<PAGE> 1
File pursuant to Rule 424(b)(2)
Registration No. 33-65067
PROSPECTUS SUPPLEMENT
(To Prospectus dated January 22, 1996)
4,000,000 Shares
(MERRY LAND & INVESTMENT COMPANY, INC. LOGO)
7.625% SERIES E CUMULATIVE REDEEMABLE PREFERRED STOCK
(Liquidation Preference $25.00 Per Share)
------------------------
DIVIDENDS ON THE 7.625% SERIES E CUMULATIVE REDEEMABLE PREFERRED STOCK, (THE
"SERIES E PREFERRED STOCK") OF MERRY LAND & INVESTMENT COMPANY, INC. ("MERRY
LAND" OR THE "COMPANY") WILL BE CUMULATIVE FROM THE DATE OF ORIGINAL ISSUE AND
WILL BE PAYABLE QUARTERLY ON THE LAST DAY OF MARCH, JUNE, SEPTEMBER AND DECEMBER
OF EACH YEAR, COMMENCING MARCH 31, 1998, AT THE RATE OF 7.625% OF THE
LIQUIDATION PREFERENCE PER ANNUM (EQUIVALENT TO $1.906 PER ANNUM PER SHARE).
THE SERIES E PREFERRED STOCK IS NOT REDEEMABLE PRIOR TO FEBRUARY 13, 2003. ON OR
AFTER FEBRUARY 13, 2003, THE SERIES E PREFERRED STOCK MAY BE REDEEMED FOR CASH
AT THE OPTION OF THE COMPANY IN WHOLE OR IN PART, AT A REDEMPTION PRICE OF
$25.00 PER SHARE, PLUS ACCRUED AND UNPAID DIVIDENDS, IF ANY, THEREON. THE
REDEMPTION PRICE (OTHER THAN THE PORTION THEREOF CONSISTING OF ACCRUED AND
UNPAID DIVIDENDS) IS PAYABLE SOLELY OUT OF THE SALE PROCEEDS OF OTHER CAPITAL
STOCK OF THE COMPANY, WHICH MAY INCLUDE OTHER SERIES OF PREFERRED SHARES. THE
SERIES E PREFERRED STOCK HAS NO STATED MATURITY AND WILL NOT BE SUBJECT TO ANY
SINKING FUND OR MANDATORY REDEMPTION AND WILL NOT BE CONVERTIBLE INTO ANY OTHER
SECURITIES OF THE COMPANY. SEE "DESCRIPTION OF SERIES E PREFERRED
STOCK -- REDEMPTION."
------------------------
APPLICATION WILL BE MADE TO LIST THE SERIES E PREFERRED STOCK ON THE NEW YORK
STOCK EXCHANGE. TRADING OF SERIES E PREFERRED STOCK ON THE NEW YORK STOCK
EXCHANGE IS EXPECTED TO COMMENCE WITHIN THE 30-DAY PERIOD AFTER INITIAL DELIVERY
OF THE SERIES E PREFERRED STOCK. SEE "UNDERWRITING."
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS TO WHICH IT
RELATES. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
-----------------------
PRICE $25 A SHARE
-----------------------
<TABLE>
<CAPTION>
UNDERWRITING
PRICE TO DISCOUNTS AND PROCEEDS TO THE
PUBLIC(1) COMMISSIONS(2) COMPANY(3)
--------- -------------- ----------
<S> <C> <C> <C>
Per Share................................. $25.00 $0.7875 $24.2125
Total..................................... $100,000,000 $3,150,000 $96,850,000
</TABLE>
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(1) Plus accrued dividends, if any, from the date of original issue.
(2) The Company has agreed to indemnify the Underwriter against certain
liabilities, including liabilities under the Securities Act of 1933, as
amended. See "Underwriting."
(3) Before deducting expenses of the offering estimated at $200,000.
------------------------
The shares of Series E Preferred Stock are offered, subject to prior sale,
when, as and if accepted by the Underwriters and subject to approval of certain
legal matters by Piper & Marbury L.L.P., counsel to the Underwriters. It is
expected that delivery of the shares of Series E Preferred Stock will be made on
or about February 13, 1998 through the facilities of DTC, against payment
therefor in immediately available funds.
------------------------
MORGAN STANLEY DEAN WITTER
February 4, 1998
<PAGE> 2
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITER MAY OVERALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE SECURITIES
OFFERED HEREBY AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN
MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
No person has been authorized to give any information or to make any
representations other than those contained or incorporated by reference in this
Prospectus Supplement or the Prospectus, and, if given or made, such information
or representations must not be relied upon as having been authorized. This
Prospectus Supplement and the Prospectus do not constitute an offer to sell or
the solicitation of an offer to buy any securities other than the securities to
which they relate or any offer to sell or the solicitation of any offer to buy
such securities in any circumstances in which such offer or solicitation is
unlawful. Neither the delivery of this Prospectus Supplement nor the Prospectus
nor any sale made hereunder or thereunder shall, under any circumstances, create
any implication that there has been no change in the affairs of the Company
since the date hereof or thereof or that the information contained or
incorporated by reference herein or therein is correct as of any time subsequent
to the date of such information.
This Prospectus Supplement and the Prospectus to which it relates,
including documents incorporated by reference herein and therein, contain
forward-looking statements within the meaning of Section 27A of the Securities
Act of 1933, as amended, and Section 21B of the Securities Exchange Act of 1934,
as amended. Forward-looking statements are inherently subject to risks and
uncertainties, many of which cannot be predicted with accuracy and some of which
might not even be anticipated. Future events and actual results, financial and
otherwise, may differ materially from the results discussed in the
forward-looking statements. Factors that might cause such a difference include,
but are not limited to, those discussed in "Management's Discussion and Analysis
of Results of Operations and Financial Condition" incorporated by reference
herein.
TABLE OF CONTENTS
PROSPECTUS SUPPLEMENT
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
The Offering................................................ S-3
The Company................................................. S-4
Recent Developments......................................... S-4
Incorporation of Certain Documents by Reference............. S-4
Use of Proceeds............................................. S-5
Capitalization.............................................. S-6
Description of Series E Preferred Stock..................... S-7
Taxation.................................................... S-10
Underwriting................................................ S-15
Experts..................................................... S-16
Legal Opinions.............................................. S-16
PROSPECTUS
Available Information....................................... 2
Incorporation of Certain Documents by Reference............. 2
The Company................................................. 4
Use of Proceeds............................................. 4
Certain Ratios.............................................. 4
Description of Debt Securities.............................. 5
Description of Common Stock................................. 16
Description of Preferred Stock.............................. 17
Description of Common Stock Warrants........................ 21
Description of Depositary Shares............................ 21
Plan of Distribution........................................ 23
Experts..................................................... 24
Legal Opinions.............................................. 24
</TABLE>
S-2
<PAGE> 3
THE OFFERING
SECURITIES OFFERED.........
4,000,000 shares of 7.625% Series E Cumulative
Redeemable Preferred Stock.
DIVIDENDS..................
Cumulative commencing February 13, 1998 at the rate of
7.625% of the liquidation preference per annum
(equivalent to $1.906 per annum per share) payable
quarterly in arrears on the last day of March, June,
September and December of each year, commencing March
31, 1998.
LIQUIDATION PREFERENCE.....
$25.00 per share, plus an amount equal to accrued and
unpaid dividends.
REDEMPTION AT OPTION OF THE
COMPANY..................
The Series E Preferred Stock is not redeemable prior to
February 13, 2003. On or after February 13, 2003, the
Series E Preferred Stock will be redeemable by the
Company, in whole or in part, at the option of the
Company, for cash in an amount equal to the liquidation
preference. The redemption price (other than the
portion thereof consisting of accrued and unpaid
dividends) is payable solely from proceeds from the
sale of other capital stock of the Company, including
but not limited to common stock, preferred stock,
depositary shares, interests, participations or other
ownership interests (however designated) and any rights
(other than debt securities convertible into or
exchangeable for equity securities) or options to
purchase any of the foregoing.
VOTING RIGHTS..............
If dividends on the Series E Preferred Stock or any
Parity Stock (as defined below) are in arrears for six
or more quarterly dividend periods, holders of the
Series E Preferred Stock (voting as a single class with
holders of shares of any series of Preferred Stock
ranking on a parity with the Series E Preferred Stock
with respect, in each case, to the payment of dividends
and amounts upon liquidation, dissolution and winding
up ("Parity Stock")) will have the right to elect two
additional directors to serve on the Company's Board of
Directors until such dividend arrearage is eliminated.
In addition, certain changes that would be materially
adverse to the rights of holders of the Series E
Preferred Stock or Parity Stock cannot be made without
the affirmative vote of two-thirds of the shares of
Series E Preferred Stock and the shares of any Parity
Stock similarly affected, voting as a single class,
entitled to be cast thereon.
RANKING....................
The Series E Preferred Stock will rank pari passu with
the Company's Series A, Series B, Series C and Series D
Preferred Stock and senior to the Common Stock with
respect to the payment of dividends and amounts upon
liquidation, dissolution or winding up.
CONVERSION RIGHTS..........
The Series E Preferred Stock is not convertible into
any other securities of the Company.
TRADING....................
Application will be made to list the Series E Preferred
Stock on the New York Stock Exchange. Trading of the
Series E Preferred Stock on the New York Stock Exchange
is expected to commence within the 30-day period after
the initial delivery of the Series E Preferred Stock.
The Underwriters have advised the Company that they
intend to make a market in the Series E Preferred Stock
prior to the commencement of trading on the New York
Stock Exchange. The Underwriters will have no
obligation to make a market in the Series E Preferred
Shares, however, and may cease market making
activities, if commenced, at any time.
USE OF PROCEEDS............
The net proceeds from the Offering will be used to
repay outstanding Company debt and to acquire and
develop additional apartment properties.
S-3
<PAGE> 4
THE COMPANY
Merry Land is one of the largest publicly owned real estate investment
trusts ("REITs") in the United States and, among REITs, is one of the largest
owners and operators of upscale, garden apartments in the United States based on
recent data compiled by the National Association of Real Estate Investment
Trusts. The Company had a total equity market capitalization of $1.2 billion at
January 31, 1998. At that date, the Company owned a high quality portfolio of
105 apartment communities located primarily in the Southern United States,
containing 29,546 units and having an aggregate cost of $1.5 billion, an average
occupancy rate of 93% and an average monthly rental rate of $709 per unit. The
Company is a self-administered and self-managed REIT headquartered in Augusta,
Georgia.
Merry Land's objective is to increase funds from operations and to produce
long term profitability for its stockholders while providing high quality
apartment communities for its residents. The Company expects to achieve its
financial objectives by producing greater cash flows through effective
management of its existing apartment communities and by acquiring and developing
additional apartment properties.
RECENT DEVELOPMENTS
For the quarter ended December 31, 1997, rental income from apartments, net
income available to common shareholders, and net income available to common
shareholders per share was $58.1 million, $7.6 million and $0.20, respectively,
as compared to rental income from apartments, net income available to common
shareholders, and net income available to common shareholders per share of $46.6
million, $12.1 million and $0.32, respectively, for the fourth quarter of 1996.
For the twelve months of 1997, rental income from apartments, net income
available to common shareholders, and net income available to common
shareholders per share was $208.4 million, $42.2 million and $1.10,
respectively, as compared to rental income from apartments, net income available
to common shareholders, and net income available to common shareholders per
share of $176.1 million, $44.2 million and $1.23, respectively, for the
comparable period in 1996.
During the fourth quarter, Merry Land acquired two apartment communities
containing 333 units for $28.0 million. In December, the Company purchased La
Tour Fontaine in Houston, Texas, a 162-unit community, for $15.3 million, and
Parc Royale in Houston, Texas, a 171-unit community, for $12.8 million.
The Company routinely considers and completes acquisitions of apartment
communities. From time to time, this includes the possible acquisition of
significant apartment community portfolios. Any such acquisition could require
the Company to assume or incur additional debt to fund such acquisitions.
The Company has signed a non-binding letter of intent to acquire up to 13
Florida apartment communities from affiliates of Trammell Crow Residential, an
apartment development and management company, for approximately $248 million.
