinary income in an amount
equal to the fair market value of the common stock at the time the
Restricted Stock is transferred to him. Dividends paid to an employee on
shares of restricted stock prior to the vesting of such shares are treated
as ordinary income of the employee in the year received unless the Section
83(b) election has been made. Merry Land will receive a deduction for
Federal income tax purposes equal to the ordinary income recognized by the
employee.
The foregoing does not address the effects of foreign, state or local
tax laws on the 2000 Management Incentive Plan or on the participation
therein.
ACCOUNTANTS
The Board of Directors and the Audit Committee have appointed the firm
of Arthur Andersen LLP as the company's independent public accountants for
the fiscal year ended December 31, 2000. A representative of the accounting
firm will be present at the annual meeting and will be available to respond
to appropriate questions. The representative will also have the opportunity
to make a statement if desired.
SHAREHOLDER PROPOSALS FOR 2001 ANNUAL MEETING
Any shareholder may present a proposal for consideration at future
meetings of the stockholders. The procedures which a shareholder must
follow to submit a proposal are fully set forth in Rule 14a-8 of the
General Rules and Regulations adopted by the Securities and Exchange
Commission under the Securities Exchange Act of 1934.
Among other requirements of the rule is a requirement that proposals
for consideration at the next annual meeting of the company's stockholders
must be received at the company's principal office not later than November
20, 2000.
OTHER MATTERS
The Board knows of no other matters to be brought before the meeting.
If, however, any other matter properly comes before the meeting, it is the
intention of the persons named in the accompanying form of proxy to vote
the proxy in accordance with their discretion and judgment in such matters.
THE COMPANY WILL FURNISH WITHOUT CHARGE TO EACH PERSON WHOSE PROXY IS
SOLICITED, ON THE WRITTEN REQUEST OF SUCH PERSON, A COPY OF THE COMPANY'S
ANNUAL REPORT ON FORM 10-K AS FILED WITH THE SECURITIES AND EXCHANGE
COMMISSION FOR 1999. ANY SUCH WRITTEN REQUEST SHOULD BE SENT TO DORRIE E.
GREEN, SECRETARY, MERRY LAND PROPERTIES, INC., P.O. BOX 1417, AUGUSTA,
GEORGIA 30903.
March 22, 2000 MERRY LAND PROPERTIES, INC.
<PAGE>
APPENDIX "A"
MERRY LAND PROPERTIES, INC.
2000 MANAGEMENT INCENTIVE PLAN
Merry Land Properties, Inc. ("Merry Land") hereby adopts this Merry Land
Properties, Inc. 2000 Management Incentive Plan (the "Plan") and subjects
250,000 shares of Merry Land common stock to the Plan.
1. PURPOSE
a. This Plan is a performance incentive and encourages the continued
employment of key employees of Merry Land and its subsidiary
corporations (the "Subsidiaries," as defined in Section 424(f) of the
Internal Revenue Code of 1986, as amended (the "Code")), so that the
person to whom an award (the "Award") is granted (the "Participant") may
acquire or increase his or her proprietary interest in the success of
Merry Land and the Subsidiaries. The Plan is also a performance
incentive and encourages the continued loyalty, support and services of
the members of Merry Land's Board of Directors. The Plan intends to
closely associate the interests of Merry Land's management with the
shareholders by reinforcing the relationship between Participants'
rewards and shareholders' gains.
b. Awards may be designated as Incentive Stock Options, Nonstatutory
Stock Options, Reload Options, Stock Loan Rights, Director Stock Loan
Rights, Dividend Rights, or Restricted Stock Grants. Awards designated
as Incentive Stock Options are intended to qualify as incentive stock
options as defined in Section 422 of the Code.
2. ADMINISTRATION
a. The Plan shall be administered by the Board of Directors of Merry
Land (the "Board of Directors"). A majority vote of the Board of
Directors shall be required for all of their actions.