The apartment portfolio includes approximately 4,000 units located primarily in
Tampa, Orlando and Jacksonville. The transaction is subject to the successful
negotiation of a definitive agreement. The execution of a definitive agreement
has been delayed to allow for the completion of satisfactory due diligence by
the Company, the procurement of required consents from third parties and several
other contingencies. There can be no assurance that the transaction will be
consummated.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
In addition to the documents incorporated by reference pursuant to the
accompanying Prospectus dated January 22, 1996, there is incorporated by
reference herein the Company's reports filed with the Securities and Exchange
Commission on Form 8-K on July 29, 1997, August 6, 1997, September 15, 1997,
September 22, 1997 and October 31, 1997; on Form 10-Q for the quarters ended
March 31, 1997; June 30, 1997 and September 30, 1997; and the Company's annual
report on Form 10-K for the year ended December 31, 1996. For additional
information with respect to documents incorporated by reference herein, see
"Incorporation Of Certain Documents By Reference" in the accompanying
Prospectus.
S-4
<PAGE> 5
USE OF PROCEEDS
The net proceeds to the Company from the sale of the shares of the Series E
Preferred Stock are estimated at approximately $96.7 million. The Company
intends to use the net proceeds to reduce the indebtedness on its existing $200
million unsecured line of credit from $67.8 million to zero, and to acquire and
develop additional apartment properties. Pending such uses, the Company intends
to invest temporarily the balance in interest bearing securities.
S-5
<PAGE> 6
CAPITALIZATION
The following table sets forth the capitalization of the Company on
December 31, 1997 and after giving effect to the issuance of the Series E
Preferred Stock offered by this Prospectus Supplement. This table should be read
in conjunction with the financial statements of the Company and related notes
incorporated by reference herein.
<TABLE>
<CAPTION>
DECEMBER 31, 1997
-------------------------
ACTUAL AS ADJUSTED
---------- -----------
(IN THOUSANDS)
<S> <C> <C>
Debt:
Unsecured bank line(1).................................... $ 67,800 $ --
Mortgage loans............................................ 70,282 70,282
6.625% Senior Notes, due 1999-2001........................ 120,000 120,000
7.25% Senior Notes, due 2002.............................. 40,000 40,000
6.875% Senior Notes, due 2003............................. 40,000 40,000
6.875% Senior Notes, due 2004............................. 40,000 40,000
7.25% Senior Notes, due 2005.............................. 120,000 120,000
6.69% Senior Notes, due 2006.............................. 50,000 50,000
6.90% Senior Notes, due 2007.............................. 50,000 50,000
---------- ----------
Total debt...................................... 598,082 530,282
Stockholders' Equity:
Preferred Stock, no par value, 20,000,000 shares
authorized;
$1.75 Series A Cumulative Convertible, 187,666 shares
issued and outstanding, $25.00 per share liquidation
preference............................................. 4,692 4,692
$2.205 Series B Cumulative Convertible, 4,000,000 shares
issued and outstanding, $25.00 per share liquidation
preference............................................. 100,000 100,000
$2.15 Series C Cumulative Convertible, 4,599,400 shares
issued and outstanding, $25.00 per share liquidation
preference............................................. 114,985 114,985
8.29% Series D Cumulative Redeemable, 1,000,000 shares
issued and outstanding, $50.00 per share liquidation
preference............................................. 50,000 50,000
7.625% Series E Cumulative Redeemable, 4,000,000 shares
issued and outstanding, $25.00 per share liquidation
preference............................................. -- 100,000
Common Stock, no par value, $1.00 stated value 100,000,000
shares authorized; 39,176,625 shares issued and
outstanding............................................ 39,177 39,177
Capital surplus........................................... 525,745 522,395
Cumulative undistributed net earnings..................... (15,730) (15,730)
Notes receivable from stockholders and ESOP............... (21,691) (21,691)
Unrealized gain on securities............................. 154 154
---------- ----------
Total stockholders' equity........................... 797,332 893,982
---------- ----------
Total capitalization............................ $1,395,414 $1,424,264
========== ==========
</TABLE>
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(1) $200 million line of credit bearing interest equal to LIBOR plus 0.60%,
maturing September 2000.
S-6
<PAGE> 7
DESCRIPTION OF SERIES E PREFERRED STOCK
The summary of certain terms and provisions of the Series E Preferred Stock
contained in this Prospectus Supplement does not purport to be complete and is
subject to, and qualified in its entirety by reference to, the terms and
provisions of the Company's Articles of Incorporation, as amended (the
"Articles"), Bylaws, as amended, and the amendment to the Articles setting forth
the particular terms of the Series E Preferred Stock (the "Series E Amendment").
The Articles authorize the issuance of 20,000,000 shares of preferred
stock, without par value (the "Preferred Stock"), of which 187,666 shares of the
Company's $1.75 Series A Cumulative Convertible Preferred Stock, liquidation
preference $25.00 per share, 4,000,000 shares of the Company's $2.205 Series B
Cumulative Convertible Preferred Stock, liquidation preference $25.00 per share,
and 4,599,400 shares of the Company's $2.15 Series C Cumulative Convertible
Preferred Stock, liquidation preference $25.00 per share, 1,000,000 shares of
the Company's 8.29% Series D Cumulative Redeemable Preferred Stock, liquidation
preference $50.00 per share were outstanding on December 31, 1997. The Preferred
Stock may be issued from time to time in one or more series, without shareholder
approval, with such voting powers (full or limited), designations, preferences
and relative, participating, optional or other special rights, and
qualifications, limitations, or restrictions thereof as shall be established by
the Board of Directors. Thus, without shareholder approval, the Company could
authorize the issuance of Preferred Stock with voting, conversion and other
rights that could dilute the voting power and other rights of the holders of
Series E Preferred Stock.
GENERAL
On February 4, 1998, the Board of Directors authorized the Company to
classify and issue the Series E Preferred Stock as part of the 20,000,000 shares
of the Company's authorized Preferred Stock and approved the form of the Series
E Amendment.
When issued, the Series E Preferred Stock will be validly issued, fully
paid and nonassessable. The holders of the Series E Preferred Stock will have no
preemptive rights with respect to any shares of capital stock of the Company or
any other securities of the Company convertible into or carrying rights or
options to purchase any such shares. The Series E Preferred Stock will not be
subject to any sinking fund or other obligation of the Company to redeem or
retire the Series E Preferred Stock. Unless redeemed by the Company on or after
February 13, 2003, the Series E Preferred Stock will have a perpetual term, with
no maturity. Application will be made to list the Series E Preferred Stock on
the New York Stock Exchange. Trading of Series E Preferred Stock on the New York
Stock Exchange is expected to commence within the 30-day period after the
initial delivery of the Series E Preferred Stock. See "Underwriting."
RANKING
The Series E Preferred Stock will rank senior to the Common Stock with
respect to payment of dividends and amounts upon liquidation, dissolution or
winding up. The Series E Preferred Stock will rank on a parity with the Series A
Preferred Stock, the Series B Preferred Stock, the Series C Preferred Stock and
the Series D Preferred Stock with respect to payment of dividends and amounts
upon liquidation, dissolution and winding up.
While any shares of Series E Preferred Stock are outstanding, the Company
may not authorize, create or increase the authorized amount of any class or
series of stock that ranks senior to the Series E Preferred Stock with respect
to the payment of dividends or amounts upon liquidation, dissolution or winding
up without the consent of the holders of two-thirds of the outstanding shares of
Series E Preferred Stock and all other shares of Voting Preferred Shares
(defined below), voting as a single class. However, the Company may create
additional classes of stock, increase the authorized number of shares of
Preferred Stock or issue series of Preferred Stock ranking on a parity with the
Series E Preferred Stock with respect, in each case, to the payment of dividends
and amounts upon liquidation, dissolution and winding up (a "Parity Stock")
without the consent of any holder of Series E Preferred Stock. The Series A
Preferred Stock, the Series B Preferred Stock, the Series C Preferred Stock and
the Series D Preferred Stock are each Parity Stock. See "Voting Rights" below.
S-7
<PAGE> 8
DIVIDENDS
Holders of shares of Series E Preferred Stock will be entitled to receive,
when, as and if declared by the Board of Directors of the Company, out of funds
of the Company legally available for payment, cumulative cash dividends payable
at the rate of 7.625% of the liquidation preference per annum (equivalent to
$1.906 per annum per share). Dividends on the Series E Preferred Stock will be
payable quarterly in arrears on the last calendar day of March, June, September
and December of each year (and if such day is not a business day, then no later
than the next succeeding business day), commencing March 31, 1998 (and, in the
case of any accrued but unpaid dividends, at such additional times and for such
interim periods, if any, as determined by the Board of Directors). Each such
dividend will be payable to holders of record as they appear on the stock
records of the Company at the close of business on such record dates, which
shall be on or about the 15th day of the calendar months in which the dividend
payment dates fall or such other dates not less than 10 days nor more than 60
days preceding the payment dates thereof, as shall be fixed by the Board of
Directors of the Company. Dividends will accrue from the date of original
issuance of the Series E Preferred Stock. Dividends will be cumulative from such
date, whether or not in any dividend period or periods there shall be funds of
the Company legally available for the payment of such dividends. Accumulations
of dividends on shares of Series E Preferred Stock will not bear interest.
Dividends payable on the Series E Preferred Stock for any period greater or less
than a full dividend period will be computed on the basis of a 360-day year
consisting of twelve 30-day months.
Except as provided in the next sentence, no dividend will be declared or
paid on any Parity Stock unless full cumulative dividends have been declared and
paid or are contemporaneously declared and funds sufficient for payment set
aside on the Series E Preferred Stock for all prior dividend periods. If accrued
dividends on the Series E Preferred Stock for all prior dividend periods have
not been paid in full, then any dividend declared on the Series E Preferred
Stock for any dividend period and on any Parity Stock will be declared ratably
in proportion to accrued and unpaid dividends on the Series E Preferred Stock
and such Parity Stock.
The Company will not (i) declare, pay or set apart funds for the payment of
any dividend or other distribution with respect to any Junior Stock (as defined
below) or (ii) redeem, purchase or otherwise acquire for consideration any
Junior Stock through a sinking fund or otherwise (other than a redemption or
purchase or other acquisition of shares of Common Stock made for purposes of an
employee incentive or benefit plan of the Company or any subsidiary), unless (A)
all cumulative dividends with respect to the Series E Preferred Stock and any
Parity Stock at the time such dividends are payable have been paid or funds have
been set apart for payment of such dividends and (B) sufficient funds have been
paid or set apart for the payment of the dividend for the current dividend
period with respect to the Series E Preferred Stock and any Parity Stock. The
foregoing limitations do not restrict the Company's ability to take the
foregoing actions with respect to any Parity Stock.
As used herein, (i) the term "dividend" does not include dividends payable
solely in shares of Junior Stock on Junior Stock, or in options, warrants or
rights to holders of Junior Stock to subscribe for or purchase any Junior Stock,
and (ii) the term "Junior Stock" means the Common Stock, and any other class of
capital stock of the Company now or hereafter issued and outstanding that ranks
junior as to the payment of dividends or amounts upon liquidation, dissolution
and winding up to the Series E Preferred Stock.
REDEMPTION
Shares of Series E Preferred Stock will not be redeemable by the Company
prior to February 13, 2003. On or after February 13, 2003, the shares of Series
E Preferred Stock will be redeemable at the option of the Company, in whole or
in part, for cash equal to the liquidation preference of the Series E Preferred
Stock to be redeemed including accrued and unpaid dividends. The redemption
price (other than the portion thereof consisting of accrued and unpaid
dividends) is payable solely from proceeds from the sale of other capital stock
of the Company, including but not limited to common stock, preferred stock,
depositary shares, interests, participations or other ownership interests
(however designated) and any rights (other than debt securities convertible into
or exchangeable for equity securities) or options to purchase any of the
foregoing. In order to exercise its redemption option, the Company must issue a
press release announcing the redemption.
Notice of redemption will be given by mail or by publication in a newspaper
of general circulation in the City of New York once per week for at least two
successive weeks to the holders of the Series E Preferred Stock
S-8
<PAGE> 9
not more than four business days after the Company issues the press release. A
similar notice furnished by the Company will be mailed by the registrar, postage
prepaid, not less than 30 nor more than 60 days prior to the redemption date,
addressed to the respective holders of record of the Series E Preferred Stock to
be redeemed at their respective addresses as they appear on the share transfer
records of the registrar. The redemption date will be a date selected by the
Company not less than 30 nor more than 60 days after the date on which the
Company issues the press release announcing its intention to redeem the Series E
Preferred Stock. If fewer than all of the shares of Series E Preferred Stock are
to be redeemed, the shares to be redeemed shall be selected by lot or pro rata
or in some other equitable manner determined by the Company.