b. The Board of Directors shall have the power, subject to, and within
the limits of, the express provisions of the Plan:
i. To determine from time to time which employees are eligible
persons and which of the eligible persons shall be granted Awards
under the Plan, and the time or times when, and the number of shares
for which, an Award shall be granted to such person;
ii. To prescribe the other terms and provisions (which need not be
identical) of each Award granted under the Plan to eligible persons;
iii. To construe and interpret the Plan and Awards granted under
it, and to establish, amend, and revoke rules and regulations for
administration. The Board of Directors, in the exercise of this power,
may correct any defect, or supply any omission, or reconcile any
inconsistency in the Plan, or in any Award agreement, in the manner
and to the extent they shall deem necessary or expedient to make the
Plan fully effective. In exercising this power, the Board of Directors
may retain counsel at the expense of Merry Land. All decisions and
determinations by the Board of Directors in exercising this power
shall be final and binding upon Merry Land, the Subsidiaries, and the
Participants;
iv. To determine the duration and purpose of leaves of absence
which may be granted to a Participant without constituting a
termination of his or her employment for purposes of the Plan;
v. Generally, to exercise such powers and to perform such acts as
are deemed necessary or expedient to promote the best interests of
Merry Land and the Subsidiaries with respect to the Plan; and
vi. To delegate all its authority with respect to the Plan to a
committee of the Board consisting of at least two (2) members of the
Board who are treated as "outside directors" for purposes of
Sec.162(m) of the Code and "Non-Employee Directors" for purposes of
Rule 16b-3 of the Securities Exchange Act of 1934.
3. STOCK
a. The stock subject to the Awards shall be shares of Merry Land's
authorized but unissued common stock, no par value per share (the
"Common Stock"). The original number of shares of common stock for which
Awards are authorized, excluding the shares involved in the unexercised
portion of any canceled, terminated or expired Awards, is 250,000.
b. Whenever any outstanding Stock Option or Reload Option under the
Plan expires, is canceled, or is otherwise terminated, the shares of
Common Stock allocable to the unexercised portion of such Award may
again be the subject of Awards under the Plan except for Awards
surrendered in conjunction with the exercise of a Stock Appreciation
Right.
4. ELIGIBILITY
The persons eligible to receive Awards shall be members of the Board of
Directors or full-time employees of Merry Land or the Subsidiaries who, in
the opinion of the Board of Directors, are responsible in more than
ministerial ways for the management, operation and success of Merry Land or
a parent or Subsidiary (such employees to be designated as "key
employees"). Subject to the following provisions, the Board of Directors
may from time to time grant Awards to one or more eligible persons. A
Participant may hold more than one option and receive more than one Award.
5. INCENTIVE STOCK OPTIONS AND NONSTATUTORY STOCK OPTIONS
The terms of each Award of Incentive Stock Options or Nonstatutory Stock
Options shall be evidenced by an option agreement. Each option agreement
shall contain such provisions as the Board of Directors deems appropriate.
Option agreements need not be identical, but each option agreement shall
include the substance of all of the following provisions:
a. Stock Options granted under this Plan shall be exercisable for such
periods as determined by the Board of Directors at the time of grant of
each such option, but in no event shall an Incentive Stock Option be
exercisable after the expiration of 10 years from the date of grant,
provided, however, that if any employee, at the time an Incentive Stock
Option is granted to such employee, owns stock representing more than
10% of the total combined voting power of all classes of stock of Merry
Land or any of the Subsidiaries (as determined under Section 424(d) of
the Code), the Incentive Stock Option granted to such employee shall not
be exercisable after the expiration of 5 years from the date of grant.
Each Incentive Stock Option and Nonstatutory Stock Option granted under
this Plan shall also be subject to earlier termination as provided in a
particular Award agreement.
b. The aggregate fair market value (determined at the time the Award
is granted) of the stock with respect to which Incentive Stock Options
first become exercisable by an individual during any calendar year under
the Plan (and all such other Plans of Merry Land, a Subsidiary thereof,
or parent or predecessor corporation within the meaning of Section 422
of the Code) shall not exceed $100,000.00. To the extent an Award of
Incentive Stock Options would so exceed $100,000, such excess options
shall be deemed Nonstatutory Stock Options.
c. The minimum number of shares with respect to which an option may be
exercised at any one time shall be 100 shares, unless the number
purchased is the total number at the time available for purchase under
the Award.
d. Each Award shall be exercisable in such installments (which need
not be equal) and at such times as designated by the Board of Directors.
To the extent not exercised, installments shall accumulate and be
exercisable, in whole or in part, at any time after becoming
exercisable, but no later than the date the Award expires.
e. The purchase price per share of Common Stock under each Incentive
Stock Option shall be not less than the fair market value of the Common
Stock subject to the Award on the date the Award is granted, subject to
the conditions contained below with respect to 10% shareholders. For
this purpose, the fair market value of the Common Stock shall be
determined in good faith by the Board of Directors. If any employee, at
the time an Incentive Stock Option is granted to him or her, owns stock
representing more than 10% of the total combined voting power of all
such classes of stock of Merry Land or any of the Subsidiaries (as
determined under Section 424(d) of the Code) the purchase price per
share of Common Stock under each Incentive Stock Option granted to him
or her shall be not less than 110% of the fair market value of the
Common Stock subject to the Award at the date the Award is granted.
f. The optionee shall not be deemed to be the holder of, or to have
any of the rights of a holder with respect to, any shares of Common
Stock subject to such option unless and until the option shall have been
exercised pursuant to the terms thereof, Merry Land shall have issued
and delivered the shares to the optionee, and the optionee's name shall
have been entered as a stockholder of record on the books of Merry Land.