On the redemption date, the Company must pay on each share of Series E
Preferred Stock to be redeemed any accrued and unpaid dividends, in arrears up
to the redemption date, except that in the case of a redemption date falling
after a dividend payment record date and prior to the related payment date, the
holders of the Series E Preferred Stock at the close of business on such record
date will be entitled to receive the dividend payable on such shares on the
corresponding dividend payment date, notwithstanding the redemption of such
shares following such dividend payment record date. Except as provided for in
the preceding sentence, no payment or allowance will be made for accrued
dividends on any shares of Series E Preferred Stock called for redemption after
the redemption date.
In the event that full cumulative dividends on the Series E Preferred Stock
and any Parity Stock have not been paid or declared and set apart for payment,
the Series E Preferred Stock may not be redeemed in part and the Company may not
purchase or acquire shares of Series E Preferred Stock otherwise than pursuant
to a purchase or exchange offer made on the same terms to all holders of shares
of Series E Preferred Stock.
On and after the date fixed for redemption, provided that the Company has
made available at the office of the Registrar and Transfer Agent a sufficient
amount of cash to effect the redemption, dividends will cease to accrue on the
Series E Preferred Stock called for redemption (except that, in the case of a
redemption date after a dividend payment record date and prior to the related
dividend payment date, holders of Series E Preferred Stock at the close of
business on the dividend payment record date will be entitled on such dividend
payment date to receive the dividend payable on such shares), such shares shall
no longer be deemed to be outstanding and all rights of the holders of such
shares of Series E Preferred Stock shall cease except the right to receive the
cash payable upon such redemption, without interest from the date of such
redemption. At the close of business on the redemption date, each holder of
Series E Preferred Stock (unless the Company defaults in the delivery of the
cash) will without any further action, no longer be deemed a holder of the
number of shares of Series E Preferred Stock to be redeemed.
LIQUIDATION PREFERENCE
In the event of any liquidation, dissolution or winding up of the Company,
whether voluntary or involuntary, the holders of shares of Series E Preferred
Stock will be entitled to receive $25.00 per share of Series E Preferred Stock
plus an amount per share of Series E Preferred Stock equal to all dividends
(whether or not earned or declared) accrued and unpaid thereon to the date of
final distribution to such holders (the "Liquidation Preference"), and no more.
Until the holders of the Series E Preferred Stock have been paid the
Liquidation Preference in full, no payment will be made to any holder of Junior
Stock upon the liquidation, dissolution or winding up of the Company. If, upon
any liquidation, dissolution or winding up of the Company, the assets of the
Company, or proceeds thereof, distributable among the holders of the shares of
Series E Preferred Stock are insufficient to pay in full the Liquidation
Preference and the liquidation preference with respect to any other shares of
Parity Stock, then such assets, or the proceeds thereof, will be distributed
among the holders of shares of Series E Preferred Stock and any such Parity
Stock ratably in accordance with the respective amounts which would be payable
on such shares of Series E Preferred Stock and any such Parity Stock if all
amounts payable thereon were paid in full. Neither a consolidation or merger of
the Company with another corporation, a statutory share exchange by the Company
nor a sale or transfer of all or substantially all of the Company's assets will
be considered a liquidation, dissolution or winding up, voluntary or
involuntary, of the Company.
S-9
<PAGE> 10
VOTING RIGHTS
Except as indicated below, or except as otherwise from time to time
required by applicable law, the holders of shares of Series E Preferred Stock
will have no voting rights.
If six or more quarterly dividends payable on the Series E Preferred Stock
or any other Parity Stock are in arrears, whether or not earned or declared, the
number of directors then constituting the Board of Directors of the Company will
be increased by two and the holders of shares of Series E Preferred Stock,
voting together as a class with the holders of any other series of Parity Stock
(any such other series, the "Voting Preferred Shares"), will have the right to
elect two additional directors to serve on the Company's Board of Directors at
an annual meeting of shareholders or a properly called special meeting of the
holders of the Series E Preferred Stock and such Voting Preferred Shares and at
each subsequent annual meeting of shareholders until all such dividends and
dividends for the current quarterly period on the Series E Preferred Stock and
such other Voting Preferred Shares have been paid or declared and set aside for
payment.
The approval of two-thirds of the outstanding shares of Series E Preferred
Stock and all other series of Voting Preferred Shares similarly affected, voting
as a single class, will be required in order to amend the Articles or the Series
E Amendment to affect materially and adversely the rights, preferences or voting
power of the holders of the Series E Preferred Stock or the Voting Preferred
Shares or to authorize, create, or increase the authorized amount of, any class
of stock having rights senior to the Series E Preferred Stock with respect to
the payment of dividends or amounts upon liquidation, dissolution or winding up.
However, the Company may create additional classes of Parity and Junior Stock,
increase the authorized number of shares of Parity and Junior Stock and issue
additional series of Parity and Junior Stock without the consent of any holder
of Series E Preferred Stock.
When exercising the voting rights described above, each share of Series E
Preferred Stock shall have one vote per share, except that when voting as a
single class with the Voting Preferred Shares, then each share of Series E
Preferred Stock and Voting Preferred Shares shall have one vote per $25.00 of
stated liquidation preference.
Except as required by law, the holders of Series E Preferred Stock will not
be entitled to vote on any merger or consolidation involving the Company or a
sale of all or substantially all of the assets of the Company.
CONVERSION RIGHTS
Shares of Series E Preferred Stock will not be convertible into any other
securities of the Company.
TRANSFER AGENT, REGISTRAR, DIVIDEND DISBURSING AGENT AND REDEMPTION AGENT
The transfer agent, registrar, dividend disbursing agent and redemption
agent for the shares of Series E Preferred Stock will be First Union National
Bank, Charlotte, North Carolina.
TAXATION
This section is a general summary of the material federal income tax
considerations that may be relevant to prospective purchasers of shares of
Series E Preferred Stock under the Internal Revenue Code of 1986, as amended
(the "Code") and is based upon applicable Code provisions, rules and regulations
promulgated thereunder, and reported judicial and administrative interpretations
thereof, all of which are subject to change (possibly on a retroactive basis).
The following discussion does not include all matters that may be relevant
to any particular holder of shares of Series E Preferred Stock in light of such
holder's particular facts and circumstances. Certain holders, such as foreign
persons, tax-exempt entities, insurance companies and financial institutions,
may be subject to special rules not discussed below. In particular, the
following discussion does not discuss issues under the Employee Retirement
Income Security Act of 1974, as amended, the Foreign Investment in Real Property
Tax Act of 1980, and foreign, state and local tax laws.
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<PAGE> 11
Each prospective purchaser should consult, and must depend on, his own tax
advisor regarding the specific tax consequences to him of the purchase,
ownership, and sale of the shares of Series E Preferred Stock and of the
Company's election to be taxed as a REIT, including the federal, state, local,
foreign and other tax consequences of such purchase, ownership, sale and
election and of potential changes in applicable tax laws.
TAXATION OF THE COMPANY
The Company has elected to be taxed as a REIT under Sections 856 through
860 of the Internal Revenue Code of 1986 (the "Code"). The Company believes that
it was organized and has operated in such a manner as to qualify for taxation as
a REIT under the Code, and the Company intends to continue to operate in such a
manner, but no assurance can be given that it will operate in a manner so as to
qualify or remain qualified.
If the Company qualifies for tax treatment as a REIT, it will generally not
be subject to federal corporate taxation on its net income to the extent
currently distributed to its stockholders. This substantially eliminates the
"double taxation" (at both the corporate and stockholder levels) that typically
results from the use of corporate investment vehicles.
To qualify as a REIT under the Code for a taxable year, the Company must
meet certain organizational and operational requirements, which generally
require it to be an investor in real estate and to avoid excessive concentration
of ownership of its capital stock. Among other requirements, the principal
activities of a REIT must be real estate related. Generally, at least 75% of the
value of the total assets of the Company at the end of each calendar quarter
must consist of real estate assets, cash or certain U.S. government securities.
The Company may not own more than 10% of the outstanding voting securities of
any corporation and no more than 5% of the value of the Company's assets may be
invested in a single corporation; shares of qualified REITs and of certain
wholly-owned subsidiaries are exempt from this prohibition. Additionally, for
taxable years beginning before August 6, 1997, gross income from the sale or
other disposition of stock and securities held for less than one year, and of
real property held for less than four years, must constitute less than 30% of
the gross income for each taxable year of a REIT; the foregoing 30% restriction
has been repealed for taxable years beginning after August 5, 1997. For each
taxable year, at least 75% of the REIT's gross income must be derived from
specified real estate sources and 95% must be derived from such real estate
sources plus certain other permitted sources. Real estate income for purposes of
these requirements includes gains from the sale of real property not held
primarily for sale to customers in the ordinary course of business, dividends on
REIT shares, interest on loans secured by mortgages on real property, certain
rents from real property and income from foreclosure property. For rents to
qualify, they may not be based on the income or profits of any person, except
that they may be based on a percentage or percentages of gross income or
receipts, and the REIT may not furnish services to residents, unless the
services performed are of a type customarily rendered in connection with the
rental of space for occupancy only or, for taxable years beginning after August
5, 1997, the amounts received by the REIT for non-customary tenant services do
not exceed 1% of all amounts received by the REIT with respect to the property.
In this regard, it should be noted that the Company manages its real properties
directly, but the Company believes that it provides only customary services.
Moreover, rents do not qualify if the Company holds, directly or indirectly,
more than a certain prescribed percentage interest in a tenant.
The Company must satisfy certain ownership restrictions that limit
concentration of ownership of capital stock directly or indirectly in the hands
of a few individuals. The outstanding capital of the Company must be held by at
least 100 stockholders. No more than 50% in value of the outstanding capital
stock, including in some circumstances capital stock into which outstanding
securities might be converted, may be owned actually or constructively by five
or fewer individuals or certain other entities at any time during the last half
of the Company's taxable year. There are no restrictions in the Company's
Articles that would limit the ability of a holder of common stock or preferred
stock to transfer shares if such transfer would cause or contribute to a
violation of the stock ownership requirements. Thus, while the Company intends
to monitor carefully its stock ownership and expects to be able to meet the
ownership requirements in the future, there can be no assurance that transfers
of shares of capital stock beyond the control of the Company, or changes in the
relative values of the preferred stock and the common stock, could not result in
the Company's failure to satisfy the stock ownership requirements. For taxable
years beginning after August 5, 1997, a REIT that satisfies certain
S-11
<PAGE> 12
shareholder recordkeeping requirements prescribed in Treasury Department
Regulations will be treated as having satisfied the foregoing 50% requirement
unless the REIT knows, or exercising reasonable diligence would have known, that
the 50% requirement was not satisfied. The Company intends to comply with the
recordkeeping requirements.
So long as the Company qualifies for taxation as a REIT and distributes at
least 95% of its real estate investment trust taxable income (computed without
regard to net capital gains or the dividends-paid deduction) for its taxable
year to its stockholders annually, the Company itself will not be subject to
federal income tax on that portion of such income distributed to stockholders.
The Company will be taxed at regular corporate rates on all income not
distributed to stockholders. The Company's policy is to distribute at least 95%
of its taxable income. REITs may also incur taxes on certain categories of
income (such as undistributed capital gain income and certain income from
foreclosure property) for the alternative minimum tax, and for certain other
activities. They may also be subject to federal excise tax to the extent
distributions do not satisfy certain requirements, as well as to certain state,
local and other taxes. For taxable years beginning after August 5, 1997, a REIT
may designate undistributed net capital gain (upon which a corporate income tax
has been incurred) as constructively distributed to its shareholders. If such
designation is made, each shareholder is required to report on its individual
return its share of the designated undistributed net capital gain and is
entitled to a credit for its share of the corporate tax on such gain.
Failure of the Company to qualify during any taxable year as a REIT could,
unless certain relief provisions were available, have a material adverse effect
upon holders of the Company's securities. If disqualified for taxation as a REIT
for a taxable year, the Company would also be disqualified for taxation as a
REIT for the next four taxable years, unless the failure was due to reasonable
cause and not willful neglect. In order to elect again to be taxed as a REIT,
the Company would be required to distribute all of its earnings and profits
accumulated in any non-REIT taxable year. Further, the Company might be subject
to taxation on any unrealized gain inherent in its assets at the time of such
election. If disqualified, the Company would be subject to federal income tax at
corporate rates on all of its taxable income and would not be able to deduct the
dividends paid. Should the failure to qualify be determined to have occurred
retroactively in an earlier tax year of the Company, substantial federal income
tax liability on the Company attributable to such nonqualifying tax years could
be imposed. In the event that the Company fails to meet certain income tests of
the tax law, it may nonetheless retain its qualification as a REIT if it pays a
100% tax based upon the amount by which it failed to meet the income tests so
long as its failure was due to reasonable cause and not willful neglect. Any
such liabilities could result in the Company being unable to pay dividends on
the Series E Preferred Stock and could result in the Company being unable to pay
dividends sufficient to maintain its REIT status.