Thereupon, the optionee shall have full voting, dividend, and other
ownership rights with respect to such shares of Common Stock.
g. Except as provided to the contrary in Section 7 hereof, an
Incentive Stock Option granted hereunder shall remain outstanding and
shall be exercisable only so long as the person to whom such Incentive
Stock Option was granted remains an employee of Merry Land or any parent
or Subsidiary.
h. Notwithstanding anything to the contrary herein, each Option
agreement shall provide that all Stock Options may be exercised at any
time following a "Change in Control" as defined in Section 7(d)
occurring after the date of the Award.
6. METHOD OF EXERCISE, PAYMENT OF PURCHASE PRICE OF OPTIONS
a. Subject to the provisions of Sections 5 and 14, Incentive Stock
Options and Nonstatutory Stock Options granted under this Plan may be
exercised in whole or in installments to such extent, and at such time
or times during the terms thereof, as shall be determined by the Board
of Directors at the time of grant of each such Award.
b. An option may be exercised by the Participant delivering to the
Board of Directors on any business day a written notice specifying the
number of shares of Common Stock the optionee then desires to purchase
(the "Notice").
c. Payment for the shares of Common Stock purchased pursuant to the
exercise of an option shall be in either (i) cash equal to the option
price for the number of shares specified in the Notice (the "Total
Option Price"), or (ii) in the discretion of the Board of Directors,
shares of Common Stock of Merry Land with a fair market value,
determined in accordance with Section 5 hereof, as of the effective date
of exercise of the option, equal to or less than the Total Option Price,
plus cash, in an amount equal to the amount, if any, by which the Total
Option Price exceeds the fair market value of the Common Stock.
d. Merry Land may, with the Board of Directors' approval, extend one
or more loans to Participants in connection with the exercise of
outstanding options granted under the Plan; provided any such loan shall
be subject to the following terms and conditions:
i. The principal of the loan shall not exceed the amount required
to be paid to Merry Land upon the exercise of the option and the loan
proceeds shall be paid directly to Merry Land in consideration of such
exercise.
ii. The loan shall be with full recourse to the Participant, shall
be evidenced by the Participant's promissory note and shall bear
interest at a rate determined by the Board of Directors but not less
than Merry Land's average cost of funds as of a date within thirty-one
(31) days of the date of such loan, as determined by the Board of
Directors.
iii. In the event a Participant terminates his or her employment
with Merry Land, the unpaid principal balance of the note shall become
due and payable on the tenth (10th) business day after such
termination; provided, however, that if a sale of such shares would
cause such Participant to incur liability under Section 16(b) of the
Securities Exchange Act of 1934, the unpaid balance shall become due
and payable on the tenth (10th) business day after the first day on
which a sale of such shares could have been made without incurring
such liability assuming for these purposes that there are no other
transactions by the Participant subsequent to such termination;
provided, however, that this clause (iv) need not apply, in the
discretion of the Board of Directors, if the Participant's employment
terminates within three years after a "Change in Control" as defined
in Section 7(d).
7. TERMINATION OF EMPLOYMENT OR SERVICE -OPTIONEES
a. In the event of the death of an optionee while in the employ of
Merry Land or a parent or Subsidiary:
i. Stock Options, whether or not exercisable at the time of the
death of the optionee, may be exercised, as provided in Section 6
hereof, by the estate of the optionee or by a person who acquired the
right to exercise such option by bequest or inheritance from such
optionee, within one year after the date of death but not later than
the date on which the option would otherwise expire; or
ii. The Board of Directors may authorize, if not theretofore
authorized, Merry Land to accept surrender of the right to exercise
such option (or any part thereof) to the extent that the optionee was
entitled to do so under Section 8 hereof at the date of his or her
death by the estate of the optionee, or by a person who acquired the
right to exercise such option by bequest or inheritance from such
optionee, within one year after the date of such death but not later
than the date on which the Option would otherwise expire.
b. If the employment of an optionee is terminated by reason of
disability as defined in Section 22(e)(3) of the Code, the Stock Options
held by such optionee may be exercised, as provided in Section 6 hereof,
whether or not exercisable at the time of such termination of
employment, within one year after such termination but not later than
the date on which such options would otherwise expire.
c. If the employment of an optionee is terminated for any reason other
than death or disability, Incentive Stock Options held by such optionee
shall, to the extent not theretofore exercised, be canceled no later
than three months after the date of such termination but no later than
the date on which the options would otherwise expire.
d."Change in control" means a change in control of Merry Land of a
nature that would be required to be reported in response to Item 6(e) of
Schedule 14A of Regulation 14A promulgated under the Exchange Act as in
effect on January 1, 1997, provided that such a change in control shall
be deemed to have occurred at such time as (i) any "person" (as that
term is used in Sections 13(d) and 14(d)(2) of the Exchange Act), is or
becomes the "beneficial owner" (as defined in Rule 13d-3 under the
Exchange Act) directly or indirectly, of securities representing 30% or
more of the combined voting power for election of directors of the then
outstanding securities of Merry Land or any successor of Merry Land;
(ii) during any period of two consecutive years or less, individuals who
at the beginning of such period constitute the Board cease, for any
reason to constitute at least a majority of the Board, unless the
election or nomination for election of each new director was approved by
a vote of at least two-thirds of the directors then still in office who
were directors at the beginning of the period; (iii) the shareholders of
Merry Land approve any merger, consolidation or share exchange as a
result of which the common stock of Merry Land shall be changed,
converted or exchanged (other than a merger with a wholly-owned
subsidiary of Merry Land), or any dissolution or liquidation of Merry
Land or any sale or the disposition of 50% or more of the assets or
business of Merry Land; or (iv) the shareholders of Merry Land approve
any merger or consolidation to which Merry Land is a party or a share
exchange in which Merry Land shall exchange its shares for shares of
another corporation as a result of which the persons who were
shareholders of Merry Land immediately prior to the effective date of
the merger, consolidation or share exchange shall have beneficial
ownership of less than 50% of the combined voting power for election of
directors of the surviving corporation following the effective date of
such merger, consolidation or share exchange. However, a "change in
control" shall not be deemed to occur if one or more of Merry Land's
current executive officers or directors (in office on the date this Plan
is adopted) becomes the "beneficial owner" of 30% or more of the
securities described in clause (i).
8. STOCK APPRECIATION RIGHTS
a. The Board of Directors may authorize on such terms and conditions
as they deem appropriate in each case, Merry Land to accept the
surrender by the Optionee of the right to exercise an Incentive Stock
Option or Nonstatutory Stock Option (or portion thereof) in
consideration for the payment by Merry Land of an amount equal to the
excess of the fair market value of the shares of Common Stock subject to
such option (or portion thereof) surrendered over the option price of
such shares (referred to as a "Stock Appreciation Right" or "SAR"). Such
payment, at the discretion of the Board of Directors, may be made in
shares of Common Stock valued at the then fair market value thereof
(determined as provided in Section 5 hereof), or in cash, or partly in
cash and partly in shares of Common Stock. The terms and conditions for
an SAR may be set forth in the Option agreement, or the Board may retain
discretion to authorize SAR payments on a case-by-case basis; provided,
however, that in the event of a "Change in Control" as defined in
Section 7(d), the Board shall exercise any discretion in favor of making
any requested SAR payments with respect to any Stock Options granted
prior to the Change in Control.
b. Any option surrendered as provided in this Section 8 shall be
canceled by Merry Land and not be subject to further grant.
c. The Board of Directors shall be authorized hereunder to make
payment to the optionee in shares of Common Stock only if Section 83 of
the Code applies to the Common Stock transferred to the Participant.
d. Notwithstanding anything contained herein to the contrary, the
Stock Appreciation Rights provided in this Section with respect to
Incentive Stock Options shall, by their terms, meet the following
requirements:
i. The Stock Appreciation Rights shall expire not later than the
expiration of the underlying Incentive Stock Option to which such
rights relate;
ii. The Stock Appreciation Rights may be for no more than 100% of
the difference between the exercise price of the underlying Incentive
Stock Option and the fair market value of the stock subject to the
underlying Incentive Stock Option at the time the Stock Appreciation
Rights are exercised;
iii. The Stock Appreciation Rights may be transferable only when
the underlying Incentive Stock Option is transferable, and under the
same conditions;
iv. The Stock Appreciation Rights may be exercised only when the
underlying Incentive Stock Option is eligible to be exercised;
v. The Stock Appreciation Rights may be exercised only when the
fair market value of the stock subject to the underlying Incentive
Stock Option exceeds the exercise price of such Incentive Stock
Option; and
vi. The Stock Appreciation Rights may be exercised only if such
exercise has the same economic and tax consequences as the exercise of
the underlying Incentive Stock Option followed by an immediate sale of
the stock acquired thereby.