TAXATION OF THE SHAREHOLDERS OF THE COMPANY
Distributions to Holders. Distributions with respect to the Series E
Preferred Stock will be taxable as dividends to the extent of the Company's
current or accumulated earnings and profits as determined for federal income tax
purposes. Distributions with respect to the Series E Preferred Stock in excess
of earnings and profits will be treated first as a tax-free return of capital to
the holder, to the extent of the holder's basis in such stock (and will
correspondingly reduce such basis) and then as a capital gain, to the extent of
any excess over such basis (assuming the holder holds the Series E Preferred
Stock as a capital asset). If distributions to holders of Preferred Stock exceed
the Company's current and accumulated earnings and profits, the Company will
allocate such earnings and profits among distributions to the holders of all
classes of the Preferred Stock in proportion to the total distributions for such
year with respect to such shares.
Dividends will be taxed as ordinary income to the holder except to the
extent that the dividend is a distribution of the Company's net capital gain and
is properly designated by the Company as a capital gain dividend. The Company
presently intends to designate the respective dividends paid by the Company to
the holders of all classes of the Preferred Stock and Common Stock in such a
manner that the aggregate dividends paid to the holders of each such class of
stock annually will have the same relative proportions of capital gain dividends
(if any are so designated) and ordinary income dividends. The Company will
notify each holder of the Series E Preferred Stock as to the portions of each
distribution which, in its judgment and consistent with the intention stated in
the preceding sentence, constitute ordinary income and capital gain.
S-12
<PAGE> 13
Capital gain distributions to corporate holders are generally taxed in the
same manner as ordinary income, except that capital losses of such holders are
deductible only to the extent of capital gains. Under Section 291 of the Code,
however, corporate holders may be required to treat up to 20% of any such
capital gain as ordinary income. For noncorporate shareholders, net capital
gains are taxed at a maximum rate of 28%, while short-term capital gains and
ordinary income are taxed at a maximum rate of 39.6%. However, because of
certain limitations on itemized deductions and personal exemptions, the
effective rate may be higher in certain circumstances. Except to a very limited
extent, capital losses of noncorporate shareholders are deductible only to the
extent of capital gains.
Ordinary and capital gain dividends are not eligible for the
dividends-received deduction that is generally allowed to corporate
shareholders.
Sale or Exchange of Series E Preferred Stock. Upon the sale or exchange of
Series E Preferred Stock, the holder will recognize gain or loss equal to the
difference between the amount realized on such sale and the tax basis of such
Series E Preferred Stock. Assuming such stock is held as a capital asset, such
gain or loss will be a long-term capital gain or loss if the Series E Preferred
Stock has been held for more than one year. However, any loss recognized by a
holder on the sale of a share of Series E Preferred Stock held for not more than
six months and with respect to which a capital gain dividend was received will
be treated as a long-term capital loss to the extent of the amount of
distributions from the Company with respect to such share that was required to
be treated by such holder as long-term capital gain.
Redemption of Series E Preferred Stock. The treatment to be accorded to
any redemption by the Company (as distinguished from a sale, exchange or other
disposition) of Series E Preferred Stock can only be determined on the basis of
particular facts as to each holder of Series E Preferred Stock at the time of
redemption. In general a holder of Series E Preferred Stock will recognize
capital gain or loss measured by the difference between the amount realized by
the holder upon the redemption and such holder's adjusted tax basis in the
Series E Preferred Stock redeemed (provided the Series E Preferred Stock is held
as a capital asset) if such redemption (i) results in a "complete termination"
of the holder's share interest in all classes of shares of the Company under
Section 302(b)(3) of the Code, (ii) is "substantially disproportionate" with
respect to the holder's interest in the Company under Section 302(b)(2) of the
Code (which generally will not be the case if only Series E Preferred Stock is
redeemed, since such shares generally do not have voting rights) or (iii) is
"not essentially equivalent to a dividend" with respect to the holder of Series
E Preferred Stock under Section 302(b)(1) of the Code. In determining whether
any of these tests have been met, shares considered to be owned by the holder by
reason of certain constructive ownership rules set forth in the Code, as well as
shares actually owned, must generally be taken into account. Because the
determination as to whether any of the alternative tests of Section 302(b) of
the Code will be satisfied with respect to any particular holder of Series E
Preferred Stock depends upon the facts and circumstances at the time when the
determination must be made, prospective investors are advised to consult their
own tax advisors to determine such tax treatment.
A "substantially disproportionate" reduction in the interest of a holder of
Series E Preferred Stock will have occurred if, as a result of the redemption,
(1) such holder's ownership of all of the outstanding voting stock of the
Company is reduced immediately after the redemption to less than 80 percent of
the holder's percentage interest in such stock immediately before the
redemption; (2) the holder's percentage ownership of the Common Stock after and
before the redemption meets the same 80 percent requirement, and (3) the holder
owns, immediately after the redemption, less than 50 percent of the total
combined voting power of all classes of stock entitled to vote. Based upon
current law, it is possible that a redemption of Series E Preferred Stock from a
holder of Series E Preferred Stock would be considered "not essentially
equivalent to a dividend." However, whether a distribution is "not essentially
equivalent to a dividend" depends on all of the facts and circumstances. The
application of these tests to a redemption of Series E Preferred Stock is
unclear, and a holder of Series E Preferred Stock intending to rely on any of
these tests at the time of redemption should consult its own tax adviser to
determine their application to its particular situation.
If the redemption does not meet any of the tests under Section 302 of the
Code, then the redemption proceeds received from the Series E Preferred Stock
will be treated as a distribution on the Series E Preferred Stock as described
above (see Distributions to Holders). If the redemption is taxed as a dividend,
the holder's
S-13
<PAGE> 14
adjusted tax basis in the Series E Preferred Stock will be transferred to any
other shares of the Company held by such holder. If, however, the holder of the
Series E Preferred Stock holds no other shares of the Company, such basis could
be transferred to a related person or it may be lost.
Unrelated Business Income Tax of Pension Trusts. If any exempt pension
trust described in Section 401(a) becomes the owner of more than 10% (by value)
of the outstanding stock of the Company and certain other conditions (generally
related to the existence of a high concentration of ownership of Company stock
in the hands of such pension trusts) are satisfied, a portion of the dividends
received by the pension trust with respect to its Company stock may be subject
to the unrelated business income tax. Exempt pension trusts should consult their
tax advisors regarding the advisability of acquiring more than 10% (by value) of
the outstanding stock of the Company.
Backup Withholding. Under the backup withholding provisions of the Code
and applicable Treasury regulations thereunder a holder of Series E Preferred
Stock may be subject to backup withholding at the rate of 31% with respect to
dividends paid on, or the proceeds of a sale or redemption of, such stock unless
(i) such holder is a corporation or comes within certain other exempt categories
and when required demonstrates this fact, or (ii) provides a taxpayer
identification number, certifies as to no loss of exemption from backup
withholding, and otherwise complies with the applicable requirements of the
backup withholding rules. The amount of any backup withholding from a payment to
a holder will be allowed as a credit against the holder's federal income tax
liability and may entitle such holder to a refund, provided that the required
information is furnished to the Internal Revenue Service.
Other Tax Matters. Holders of Series E Preferred Stock will not be
permitted to deduct any losses of the Company (whether ordinary or capital) on
their own income tax returns. In addition, under regulations to be promulgated
by the Treasury Department, holders of Series E Preferred Stock may be required
to report as tax preference items or adjustments certain items and adjustments
of the Company for purposes of determining the holders' alternative minimum tax
liability, if any.
S-14
<PAGE> 15
UNDERWRITING
Subject to the terms and conditions of the Underwriting Agreement dated the
date hereof (the "Underwriting Agreement") the Company has agreed to sell to
Morgan Stanley & Co. Incorporated, (the "Representative") as representative of
the several underwriters (the "Underwriters") and the Underwriters have
severally agreed to purchase the following respective number of the shares of
Series E Preferred Stock offered hereby if any shares are purchased:
<TABLE>
<CAPTION>
NUMBER OF
UNDERWRITER SHARES
- ----------- ---------
<S> <C>
Morgan Stanley & Co. Incorporated........................... 2,400,000
BT Alex Brown Incorporated.................................. 75,000
A.G. Edwards & Sons, Inc. .................................. 75,000
EVEREN Securities, Inc. .................................... 75,000
Interstate/Johnson Lane Corporation......................... 75,000
Legg Mason Wood Walker, Incorporated........................ 75,000
Morgan Keegan & Company, Inc. .............................. 75,000
CIBC Oppenheimer Corp. ..................................... 75,000
The Robinson-Humphrey Company, LLC.......................... 75,000
Tucker Anthony Incorporated................................. 75,000
Wheat First Securities, Inc. ............................... 75,000
Cowen & Company............................................. 50,000
Crowell, Weeden & Co. ...................................... 50,000
Dain Bosworth Incorporated.................................. 50,000
Fahnestock & Co. Inc. ...................................... 50,000
First Albany Corporation.................................... 50,000
H.J. Meyers & Co., Inc. .................................... 50,000
J.J.B. Hilliard, W.L. Lyons, Inc. .......................... 50,000
Janney Montgomery Scott Inc. ............................... 50,000
Josepthal, Lyon & Ross, Incorporated........................ 50,000
McGinn, Smith & Co., Inc. .................................. 50,000
Pershing Division of Donaldson, Lufkin & Jenrette Securities
Corporation............................................... 50,000
Piper Jaffray Inc........................................... 50,000
Raymond James & Associates, Inc............................. 50,000
Roney & Co., L.L.C.......................................... 50,000
Scott & Stringfellow, Inc. ................................. 50,000
Sutro & Co. Incorporated.................................... 50,000
US Clearing Corp............................................ 50,000
---------
Total............................................. 4,000,000
=========
</TABLE>
The Representative has advised the Company that the Underwriters proposed
initially to offer the Series E Preferred Stock to the public at the public
offering price set forth on the cover page of this Prospectus Supplement, and to
certain dealers at such price less a concession not in excess of $0.50 per
share. The Underwriters may allow, and such dealers may reallow, a concession
not in excess of $0.40 per share to certain other dealers. After the initial
public offering, the public offering price and such concessions may be changed.
Application will be made to list the Series E Preferred Stock on the New
York Stock Exchange. Trading of the Series E Preferred Stock on the New York
Stock Exchange is expected to commence within the 30-day period after the
initial delivery of the Series E Preferred Stock. The Underwriters have advised
the Company that they intend to make a market in the Series E Preferred Stock
prior to the commencement of trading on the New York Stock Exchange. The
Underwriters will have no obligation to make a market in the Series E Preferred
Shares, however, and may cease market making activities, if commenced, at any
time.
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<PAGE> 16
In connection with the Offering, the rules of the Securities and Exchange
Commission permit the Underwriters to engage in certain transactions that
stabilize the price of the Series E Preferred Stock. Such transactions may
consist of bids or purchases for the purpose of pegging, fixing or maintaining
the price of the Series E Preferred Stock. If the Underwriters create a short
position in the Series E Preferred Stock in connection with the Offering (i.e.,
if they sell more Series E Preferred Stock than are set forth on the cover page
of this Prospectus Supplement), the Underwriters may reduce that short position
by purchasing Series E Preferred Stock in the open market. The Underwriters also
may impose a penalty bid on certain selling group members. This means that if
the Underwriters purchase Series E Preferred Stock in the open market to reduce
their short position or to stabilize the price of the Series E Preferred Stock,
they may reclaim the amount of the selling concession from the selling group
members who sold those Series E Preferred Stock as part of the Offering.
In general, purchases of a security for the purpose of stabilization or to
reduce a syndicate short position could cause the price of the security to be
higher than it might otherwise be in the absence of such purchases. The
imposition of a penalty bid might have an effect on the price of a security to
the extent that it discourages resales of the security by purchasers in the
Offering.
Neither the Company nor any of the Underwriters makes any representation or
prediction as to the direction or magnitude of any effect that the transactions
described above may have on the price of the Series E Preferred Stock. In
addition, neither the Company nor any of the Underwriters makes any
representation that the Underwriters will engage in such transactions or that
such transactions, once commenced, will not be discontinued without notice.