9. RELOAD OPTIONS
a. Authorization of Reload Options. Concurrently with the Award of any
Stock Option (such Option hereinafter referred to as the "Underlying
Option") to any Participant, the Board of Directors may grant one or
more reload options (each, a "Reload Option") to such Participant to
purchase for cash or Common Stock a number of shares of Common Stock as
specified below. A Reload Option shall be exercisable for an amount of
shares of Common Stock equal to (i) the number of shares of Common Stock
delivered by the Optionee to the Company to exercise the Underlying
Option, and (ii) to the extent authorized by the Board of Directors, the
number of shares of Common Stock used to satisfy any tax withholding
requirement incident to the exercise of the Underlying Option, subject
to the availability of Common Stock under the Plan at the time of such
exercise. Any Reload Option may provide for the grant, when exercised,
of subsequent Reload Options to the extent and upon such terms and
conditions consistent with this Section 8, as the Board of Directors in
its sole discretion shall specify at or after the time of grant of such
Reload Option. The grant of a Reload Option will become effective upon
the exercise of an Underlying Option or Reload Option by delivering to
the Company Common Stock in payment of the exercise price and/or tax
withholding obligations. Notwithstanding the fact that the Underlying
Option may be an Incentive Stock Option, a Reload Option is not intended
to qualify as an Incentive Stock Option under Section 422 of the Code.
b. Reload Option Amendment. Each Stock Option Agreement shall state
whether the Board of Directors has authorized Reload Options with
respect to the Underlying Option. Upon the exercise of an Underlying
Option or other Reload Option, the Reload Option will be evidenced by an
amendment to the underlying Stock Option Agreement.
c. Reload Option Price. The option price per share of Common Stock
deliverable upon the exercise of a Reload Option shall be the fair
market value of a share of common Stock on the date the grant of the
Reload Option becomes effective.
d.Term and Exercise. Each Reload Option is fully exercisable
immediately upon its grant. The term of each Reload Option shall be
equal to the remaining option term of the Underlying Option.
e. Termination of Employment. No additional Reload Options shall be
granted to Optionees when Options and/or Reload Options are exercised
pursuant to the terms of this Plan following termination of the
Optionee's employment unless the Board of Directors, in its sole
discretion, shall determine otherwise.
f. Applicability of Other Sections. Except as otherwise provided in
this Section 9, the provisions of Sections 5 and 6 applicable to Options
shall apply equally to Reload Options.
10. STOCK LOAN RIGHTS
A Participant may be granted rights to receive limited or full recourse
loans, with or without interest, to purchase Common Stock at the fair
market value (determined as provided in Section 5) prevailing at the time
of purchase ("Stock Loan Rights"). Stock Loan Rights may permit a
Participant to elect to purchase the stock subject to the Award at any time
within forty-five (45) days of the date of Award. If the Participant
chooses not to purchase the Common Stock subject to the Award within such
time period, the Award shall be deemed to be canceled and the Common Stock
subject to such Award may again be the subject of Awards under the Plan.
The loans shall be:
a. evidenced by a promissory note,
b. payable on demand (except upon the death, disability or retirement
of a Participant or upon a change in control as defined in Section
7(d)),
c. secured by the Common Stock purchased by the employee with such
percentage as may be set by the Board of Directors of all dividends to
be applied against the principal balance of the loan, and
d. if approved by the Board of Directors, extended on a limited
recourse basis with recourse in the event of default limited to the
shares of stock purchased with and securing the loan and without
personal liability on the part of the employee.
The percentage of dividends required to be applied against the principal
balance of any loan shall be set forth in the terms of the Award. No shares
of Common Stock purchased pursuant to an Award of Stock Loan Rights may be
released to the employee until the loan is repaid in full; provided,
however, the Board of Directors may release a portion of said shares if and
to the extent the fair market value of the remaining shares securing
repayment of the loan exceeds 150% of the outstanding principal balance of
the loan.
The loans shall be forgiven upon a "Change in Control" as defined in
Section 7(d) occurring after the Award of the Stock Loan, except that if
the Change in Control occurs within four years of the Award, the percentage
of the loan forgiven shall be limited initially to 20% of the initial loan
amount, and another 20% for each year thereafter. The loans may be
forgiven by the Board of Directors in its discretion upon the death,
disability or retirement of a Participant.
11. DIVIDEND RIGHTS
A Participant may also be granted "Dividend Rights" based on the
dividends declared on the Common Stock, to be credited as of dividend
payment dates, during the period between the Award Date and the date such
Award is exercised, vests or expires, as determined by the Board of
Directors. Such Dividend Rights shall be converted to cash or additional
shares of Common Stock by such formula and at such time and subject to such
limitations as may be determined by the Board of Directors.
12. RESTRICTED STOCK GRANTS
a. The Board of Directors may award Restricted Stock Grants to
Participants. Each Restricted Stock Grant shall be evidenced by a
Restricted Stock Agreement, and each Restricted Stock Agreement shall
set forth the conditions, which will need to be timely satisfied before
the Award will be effective and the conditions, if any, under which the
Participant's interest in the related Common Stock will be forfeited.
The Board of Directors may make a Restricted Stock Grant subject to the
satisfaction of such conditions which the Board of Directors deems
appropriate under the circumstances and the related Restricted Stock
Agreement shall set forth each such condition and the deadline for
satisfying each such grant condition. If a Restricted Stock Grant fails
to become effective by reason of the failure of a condition to the
effectiveness of the Award, in whole or in part, the Award shall be
deemed to be canceled and the Common Stock subject to such Award may
again be the subject of Awards under the Plan.
b.The Board of Directors may make each Restricted Stock Grant (if,
when and to the extent that the grant becomes effective) subject to such
conditions which the Board of Directors acting in its absolute
discretion deems appropriate under the circumstances and the related
Restricted Stock Agreement shall set forth each such condition and the
deadline for satisfying each such forfeiture condition, which conditions
may be waived in the event of death, disability or retirement of a
Participant as well as a change in control. A Participant's
nonforfeitable interest in the shares of Common Stock related to a
Restricted Stock Grant shall depend on the extent to which each such
condition is timely satisfied. A stock certificate shall be issued to,
or for the benefit of, the Participant with respect to the number of
shares of Common Stock for which a grant has become effective and
completely nonforfeitable.
c. Each Restricted Stock Agreement shall provide the right to receive
any cash or other dividends which are paid with respect to his or her
Restricted Stock Grant before the Participant's interest in such stock
becomes completely nonforfeitable.
d. A Participant shall have the right to vote the Stock related to his
or her Restricted Stock Grant after the Award is effective with respect
to such Stock but before his or her interest in such Stock has been
forfeited or has become nonforfeitable.
e. In the event of a "Change of Control" as defined in Section 7(d)
occurring after the Award of the Restricted Stock Grants, a Participant
shall become fully vested in the Restricted Stock Grant, except that if
the Change in Control occurs within four years of the Award, the
percentage of the Restricted Stock Grants that becomes vested under this
clause will be limited initially to 20% and another 20% for each year
thereafter. The Board of Directors in its discretion may fully vest a
Participant's Restricted Stock Grants upon the Participant's death,
disability or retirement.
13. USE OF PROCEEDS FROM STOCK
Proceeds from the sale of Common Stock pursuant to Options or Stock
Loans granted under the Plan shall constitute general funds of Merry Land.
14. ADJUSTMENT OF SHARES UPON CHANGES IN CAPITAL STRUCTURE
The number of available shares authorized to be the subject of Awards
and the number of shares covered by any outstanding Stock Option, Reload
Option, Dividend Right or Restricted Stock Grant and the price per share
thereof shall be proportionately adjusted by the Board of Directors for any
increase or decrease in the number of issued shares of Common Stock
resulting from the subdivision or consolidation of shares or any other
capital adjustment, the payment of a stock dividend or any other increases
in such shares effected without receipt of consideration by Merry Land, or
any other decrease therein effected without distribution of cash or
property in connection therewith. If Merry Land is merged into or
consolidated with another corporation under circumstances where Merry Land
is not the surviving corporation or if Merry Land is liquidated or sells or
otherwise disposes of substantially all of its assets while unexercised
Stock Options, Reload Options, Dividend Rights or Restricted Stock Grants
remain outstanding under the Plan, (i) subject to the provisions of clause
(ii) below, after the effective date of such merger, consolidation, or
sale, as the case may be, each holder of any outstanding Award shall be
entitled, in lieu of such rights to shares of Common Stock, similar rights
with respect to shares of such stock or other securities, cash, or other
property, as the holders of shares of common stock receive pursuant to the
terms of the merger, consolidation, or sale; and (iii) all outstanding
options may be canceled by the Board of Directors as of the effective date
of any such merger, consolidation, liquidation, or sale provided that
notice of such cancellation shall be given to each holder of an option, and
each holder of any option shall have the right to exercise such option in
full, whether or not then otherwise exercisable, during a 30-day period
preceding the effective date of such merger, consolidation, liquidation,
sale or acquisition.