The Company has agreed to indemnify the Underwriters against certain civil
liabilities, including liabilities under the Securities Act of 1933, as amended,
or to contribute to payments the Underwriters may be required to make in respect
thereof.
In the ordinary course of its businesses, the Representative and its
affiliates have engaged and may in the future engage in commercial banking and
investment banking transactions with the Company.
The Company has agreed that for a period of 30 days from February 13, 1998,
the Company will not, without the prior consent of the Representative, directly
or indirectly, sell, offer to sell, grant any option for the sale of, or
otherwise dispose of Series E Preferred Stock or any other preferred stock
ranking on a parity with the Series E Preferred Stock.
EXPERTS
The audited financial statements of the Company incorporated by reference
in this Prospectus Supplement and elsewhere in the registration statement of
which this Prospectus Supplement is a part, have been audited by Arthur Andersen
LLP, independent public accountants, as indicated in their reports with respect
thereto, and are incorporated herein in reliance upon the authority of said firm
as experts in giving said reports.
LEGAL OPINIONS
Certain legal opinions relating to tax matters and the shares of the Series
D Preferred Stock offered hereby will be passed upon for the Company by Hull,
Towill, Norman & Barrett, P.C., Augusta, Georgia. Certain legal matters relating
to the validity of the Series D Preferred Stock offered hereby will be passed
upon for the Underwriter by Piper & Marbury L.L.P., Baltimore, Maryland. W. Hale
Barrett, a member of the firm of Hull, Towill, Norman & Barrett, P.C., is a
director and secretary of the Company. He and members of his firm own 47,119
shares of Common Stock and 200 shares of Series C Cumulative Convertible
Preferred Stock.
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<PAGE> 17
PROSPECTUS
$500,000,000
MERRY LAND
----------
& INVESTMENT COMPANY, INC.
[LOGO]
DEBT SECURITIES, PREFERRED STOCK, DEPOSITARY SHARES,
COMMON STOCK AND COMMON STOCK WARRANTS
------------------
Merry Land & Investment Company, Inc. ("Merry Land" or the "Company") may
from time to time offer in one or more series (i) its unsecured senior or
subordinated debt securities (the "Debt Securities"), (ii) shares or fractional
shares of its preferred stock, without par value (the "Preferred Stock"), (iii)
shares of Preferred Stock represented by depositary shares (the "Depositary
Shares"), (iv) shares of its common stock, without par value (the "Common
Stock"), or (v) warrants to purchase Common Stock (the "Common Stock Warrants"),
with an aggregate public offering price of up to $500,000,000 on terms to be
determined at the time of offering. The Debt Securities, Preferred Stock,
Depositary Shares, Common Stock and Common Stock Warrants (collectively, the
"Offered Securities") may be offered, separately or together, in separate series
in amounts, at prices and on terms to be set forth in a supplement to this
Prospectus (each, a "Prospectus Supplement").
The Debt Securities will be direct unsecured obligations of the Company and
may be either senior Debt Securities ("Senior Debt Securities") or subordinated
Debt Securities ("Subordinated Debt Securities"). The Senior Debt Securities
will rank equally with all other unsecured and unsubordinated indebtedness of
the Company. The Subordinated Debt Securities will be subordinated to all
existing and future Senior Debt of the Company, as defined. See "Description of
Debt Securities."
The specific terms of the Offered Securities in respect of which this
Prospectus is being delivered will be set forth in the applicable Prospectus
Supplement and will include, where applicable: (i) in the case of Debt
Securities, the specific title, aggregate principal amount, currency, form
(which may be registered or bearer, or certificated or global), authorized
denominations, maturity, rate (or manner of calculation thereof) and time of
payment of interest, terms for redemption at the option of the Company or
repayment at the option of the Holder, terms for sinking fund payments, terms
for conversion into Preferred Stock, Common Stock or other Company securities,
additional covenants, and any initial public offering price; (ii) in the case of
Preferred Stock, the specific title and stated value, any dividend, liquidation,
redemption, conversion, voting and other rights, and any initial public offering
price; (iii) in the case of Depositary Shares, the fractional share of Preferred
Stock represented by each such Depositary Share; (iv) in the case of Common
Stock, any initial public offering price; and (v) in the case of Common Stock
Warrants, the duration, offering price, exercise price and detachability. In
addition, such specific terms may include limitations on direct or beneficial
ownership and restrictions on transfer of the Offered Securities, in each case
as may be appropriate to preserve the status of the Company as a real estate
investment trust for federal income tax purposes.
The applicable Prospectus Supplement will also contain information, where
applicable, about certain United States federal income tax considerations
relating to, and any listing on a securities exchange of, the Offered Securities
covered by such Prospectus Supplement.
The Offered Securities may be offered directly by the Company, through
agents designated from time to time by the Company, or to or through
underwriters or dealers. If any agents or underwriters are involved in the sale
of any of the Offered Securities, their names, and any applicable purchase
price, fee, commission or discount arrangement between or among them, will be
set forth, or will be calculable from the information set forth, in the
applicable Prospectus Supplement. See "Plan of Distribution." No Offered
Securities may be sold without delivery of the applicable Prospectus Supplement
describing the Offered Securities and the method and terms of the offering.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
THE ATTORNEY GENERAL OF THE STATE OF NEW YORK HAS NOT PASSED ON OR
ENDORSED THE MERITS OF THIS OFFERING. ANY REPRESENTATION TO
THE CONTRARY IS UNLAWFUL.
The date of this Prospectus is January 22, 1996.
<PAGE> 18
AVAILABLE INFORMATION
The Company is subject to the information requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"). Reports, proxy statements
and other information filed by the Company can be inspected and copied at the
public reference facilities maintained by the Commission at 450 Fifth Street,
N.W., Washington, D.C. 20549, and its Regional Offices located at: 75 Park
Place, New York, New York 10017; and 500 West Madison Street, Chicago, Illinois
60661; and can also be inspected and copied at the offices of the New York Stock
Exchange at 20 Broad Street, New York, New York 10005. Copies of such material
can be obtained from the Public Reference Section of the Commission at 450 Fifth
Street, N.W., Washington, D.C. 20549, upon payment of the prescribed fees.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The Company has filed a registration statement with the Commission under
the Securities Act of 1933, as amended (the "Securities Act"), with respect to
the Offered Securities (the "Registration Statement"). As permitted by the rules
and regulations of the Commission, this Prospectus does not contain all of the
information set forth in the Registration Statement. For further information,
reference is made to such Registration Statement and to the exhibits, which may
be inspected and copied at or obtained from the Commission's public reference
facilities, 450 Fifth Street, N.W., Washington, D.C. 20549 upon payment of the
prescribed fees. Each statement made in this Prospectus with respect to a
document that is filed as an exhibit to the Registration Statement is qualified
by reference to such exhibit for a complete statement of the terms and
conditions thereof.
There are incorporated herein by reference the following documents
heretofore filed by the Company with the Commission:
i. the Company's annual report on Form 10-K for the year ended
December 31, 1994;
ii. the Company's quarterly reports on Form 10-Q for the quarters
ended March 31, 1995, June 30, 1995 and September 30, 1995;
iii. the Company's current reports on Form 8-K filed on, February 14,
1995, March 13, 1995, June 8, 1995, June 19, 1995, June 23, 1995, July 14,
1995, September 1, 1995, September 14, 1995, and November 8, 1995;
iv. the Company's current reports on Form 8-K/A filed on January 24,
1995 amending the Company's report on Form 8-K filed on November 3, 1994,
February 7, 1995 amending the Company's report on Form 8-K filed on August
15, 1994, June 21, 1995 amending the Company's report on Form 8-K filed on
June 19, 1995, September 18, 1995 amending the Company's report on Form 8-K
filed on June 8, 1995, and December 1, 1995 amending the Company's report
on Form 8-K filed on September 14, 1995;
v. the description of the Company's Common Stock, $1.75 Series A
Cumulative Convertible Preferred Stock and $2.15 Series C Cumulative
Convertible Preferred Stock contained in the Company's registration
statements on Form 8-A filed under the Exchange Act, including any
amendments or reports filed for the purpose of updating such descriptions;
and
vi. the Company's definitive proxy statement dated March 27, 1995
relating to the annual meeting of shareholders held on April 17, 1995.
All documents filed by the Company pursuant to Sections 13(a), 13(c), 14 or
15(d) of the Exchange Act subsequent to the date of this Prospectus and prior to
the termination of the offering shall be deemed to be incorporated by reference
into this Prospectus and to be a part hereof from the date of filing such
documents.
Any statement contained herein or in a document incorporated herein by
reference or deemed to be incorporated herein by reference shall be modified or
superseded for purposes of this Prospectus to the extent
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<PAGE> 19
that a statement contained herein, in any accompanying Prospectus Supplement
relating to a specific offering of Offered Securities or in any other amendment
or supplement hereto or document subsequently incorporated herein by reference,
modifies or supersedes such statement. Any such statement so modified or
superseded shall not be deemed, except as so modified or superseded, to
constitute a part of this Prospectus.
Copies of all documents incorporated herein by reference, other than
exhibits to such documents (unless such exhibits are specifically incorporated
by reference into the information that this Prospectus incorporates), will be
provided without charge to each person who receives a copy of this Prospectus on
the written or oral request of such person directed to W. Hale Barrett, the
Company's Secretary, 624 Ellis Street, Augusta, Georgia 30901, telephone number
(706) 722-6756.
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<PAGE> 20
THE COMPANY
Merry Land is one of the largest owners and operators of upscale garden
apartments in the Southern region of the United States. Merry Land became an
independent publicly owned company in 1981 and has been managing apartment
communities since 1982. The Company is a self-administered and self-managed real
estate investment trust ("REIT") headquartered in Augusta, Georgia. At December
15, 1995, the Company owned 78 apartment communities containing 21,705 units and
having an aggregate cost of $969.8 million. At September 30, 1995, the
communities had an average occupancy of 95.2% and an average monthly rental rate
of $624. The Company's apartment communities are located in Florida, Georgia,
Maryland, North Carolina, Ohio, South Carolina, Tennessee, Texas and Virginia.
Merry Land is a Georgia corporation. The Company's principal office is
located at 624 Ellis Street, Augusta, Georgia 30901 and its telephone number is
(706) 722-6756.
USE OF PROCEEDS
Unless otherwise set forth in the applicable Prospectus Supplement, the net
proceeds from the sale of the Offered Securities will be used for general
corporate purposes, which may include repayment of indebtedness, making
improvements to apartment properties, the acquisition of additional apartment
properties and the development and construction of new apartment properties.
CERTAIN RATIOS
The following table sets forth the Company's ratio of earnings to fixed
charges and ratio of earnings to combined fixed charges and Preferred Stock
dividends for the periods shown.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------------
1990 1991 1992 1993 1994
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Ratio of earnings to fixed charges.......................... 1.26x 1.69x 2.98x 5.58x 4.44x
Ratio of earnings to combined fixed charges and
Preferred Stock dividends................................. 1.26x 1.69x 2.98x 3.29x 2.56x
</TABLE>
The ratio of earnings to fixed charges was computed by dividing earnings by
fixed charges. The ratio of earnings to combined fixed charges and Preferred
Stock dividends was computed by dividing earnings by fixed charges and Preferred
Stock dividends. For the purpose of computing these ratios, earnings consist of
income before taxes plus fixed charges. Fixed charges consist of interest on
borrowed funds and amortization of debt discount and expense. Preferred Stock
dividends consist of those dividends paid on the Company's $1.75 Series A
Cumulative Convertible Preferred Stock (the "Series A Preferred Stock") and
$2.205 Series B Cumulative Convertible Preferred Stock (the "Series B Preferred
Stock") during the respective periods set forth in the preceding table.
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<PAGE> 21
DESCRIPTION OF DEBT SECURITIES
GENERAL
The Senior Debt Securities are to be issued under an indenture dated as of
February 1, 1995, as supplemented by a supplemental indenture dated as of June
1, 1995 and as may be further supplemented from time to time (the "Senior
Indenture"), between the Company and First Union National Bank of Georgia (the
"Senior Indenture Trustee"), and the Subordinated Debt Securities are to be
issued under an indenture dated as of February 1, 1995, as supplemented from
time to time (the "Subordinated Indenture"), between the Company and First Union
National Bank of Georgia (the "Subordinated Indenture Trustee"). The term
"Trustee," as used herein, shall refer to the Senior Indenture Trustee or the
Subordinated Indenture Trustee, as appropriate. The Senior Indenture and the
form of the Subordinated Indenture (being sometimes referred to herein
collectively as the "Indentures" and individually as an "Indenture") are filed
as exhibits to the Registration Statement and are available for inspection at
the corporate trust office of the Senior Indenture Trustee in Atlanta, Georgia
and the corporate trust office of the Subordinated Indenture Trustee in Atlanta,
Georgia or as described under "Available Information." The Indentures are
subject to and governed by the Trust Indenture Act of 1939, as amended (the
"TIA"). The statements made herein relating to the Indentures and the Debt
Securities are summaries of certain provisions thereof, do not purport to be
complete and are subject to, and are qualified in their entirety by reference
to, all provisions of the Indentures and the Debt Securities. All section
references appearing herein are to sections of the Indentures, and capitalized
terms used but not defined herein have the respective meanings set forth in the
Indentures and the Debt Securities.
TERMS
The Debt Securities will be direct, unsecured obligations of the Company.
The indebtedness represented by the Senior Debt Securities will rank equally
with all other unsecured and unsubordinated indebtedness of the Company. The
indebtedness represented by the Subordinated Debt Securities will be
subordinated in right of payment to the prior payment in full of the Senior Debt
of the Company, as described under "Subordination".
Each Indenture provides that the Debt Securities may be issued without
limit as to aggregate principal amount, in one or more series, in each case as
established from time to time in or pursuant to authority granted by a
resolution of the Board of Directors of the Company or as established in one or
more supplemental indentures to such Indenture. Debt Securities may be issued
with terms different from those of Debt Securities previously issued; all Debt
Securities of one series need not be issued at the same time and, unless
otherwise provided, a series may be reopened, without the consent of the Holders
of the Debt Securities of such series, for issuances of additional Debt
Securities of such series (Section 301 of each Indenture).
Each Indenture provides that there may be more than one Trustee thereunder,
each with respect to one or more series of Debt Securities. Any Trustee under
either Indenture may resign or be removed with respect to one or more series of
Debt Securities, and a successor Trustee may be appointed to act with respect to
such series (Section 608 of each Indenture). In the event that two or more
persons are acting as Trustee with respect to different series of Debt
Securities, each such Trustee shall be a Trustee of a trust under the applicable
Indenture separate and apart from the trust administered by any other Trustee
(Sections 101 and 609 of each Indenture), and, except as otherwise indicated
herein, any action described herein to be taken by the Trustee may be taken by
each such Trustee with respect to, and only with respect to, the one or more
series of Debt Securities for which it is Trustee under the applicable
Indenture.
Reference is made to the Prospectus Supplement relating to the series of
Debt Securities being offered for the specific terms thereof, including:
1. the title of such Debt Securities and whether such Debt Securities
are Senior Debt Securities or Subordinated Debt Securities;
2. the aggregate principal amount of such Debt Securities and any
limit on such principal amount;
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<PAGE> 22
3. the percentage of the principal amount at which such Debt
Securities will be issued and, if other than the principal amount thereof,
the portion of the principal amount payable upon declaration of
acceleration of the maturity thereof, or (if applicable) the portion of the
principal amount of such Debt Securities that is convertible into Capital
Stock (as defined in the Indentures), or the method by which any such
portion will be determined;
4. if convertible, any applicable limitations on the ownership or
transferability of the Capital Stock into which such Debt Securities are
convertible;
5. the date or dates, or the method by which such date or dates will
be determined, on which the principal of such Debt Securities will be
payable and the amount of principal payable thereon;
6. the rate or rates (which may be fixed or variable) at which such
Debt Securities will bear interest, if any, or the method by which such
rate or rates will be determined, the date or dates from which such
interest will accrue or the method by which such date or dates will be
determined, the Interest Payment Dates on which any such interest will be
payable and the Regular Record Dates, if any, for such Interest payable on
any Registered Security on any Interest Payment Dates, or the method by
which such Dates will be determined, and the basis upon which interest will
be calculated if other than that of a 360-day year consisting of twelve
30-day months;
7. the place or places where the principal of (and premium or
Make-Whole Amount (as defined), if any), interest, if any, on, and
Additional Amounts, if any, payable in respect of, such Debt Securities
will be payable, where such Debt Securities may be surrendered for
registration of transfer, conversion or exchange and where notices or
demands to or upon the Company in respect of such Debt Securities and the
applicable Indenture may be served;
8. the period or periods within which, the price or prices (including
premium or Make-Whole Amount, if any) at which, the currency or currencies,
currency unit or units or composite currency or currencies in which and
other terms and conditions upon which such Debt Securities may be redeemed
in whole or in part, at the option of the Company, if the Company is to
have the option;
9. the obligation, if any, of the Company to redeem, repay or purchase
such Debt Securities pursuant to any sinking fund or analogous provision or
at the option of a Holder thereof, and the period or periods within which
or the date or dates on which, the price or prices at which, the currency
or currencies, currency unit or units or composite currency or currencies
in which, and other terms and conditions upon which such Debt Securities
will be redeemed, repaid or purchased, in whole or in part, pursuant to
such obligation;
10. whether such Debt Securities will be in registered or bearer form
and terms and conditions relating thereto, and, if other than $1,000 and
any integral multiple thereof, the denominations in which any registered
Debt Securities will be issuable and, if other than $5,000, the
denomination or denominations in which any bearer Debt Securities will be
issuable;
11. if other than United States dollars, the currency or currencies in
which such Debt Securities will be denominated and payable, which may be a
foreign currency or units of two or more foreign currencies or a composite
currency or currencies;
12. whether the amount of payment of principal of (and premium or
Make-Whole Amount, if any) or interest, if any, on such Debt Securities may
be determined with reference to an index, formula or other method (which
index, formula or method may be based, without limitation, on one or more
currencies, currency units, composite currencies, commodities, equity
indices or other indices), and the manner in which such amounts will be
determined;
13. whether the principal of (and premium or Make-Whole Amount, if
any) or interest or Additional Amounts, if any, on such Debt Securities are
to be payable, at the election of the Company or a Holder thereof, in a
currency or currencies, currency unit or units or composite currency or
currencies other than that in which such Debt Securities are denominated or
stated to be payable, the period or periods within which, and the terms and
conditions upon which, such election may be made, and the time
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<PAGE> 23
and manner of, and identity of the exchange rate agent with responsibility
for, determining the exchange rate between the currency or currencies,
currency unit or units or composite currency or currencies in which such
Debt Securities are denominated or stated to be payable and the currency or
currencies, currency unit or units or composite currency or currencies in
which such Debt Securities are to be so payable;
14. provisions, if any, granting special rights to the Holders of such
Debt Securities upon the occurrence of such events as may be specified;
15. any deletions from, modifications of or additions to the Events of
Default or covenants of the Company with respect to such Debt Securities,
whether or not such Events of Default or covenants are consistent with the
Events of Default or covenants set forth in the applicable Indenture;
16. whether such Debt Securities will be issued in certificated or
book-entry form and terms and conditions related thereto;
17. the applicability, if any, of the defeasance and covenant
defeasance provisions of Article Fourteen of the applicable Indenture;
18. whether and under what circumstances the Company will pay
Additional Amounts as contemplated in the Indenture on such Debt Securities
to any Holder who is not a United States person in respect of any tax,
assessment or governmental charge and, if so, whether the Company will have
the option to redeem such Debt Securities rather than pay such Additional
Amounts (and the terms of any such option);
19. the obligation, if any, of the Company to permit the conversion of
the Debt Securities of such series into shares of Capital Stock of the
Company and the terms and conditions upon which such conversion shall be
effected; and
20. any other terms of such Debt Securities, which terms shall not be
inconsistent with the provisions of the applicable Indenture (Section 301
of each Indenture).
The Debt Securities may provide for less than the entire principal amount
thereof to be payable upon declaration of acceleration of the maturity thereof
("Original Issue Discount Securities") (Section 502 of each Indenture). Any
special United States federal income tax, accounting and other considerations
applicable to Original Issue Discount Securities will be described in the
applicable Prospectus Supplement.
DENOMINATIONS, INTEREST, REGISTRATION AND TRANSFER
Unless otherwise specified in the applicable Prospectus Supplement, the
Debt Securities of any series issued in registered form will be issuable in
denominations of $1,000 and integral multiples thereof. Unless otherwise
specified in the applicable Prospectus Supplement, the Debt Securities of any
series issued in bearer form will be issuable in denominations of $5,000
(Section 302 of each Indenture).
Unless otherwise specified in the applicable Prospectus Supplement, the
principal of (and premium or Make-Whole Amount, if any) and interest on any
series of Senior Debt Securities will be payable at the corporate trust office
of the Senior Indenture Trustee located at Corporate Trust Administration, 999
Peachtree Street, N.E., Suite 1100, Atlanta, Georgia 30309, and the principal of
(and premium or Make-Whole Amount, if any) and interest on any series of
Subordinated Debt Securities will be payable at the corporate trust office of
the Subordinated Indenture Trustee located at Corporate Trust Administration,
999 Peachtree Street, N.E., Suite 1100, Atlanta, Georgia 30309; provided that at
the option of the Company payment of interest on any series of Debt Securities
may be made by check mailed to the address of the Person entitled thereto as it
appears in the Security Register for such series or by wire transfer of funds to
such Person at an account maintained within the United States (Sections 301,
305, 306, 307 and 1002 of each Indenture).
Any interest not punctually paid or duly provided for on any Interest
Payment Date with respect to a Debt Security ("Defaulted Interest") will
forthwith cease to be payable to the Holder on the applicable Regular Record
Date and may either be paid to the Person in whose name such Debt Security is
registered at
7
<PAGE> 24
the close of business on a special record date (the "Special Record Date") for
the payment of such Defaulted Interest to be fixed by the Trustee, in which case
notice thereof shall be given to the Holder of such Debt Security not less than
10 days prior to such Special Record Date, or may be paid at any time in any
other lawful manner, all as more completely described in the applicable
Indenture (Section 307 of each Indenture).
Subject to certain limitations imposed upon Debt Securities issued in
book-entry form, the Debt Securities of any series will be exchangeable for
other Debt Securities of the same series and of a like aggregate principal
amount and tenor of different authorized denominations upon surrender of such
Debt Securities at the corporate trust office of the Trustee referred to above.
In addition, subject to certain limitations imposed upon Debt Securities issued
in book-entry form, the Debt Securities of any series may be surrendered for
conversion or registration of transfer thereof at the corporate trust office of
the Trustee referred to above. Every Debt Security surrendered for conversion,
registration or transfer or exchange shall be duly endorsed or accompanied by a
written instrument of transfer. No service charge will be made for any
registration or transfer or exchange of any Debt Securities, but the Company may
require payment of a sum sufficient to cover any tax or other governmental
charge payable in connection therewith (Section 305 of each Indenture). If the
applicable Prospectus Supplement refers to any transfer agent (in addition to
the Trustee) initially designated by the Company with respect to any series of
Debt Securities, the Company may at any time rescind the designation of any such
transfer agent or approve a change in the location through which such transfer
agent acts, except that the Company will be required to maintain a transfer
agent in each Place of Payment for such series. The Company may at any time
designate additional transfer agents with respect to any series of Debt
Securities (Section 1002 of each Indenture).
Neither the Company nor the Trustee shall be required to (i) issue,
register the transfer of or exchange Debt Securities of any series during a
period beginning at the opening of business 15 days before any selection of Debt
Securities of that series to be redeemed and ending at the close of business on
the day of mailing or publication of the relevant notice of redemption; (ii)
register the transfer of or exchange any Registered Security, or portion
thereof, called for redemption, except the unredeemed portion of any Registered
Security being redeemed in part; (iii) exchange any Bearer Security selected for
redemption, except that such a Bearer Security may be exchanged for a Registered
Security of that series and like tenor, provided that such Registered Security
shall be simultaneously surrendered for redemption; or (iv) issue, register the
transfer of or exchange any Debt Security which has been surrendered for
repayment at the option of the Holder, except the portion, if any, of such Debt
Security not to be so repaid (Section 305 of each Indenture).
MERGER, CONSOLIDATION OR SALE
The Company may consolidate with, or sell, lease or convey all or
substantially all of its assets to, or merge with or into, any other entity,
provided that (a) either the Company shall be the continuing entity, or the
successor entity (if other than the Company) formed by or resulting from any
such consolidation or merger or which shall have received the transfer of such
assets is a Person organized and existing under the laws of the United States or
any State thereof and shall expressly assume payment of the principal of (and
premium or Make-Whole Amount, if any) and interest (including all Additional
Amounts, if any) on all of the Debt Securities and the due and punctual
performance and observance of all of the covenants and conditions contained in
each Indenture; (b) immediately after giving effect to such transaction and
treating any indebtedness which becomes an obligation of the Company or any
Subsidiary as a result thereof as having been incurred by the Company or such
Subsidiary at the time of such transaction, no Event of Default under an
Indenture, and no event which, after notice or the lapse of time, or both, would
become such an Event of Default, shall have occurred and be continuing; and (c)
an Officers' Certificate and legal opinion covering such conditions shall be
delivered to the Trustee (Sections 801 and 803 of each Indenture).