15. AMENDMENT OF THE PLAN
a.The Board of Directors, at any time, and from time to time, may
amend the Plan, subject to any required regulatory approval and to the
limitation that, except as provided in Section 14 hereof, no amendment
shall be effective unless approved by vote of a majority of the total
votes cast by the stockholders of Merry Land at an annual or special
meeting held within twelve months before or after the date of such
amendment's adoption, where such amendment will:
i. Increase the number of shares of Common Stock as to which
Incentive Stock Options may be granted under the Plan; or
ii. Change in substance Section 4 hereof relating to eligibility to
participate in the Plan; or
iii. Materially increase the cost to Merry Land of Awards other
than Incentive Stock Options.
b. Except as provided in Section 14 hereof, rights and obligations
under any Award granted before amendment of the Plan shall not be
altered or impaired by amendment of the Plan, except with the consent of
the person to whom the Award was granted.
16. EFFECTIVENESS OF THE PLAN
This Plan shall become effective upon its adoption by the Board of
Directors; provided, however, that (i) the effectiveness of this Plan shall
be subject to the approval of the stockholders of Merry Land, within 12
months before or after the adoption of this Plan by the Board of Directors,
and (ii) the effectiveness of Awards granted under this Plan prior to the
date such stockholder approval is obtained shall also be subject to such
stockholder approval.
17. TERMINATION OR SUSPENSION OF PLAN
The Board of Directors at any time may terminate or suspend the Plan.
Unless sooner terminated, the Plan shall terminate on the tenth anniversary
of the effective date specified in Section 16 hereof, but such termination
shall not affect any Award theretofore granted. An Award may not be granted
while the Plan is suspended or after it is terminated. Rights and
obligations under any Award granted while the Plan is in effect shall not
be altered or impaired by suspension or termination of the Plan except with
the consent of the Participant.
18. NONEXCLUSIVITY OF THE PLAN
Neither the adoption of the Plan by the Board of Directors nor the
submission of the Plan to the stockholders of Merry Land for approval shall
be construed as creating any limitations on the power of the Board of
Directors to adopt such other incentive arrangements as it may deem
desirable, including, without limitation, the granting of stock Awards
otherwise than under the Plan, and such arrangements may be either
applicable generally or only in specific cases. The adoption of this Plan
shall not terminate or have any effect on any prior or existing incentive
stock option or stock loan plan, except as specifically provided herein.
19. NONTRANSFERABILITY OF AWARDS
Except as provided in Section 7 hereof:
a. All Awards granted pursuant to the Plan shall not be transferable,
except by will or the laws of descent and distribution, and shall be
exercisable during the Participant's lifetime only by the Participant;
and
b. No assignment or transfer of the Award, or of the rights
represented thereby, whether voluntary or involuntary, by operation of
law or otherwise, shall vest in the assignee or transferee any interest
or right in the Award whatsoever, but immediately upon any attempt to
assign or transfer the Award the same shall terminate and be of no force
or effect.
20. MANNER OF GRANT OF AWARDS
Nothing contained in this Plan or in any resolution heretofore or
hereafter adopted by the Board of Directors or any committee or by the
stockholders of Merry Land with respect to this Plan shall constitute the
granting of an Award under the Plan. The granting of an Award under this
Plan shall be deemed to occur only upon the date on which the Board of
Directors as provided for in Section 2 hereof shall approve the grant of
such Award.
21. SECURITIES LAWS
All Awards shall be subject to any provision necessary to assure
compliance with federal and state securities laws. Unless registered under
the Securities Act of 1933 or otherwise advised by counsel to Merry Land,
(i) each Award shall contain Participant's acknowledgment that neither the
Award nor the securities subject to the Award have been registered under
any state or federal securities law; (ii) Participant agrees that the Award
may not be exercised unless he or she is able and willing to represent in
writing to Merry Land that the securities subject to the Award are being
acquired by Participant for his or her own account and without a view to
the further distribution of such securities; and (iii) a legend reading
substantially as follows shall be placed on the certificate(s) representing
the securities:
"These securities have not been registered under the Securities Act of
1933 nor under any state securities law and may not be offered or sold
or transferred in the absence of an effective registration statement
under the Securities Act or under any applicable state act or an opinion
of counsel satisfactory to the Corporation that such registration is not
required."