CERTAIN COVENANTS
Existence. Except as described above under "Merger, Consolidation or
Sale," the Company will do or cause to be done all things necessary to preserve
and keep in full force and effect the existence, rights (charter and statutory)
and franchises of the Company and its Subsidiaries; provided, however, that the
Company shall not be required to preserve any right or franchise if it
determines that the preservation thereof is no longer
8
<PAGE> 25
desirable in the conduct of the business of the Company and its Subsidiaries as
a whole and that the loss thereof is not disadvantageous in any material respect
to the Holders of the Debt Securities of any series (Section 1005 of each
Indenture).
Maintenance of Properties. The Company will cause all of its properties
used or useful in the conduct of its business or the business of any Subsidiary
to be maintained and kept in good condition, repair and working order and
supplied with all necessary equipment and will cause to be made all necessary
repairs, renewals, replacements, betterments and improvements thereof, all as in
the judgment of the Company may be necessary so that the business carried on in
connection therewith may be properly and advantageously conducted at all times;
provided, however, that the Company and its Subsidiaries shall not be prevented
from selling or otherwise disposing of for value their properties in the
ordinary course of business (Section 1006 of each Indenture).
Insurance. The Company will, and will cause each of its Subsidiaries to,
keep all of its insurable properties insured against loss or damage in an amount
at least equal to their then full insurable value with financially sound and
reputable insurance companies (Section 1007 of each Indenture).
Payment of Taxes and other Claims. The Company will pay or discharge or
cause to be paid or discharged, before the same become delinquent, (i) all
taxes, assessments and governmental charges levied or imposed upon it or any
Subsidiary or upon the income, profits or property of the Company or any
Subsidiary, and (ii) all lawful claims for labor, materials and supplies which,
if unpaid, might by law become a lien upon the property of the Company or any
Subsidiary; provided, however, that the Company shall not be required to pay or
discharge or cause to be paid or discharged any such tax, assessment, charge or
claim whose amount, applicability or validity is being contested in good faith
by appropriate proceedings (Section 1008 of each Indenture).
Provision of Financial Information. Whether or not the Company is subject
to Section 13 or 15(d) of the Exchange Act, the Company will, to the extent
permitted under the Exchange Act, file with the Commission the annual reports,
quarterly reports and other documents which the Company would have been required
to file with the Commission pursuant to such Section 13 and 15(d) if the Company
were so subject, such documents to be filed with the Commission on or prior to
the respective dates (the "Required Filing Dates") by which the Company would
have been required so to file such documents if the Company were so subject. The
Company will also in any event (x) within 15 days of each Required Filing Date
(i) transmit by mail to all Holders of Debt Securities, as their names and
addresses appear in the Security Register, without cost to such Holders, copies
of the annual reports and quarterly reports which the Company would have been
required to file with the Commission pursuant to Section 13 or 15(d) of the
Exchange Act if the Company were subject to such Sections and (ii) file with the
Trustee copies of the annual reports, quarterly reports and other documents
which the Company would have been required to file with the Commission pursuant
to Section 13 or 15(d) of the Exchange Act if the Company were subject to such
Sections and (y) if filing such documents by the Company with the Commission is
not permitted under the Exchange Act, promptly upon written request and payment
of the reasonable cost of duplication and delivery, supply copies of such
documents to any prospective Holder (Section 1009 of each Indenture).
Waiver of Certain Covenants. The Company may omit to comply with any term,
provision or condition of the foregoing covenants, and with any other term,
provision or condition with respect to the Debt Securities of any series
specified in Section 301 of the Indentures (except any such term, provision or
condition which could not be amended without the consent of all Holders of Debt
Securities of such series), if before or after the time for such compliance the
Holders of at least a majority in principal amount of all outstanding Debt
Securities of such series, by act of such Holders, either waive such compliance
in such instance or generally waive compliance with such covenant or condition,
but no such waiver shall extend to or affect such covenant or condition except
to the extent so expressly waived, and until such waiver shall become effective,
the obligations of the Company and the duties of the Trustee in respect of any
such term, provision or condition shall remain in full force and effect (Section
1012 of each Indenture).
Additional Covenants. The Prospectus Supplement for a particular series of
Debt Securities may contain additional covenants of the Company with respect to
such series of Debt Securities.
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<PAGE> 26
EVENTS OF DEFAULT, NOTICE AND WAIVER
Each Indenture provides that the following events are "Events of Default"
with respect to any series of Debt Securities issued thereunder: (a) default for
30 days in the payment of any installment of interest or Additional Amounts
payable on any Debt Security of such series: (b) default in the payment of the
principal of (or premium or Make-Whole Amount, if any, on) any Debt Security of
such series at its Maturity; (c) default in making any sinking fund payment as
required for any Debt Security of such series; (d) default in the performance of
any other covenant of the Company contained in the Indenture (other than a
covenant added to the Indenture solely for the benefit of a series of Debt
Securities issued thereunder other than such series), continued for 60 days
after written notice as provided in the Indenture; (e) default under any bond,
debenture, note, mortgage, indenture or instrument under which there may be
issued or by which there may be secured or evidenced any indebtedness for money
borrowed by the Company (or by any Subsidiary, the repayment of which the
Company has guaranteed or for which the Company is directly responsible or
liable as obligor or guarantor) having an aggregate principal amount outstanding
of at least $10,000,000, whether such indebtedness now exists or shall hereafter
be created, which default shall have resulted in such indebtedness being
declared due and payable prior to the date on which it would otherwise have
become due and payable, without such acceleration having been rescinded or
annulled within 10 days after written notice to the Company as provided in the
Indenture; (f) the entry by a court of competent jurisdiction of one or more
judgments, orders or decrees against the Company or any Subsidiary in an
aggregate amount (excluding amounts fully covered by insurance) in excess of
$10,000,000 and such judgments, orders or decrees remain undischarged, unstayed
and unsatisfied in an aggregate amount (excluding amounts fully covered by
insurance) in excess of $10,000,000 for a period of 30 consecutive days; (g)
certain events of bankruptcy, insolvency or reorganization, or court appointment
of a receiver, liquidator or trustee of the Company or any Significant
Subsidiary or for all or substantially all of the property of the Company or any
Significant Subsidiary; and (h) any other Event of Default provided with respect
to such series of Debt Securities (Section 501 of each Indenture). The term
"Significant Subsidiary" means each significant subsidiary (as defined in
Regulations S-X promulgated under the Securities Act) of the Company.
If an Event of Default under either Indenture with respect to Debt
Securities of any series at the time outstanding occurs and is continuing, then
in every such case the Trustee or the Holders of not less than 25% in principal
amount of the Outstanding Debt Securities of that series may declare the
principal amount (or, if the Debt Securities of that series are Original Issue
Discount Securities or Indexed Securities, such portion of the principal amount
as may be specified in the terms thereof) of, and premium or Make-Whole Amount,
if any, on, all of the Debt Securities of that series to be due and payable
immediately by written notice thereof to the Company (and to the Trustee if
given by the Holders). However, at any time after such declaration of
acceleration with respect to Debt Securities of such series (or of all Debt
Securities then Outstanding under the applicable Indenture, as the case may be)
has been made, but before a judgment or decree for payment of the money due has
been obtained by the Trustee, the Holders of not less than a majority in
principal amount of the Outstanding Debt Securities of such series (or of all
Debt Securities then Outstanding under the applicable Indenture, as the case may
be) may rescind and annul such declaration and its consequences if (a) the
Company shall have deposited with the Trustee all required payments of the
principal of (and premium or Make-Whole Amount, if any) and interest, and any
Additional Amounts, on the Debt Securities of such series (or of all Debt
Securities then Outstanding under the applicable Indenture, as the case may be),
plus certain fees, expenses, disbursements and advances of the Trustee and (b)
all Events of Default, other than the nonpayment of accelerated principal (or
specified portion thereof and the premium or Make-Whole Amount, if any) or
interest, with respect to the Debt Securities of such series (or of all Debt
Securities then Outstanding under the applicable Indenture, as the case may be)
have been cured or waived as provided in the Indenture (Section 502 of each
Indenture). Each Indenture also provides that the Holders of not less than a
majority in principal amount of the Outstanding Debt Securities of any series
(or of all Debt Securities then Outstanding under the applicable Indenture, as
the case may be) may waive any past default with respect to such series and its
consequences, except a default (x) in the payment of the principal of (or
premium or Make-Whole Amount, if any) or interest or Additional Amounts payable
on any Debt Security of such series or (y) in respect of a covenant or provision
contained in the applicable Indenture that cannot be modified or
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amended without the consent of the Holder of each Outstanding Debt Security
affected thereby (Section 513 of each Indenture).
The Trustee is required to give notice to the Holders of Debt Securities
within 90 days of a default under the applicable Indenture; provided, however,
that such Trustee may withhold notice to the Holders of any series of Debt
Securities of any default with respect to such series (except a default in the
payment of the principal of (or premium or Make-Whole Amount, if any) or
interest or Additional Amounts payable on any Debt Security of such series or in
the payment of any sinking fund installment in respect of any Debt Security of
such series) if the Responsible Officers of such Trustee consider such
withholding to be in the interest of such Holders (Section 601 of each
Indenture).
Each Indenture provides that no Holders of Debt Securities of any series
may institute any proceedings, judicial or otherwise, with respect to such
Indenture or for any remedy thereunder, except in the case of failure of the
Trustee, for 60 days, to act after it has received a written request to
institute proceedings in respect of an Event of Default from the Holders of not
less than 25% in principal amount of the Outstanding Debt Securities of such
series, as well as an offer of reasonable indemnity (Section 507 of each
Indenture). This provision will not prevent, however, any Holder of Debt
Securities from instituting suit for the enforcement of payment of the principal
of (and premium or Make-Whole Amount, if any), interest on and additional
Amounts payable with respect to, such Debt Securities at the respective due
dates or redemption dates thereof (Section 508 of each Indenture).
MODIFICATION OF THE INDENTURES
Modifications and amendment of either Indenture may be made with the
consent of the Holders of not less than a majority in principal amount of all
Outstanding Debt Securities issued under such Indenture that are affected by
such modification or amendment; provided, however, that no such modification or
amendment may, without the consent of the Holder of each such Debt Security
affected thereby, (a) change the stated Maturity of the principal of (or premium
or Make-Whole Amount, if any), or any installment of principal of or interest or
Additional Amounts payable on, any such Debt Security; (b) reduce the principal
amount of, or the rate or amount of interest on, or any premium or Make-Whole
Amount payable on redemption of, or any Additional Amount payable with respect
to, any such Debt Security, or reduce the amount of principal of an Original
Issue Discount Security or Make-Whole Amount, if any, that would be due and
payable upon declaration of acceleration of the maturity thereof or would be
provable in bankruptcy, or adversely affect any right of repayment of the Holder
of any such Debt Security; (c) change the Place of Payment, or the coin or
currency, for payment of principal of (and premium or Make-Whole Amount, if
any), or interest on, or any Additional Amounts payable with respect to, any
such Debt Security; (d) impair the right to institute suit for the enforcement
of any payment on or with respect to any such Debt Security; (e) reduce the
percentage of Outstanding Debt Securities of any series, the consent of whose
Holders is necessary to modify or amend the applicable Indenture, to waive
compliance with certain provisions thereof or certain defaults and consequences
thereunder or to reduce the quorum or voting requirements set forth in the
Indenture; or (f) modify any of the foregoing provisions or any of the
provisions relating to the waiver of certain past defaults or certain covenants,
except to increase the required percentage to effect such action or to provide
that certain other provisions may not be modified or waived without the consent
of the Holder of each such Debt Security (Section 902 of each Indenture).
The Holders of not less than a majority in principal amount of Outstanding
Debt Securities issued under either Indenture have the right to waive compliance
by the Company with certain covenants in such Indenture (Section 1012 of each
Indenture).