The transfer agent shall also be instructed to refuse to transfer the
securities unless the legend has been complied with.
22. TAX WITHHOLDING
The employer (whether Merry Land or a Subsidiary) of any employee
granted an Award under this Plan shall have the right to deduct or
otherwise effect a withholding of any amount required by federal or state
laws to be withheld with respect to the grant, vesting or exercise of any
Award or the sale of stock acquired upon the exercise of an Incentive Stock
Option in order for the employer to obtain a tax deduction available to the
employer as a consequence of such grant, exercise, or sale, as the case may
be or to comply with the law.
23. CONTINUATION OF EMPLOYMENT
Nothing contained in this Plan (or in any written Award agreement) shall
obligate Merry Land or any Subsidiary to continue to employ, for any
period, an employee to whom an Award has been granted, or interfere with
the right of Merry Land or any Subsidiary to reduce such employee's
compensation.
24. PLAN NOT FUNDED
No Participant, beneficiary or other person shall have any right, title
or interest in any fund or in any specific asset (including shares of
Common Stock) of Merry Land by reason of any Award granted hereunder. There
shall be no funding of any benefits which may become payable hereunder.
Neither the provisions of the Plan (or of any documents related hereto),
nor the creation or adoption of the Plan, nor any action taken pursuant to
the provisions of the Plan shall create a trust of any kind or a fiduciary
relationship between Merry Land and any Participant or beneficiary. To the
extent that a Participant or beneficiary or other person acquires a right
to receive an Award hereunder, such right shall be no greater than the
right of any unsecured general creditor of Merry Land. Awards payable under
the Plan shall be paid in shares of Common Stock or from the general assets
of Merry Land, and no special or separate fund or deposit shall be
established and no segregation of assets or shares shall be made to assure
payment of such Awards.
25. EXCULPATION AND INDEMNIFICATION
Merry Land shall indemnify and hold harmless the members of the Board of
Directors acting in accordance with Section 2, from and against any and all
liabilities, costs, and expenses incurred by such persons as a result of
any act, or omission to act, in connection with the performance of such
persons' duties, responsibilities, and obligations under this Plan, other
than such liabilities, costs and expenses as may result from the gross
negligence, bad faith, willful misconduct, or criminal acts of such
persons.
MERRY LAND PROPERTIES, INC.
P.O. Box 1417
Augusta, Georgia 30903
<PAGE>
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby constitutes and appoints W. Tennent Houston and
Michael N. Thompson, or either of them present at the annual meeting to be
held on April 20, 2000 at 10:00 a.m. at the company's corporate office
located at 624 Ellis Street, Augusta, Georgia, and at any or all
adjournments, with power of substitution, as the undersigned's true and
lawful attorney and proxy to represent the undersigned at that meeting and
to vote in the undersigned's name, that number of shares which the
undersigned is entitled to vote. The undersigned's attorney and proxy is
hereby instructed to vote as follows:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
1. ELECTION OF DIRECTORS
<S> <C> <C> <C> <C> <C>
<square> FOR all nominees listed below <square> WITHHOLD
(except those marked to the AUTHORITY to
contrary below) vote for all
nominees listed
below
Boone A. Knox Michael N. Thompson
- -----------------------------------------------------------------------------
2. APPROVAL OF THE 2000 MANAGEMENT INCENTIVE PLAN
<square> FOR <square> AGAINST <square> ABSTAIN
- -------------------------------------------------------------------------------
3. IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO VOTE UPON SUCH OTHER
BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING.
<square> FOR <square> WITHHOLD AUTHORITY
- -------------------------------------------------------------------------------
This proxy when properly executed will be voted in the manner directed by the
undersigned stockholder. IF NO DIRECTION IS GIVEN, THIS PROXY WILL BE VOTED
FOR THE ELECTION OF DIRECTOR AND FOR THE RATIFICATION OF ACCOUNTANTS.
- -------------------------------------------------------------------------------
Please sign exactly as name appears below. When shares are held by joint
tenants, both should sign. When signing as attorney, executor, administrator,
trustee or guardian, give full title 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>
<TABLE>
<CAPTION>
* PLEASE INDICATE ANY CHANGE IN ADDRESS
<S> <C>
Dated: , 2000
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Signature of Stockholder
- --------------------------------------------------------------------------------
Signature of Stockholder held jointly
PLEASE SPECIFY CHOICES, SIGN, DATE AND RETURN IN THE ENCLOSED POSTAGE PAID
ENVELOPE.
</TABLE>
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE
ENCLOSED ENVELOPE.