Modifications and amendments of either Indenture may be made by the Company
and the respective Trustee thereunder without the consent of any Holder of Debt
Securities for any of the following purposes:
i. to evidence the succession of another Person to the Company as
obligor under such Indenture;
ii. to add to the covenants of the Company for the benefit of the
Holders of all or any series of Debt Securities or to surrender any right
or power conferred upon the Company in such Indenture;
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iii. to add Events of Default for the benefit of the Holders of all or
any series of Debt Securities;
iv. to add or change any provisions of either Indenture to facilitate
the issuance of, or to liberalize certain terms of, Debt Securities in
bearer form, or to permit or facilitate the issuance of Debt Securities in
uncertificated form provided that such action shall not adversely affect
the interests of the Holders of the Debt Securities of any series in any
material respect;
v. to add, change or eliminate any provisions of either Indenture,
provided that any such addition, change or elimination shall become
effective only when there are no Debt Securities Outstanding of any series
created prior thereto which are entitled to the benefit of such provision;
vi. to secure the Debt Securities;
vii. to establish the form or terms of Debt Securities of any series,
including the provisions and procedures, if applicable, for the conversion
of such Debt Securities into Common Stock or Preferred Stock of the
Company; to provide for the acceptance of appointment by a successor
Trustee or facilitate the administration of the trusts under either
Indenture by more than one Trustee;
viii. to provide for the acceptance of appointment by a successor
Trustee or facilitate the administration of the trusts under either
Indenture by more than one Trustee;
ix. to cure any ambiguity, defect or inconsistency in either
Indenture, provided that such action shall not adversely affect the
interests of Holders of Debt Securities of any series issued under such
Indenture;
x. to close either Indenture with respect to the authentication and
delivery of additional series of Debt Securities or to qualify, or maintain
qualification of, either Indenture under the Trust Indenture Act; or
xi. to supplement any of the provisions of either Indenture to the
extent necessary to permit or facilitate defeasance and discharge of any
series of such Debt Securities, provided that such action shall not
adversely affect the interests of the Holders of the Debt Securities of any
series in any material respect (Section 901 of each Indenture).
SUBORDINATION
Upon any distribution to creditors of the Company in a liquidation,
dissolution, bankruptcy, insolvency or reorganization, the payment of the
principal of and interest on the Subordinated Debt Securities will be
subordinated to the extent provided in the Subordinated Indenture in right of
payment to the prior payment in full of all Senior Debt (Sections 1601 and 1602
of the Subordinated Indenture), but the obligation of the Company to make
payment of the principal and interest on the Subordinated Debt Securities will
not otherwise be affected (Section 1608 of the Subordinated Indenture). No
payment of principal or interest may be made on the Subordinated Debt Securities
at any time if a default on Senior Debt exists that permits the holders of such
Senior Debt to accelerate its maturity and the default is the subject of
judicial proceedings or the Company receives notice of the default (Section 1603
of the Subordinated Indenture). The Company may resume payments on the
Subordinated Debt Securities when the default is cured or waived, or 120 days
pass after the notice is given if the default is not the subject of judicial
proceedings, if the subordination provisions of the Subordinated Indenture
otherwise permit payment at that time (Section 1603 of the Subordinated
Indenture). After all Senior Debt is paid in full and until the Subordinated
Debt Securities are paid in full, Holders will be subrogated to the rights of
holders of Senior Debt to the extent that distributions otherwise payable to
holders have been applied to the payment of Senior Debt (Section 1607 of the
Subordinated Indenture). By reason of such subordination, in the event of a
distribution of assets upon insolvency, certain general creditors of the Company
may recover more, ratably, than holders of the Subordinated Debt Securities.
Senior Debt is defined in the Subordinated Indenture as the principal of
and interest on, or substantially similar payments to be made by the Company in
respect of, the following, whether outstanding at the date of execution of the
Subordinated Indenture or thereafter incurred, created or assumed: (a)
indebtedness of the Company for money borrowed or represented by purchase-money
obligations, (b) indebtedness of the
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Company evidenced by notes, debentures, or bonds, or other securities issued
under the provisions of an indenture, fiscal agency agreement or other
instrument, (c) obligations of the Company as lessee under leases of property
either made as part of any sale and leaseback transaction to which the Company
is a party or otherwise, (d) indebtedness of partnerships and joint ventures
that is included in the consolidated financial statements of the Company, (e)
indebtedness, obligations and liabilities of others in respect of which the
Company is liable contingently or otherwise to pay or advance money or property
or as guarantor, endorser or otherwise or which the Company has agreed to
purchase or otherwise acquire, and (f) any binding commitment of the Company to
fund any real estate investment or to fund any investment in any entity making
such real estate investment, in each case other than (1) any such indebtedness,
obligation or liability referred to in clauses (a) through (f) above as to
which, in the instrument creating or evidencing the same pursuant to which the
same is outstanding, it is provided that such indebtedness, obligation or
liability is not superior in right of payment to the Subordinated Debt
Securities or ranks pari passu with the Subordinated Debt Securities, (2) any
such indebtedness, obligation or liability which is subordinated to indebtedness
of the Company to substantially the same extent as or to a greater extent than
the Subordinated Debt Securities are subordinated, and (3) the Subordinated Debt
Securities (Section 101 of the Subordinated Indenture). At December 15, 1995,
Senior Debt aggregated approximately $360.0 million. There are no restrictions
in the Subordinated Indenture upon the creation of additional Senior Debt or
other indebtedness.
DISCHARGE, DEFEASANCE AND COVENANT DEFEASANCE
Under each Indenture, the Company may discharge certain obligations to
Holders of any series of Debt Securities issued thereunder that have not already
been delivered to the applicable Trustee for cancellation and that either have
become due and payable or will become due and payable within one year (or
scheduled for redemption within one year) by irrevocably depositing with the
applicable Trustee, in trust, funds in such currency or currencies, currency
unit or units or composite currency or currencies in which such Debt Securities
are payable in an amount sufficient to pay the entire indebtedness on such Debt
Securities in respect of principal (and premium or Make-Whole Amount, if any)
and interest and any Additional Amounts payable to the date of such deposit (if
such Debt Securities have become due and payable) or to the Stated Maturity or
Redemption Date, as the case may be (Section 401 of each Indenture).
Each Indenture provides that, if the provisions of Article Fourteen thereof
are made applicable to the Debt Securities of or within any series pursuant to
Section 301 of such Indenture, the Company may elect either (a) to defease and
be discharged from any and all obligations with respect to such Debt Securities
(except for the obligation to pay Additional Amounts, if any, upon the
occurrence of certain events of tax assessment or governmental charge with
respect to payments on such Debt Securities and the obligations to register the
transfer or exchange of such Debt Securities, to replace temporary, mutilated,
destroyed, lost or stolen Debt Securities, to maintain an office or agency in
respect of such Debt Securities and to hold moneys for payment in trust)
("defeasance") (Section 1402 of each Indenture) or (b) to be released from its
obligations with respect to such Debt Securities under provisions of each
Indenture described under "Certain Covenants," or, if provided pursuant to
Section 301 of each Indenture, its obligations with respect to any other
covenant, and any failure to comply with such obligations shall not constitute a
default or an Event or Default with respect to such Debt Securities ("covenant
defeasance") (Section 1403 of each Indenture), in either case upon the
irrevocable deposit by the Company with the applicable Trustee, in trust, of an
amount, in such currency or currencies, currency unit or currency units or
composite currency or currencies in which such Debt Securities are payable at
Stated Maturity, or Government Obligations (as defined below), or both,
applicable to such Debt Securities which through the scheduled payment of
principal and interest in accordance with their terms will provide money in an
amount sufficient to pay the principal of (and premium or Make-Whole Amount, if
any) and interest on such Debt Securities, and any mandatory sinking fund or
analogous payments thereon, on the scheduled due dates therefor.
Such a trust may only be established if, among other things, the Company
has delivered to the applicable Trustee an Opinion of Counsel (as specified in
each Indenture) to the effect that the Holders of such Debt Securities will not
recognize income, gain or loss for United States federal income tax purposes as
a result of such defeasance or covenant defeasance and will be subject to United
States federal income tax on the same
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amounts, in the same manner and at the same times as would have been the case if
such defeasance or covenant defeasance had not occurred, and such Opinion of
Counsel, in the case of defeasance, must refer to and be based upon a ruling of
the Internal Revenue Service or a change in applicable United States federal
income tax laws occurring after the date of such Indenture (Section 1404 of each
Indenture).
"Government Obligations" means securities which are (i) direct obligations
of the United States of America or the government which issued the Foreign
Currency in which the Debt Securities of a particular series are payable, for
the payment of which its full faith and credit is pledged or (ii) obligations of
a Person controlled or supervised by and acting as an agency or instrumentality
of the United States of America or the government which issued the Foreign
Currency in which the Debt Securities of such series are payable, the payment of
which is unconditionally guaranteed as a full faith and credit obligation by the
United States of America or such other government, which, in either case, are
not callable or redeemable at the option of the issuer thereof, and shall also
include a depository receipt issued by a bank or trust company as custodian with
respect to any such Government Obligation or a specific payment of interest on
or principal of any such Government Obligation held by such custodian for the
account of the holder of a depository receipt, provided that (except as required
by law) such custodian is not authorized to make any deduction from the amount
payable to the holder of such depository receipt from any amount received by the
custodian in respect of the Government Obligation or the specific payment of
interest on or principal of the Government Obligation evidenced by such
depository receipt (Section 101 of each Indenture).
Unless otherwise provided in the applicable Prospectus Supplement, if after
the Company has deposited funds and/or Government Obligations to effect
defeasance or covenant defeasance with respect to Debt Securities of any series,
(a) the Holder of a Debt Security of such series is entitled to, and does, elect
pursuant to Section 301 of either Indenture or the terms of such Debt Security
to receive payment in a currency, currency unit or composite currency other than
that in which such deposit has been made in respect to such Debt Security, or
(b) a Conversion Event (as defined below) occurs in respect of the currency,
currency unit or composite currency in which such deposit has been made, the
indebtedness represented by such Debt Security shall be deemed to have been, and
will be, fully discharged and satisfied through the payment of the principal of
(and premium or Make-Whole Amount, if any) and interest on such Debt Security as
they become due out of the proceeds yielded by converting the amount so
deposited in respect of such Debt Security into the currency, currency unit or
composite currency in which such Debt Security becomes payable as a result of
such election or such cessation of usage based on the applicable market exchange
rate (Section 1405 of each Indenture).
"Conversion Event" means the cessation of use of (i) a currency, currency
unit or composite currency issued by the government of one or more countries
other than the United States (other than the ECU or other currency unit) both by
the government of the country that issued such currency and for the settlement
of transactions by a central bank or other public institutions of or within the
international banking community, (ii) the ECU both within the European Monetary
System and for the settlement of transactions by public institutions of or
within the European Communities or (iii) any currency, currency unit or
composite currency other than the ECU for the purposes for which it was
established (Section 101 of each Indenture). Unless otherwise provided in the
applicable Prospectus Supplement, all payments of principal of (and premium or
Make-Whole Amount, if any) and interest on any Debt Security that is payable in
a Foreign Currency that ceases to be used by its government of issuance shall be
made in United States dollars.
In the event the Company effects covenant defeasance with respect to any
Debt Securities and such Debt Securities are declared due and payable because of
the occurrence of any Event of Default other than the Event of Default described
in clause (d) under "Events of Default, Notice and Waiver" with respect to
Sections 1004 to 1009, inclusive, of either Indenture (which Sections would no
longer be applicable to such Debt Securities) or described in clause (h) under
"Events of Default, Notice and Waiver" with respect to a covenant as to which
there has been covenant defeasance, the amount in such currency, currency unit
or composite currency in which such Debt Securities are payable, and Government
Obligations on deposit with the Trustee, will be sufficient to pay amounts due
on such Debt Securities at the time of their Stated Maturity but may not be
sufficient to pay amounts due on such Debt Securities at the time of the
acceleration resulting
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from such Event of Default. However, the Company would remain liable to make
payment of such amounts due at the time of acceleration.
The applicable Prospectus Supplement may further describe the provisions,
if any, permitting such defeasance or covenant defeasance, including any
modifications to the provisions described above, with respect to the Debt
Securities of or within a particular series.
CONVERSION RIGHTS
The terms and conditions, if any, upon which the Debt Securities are
convertible into Capital Stock will be set forth in the applicable Prospectus
Supplement relating thereto. Such terms will include whether such Debt
Securities are convertible into Capital Stock, the conversion price (or manner
of calculation thereof), the conversion period, provisions as to whether
conversion will be at the option of the Holders or the Company, the events
requiring an adjustment of the conversion price and provisions affecting
conversion in the event of the redemption of such Debt Securities.
BOOK-ENTRY SYSTEM
The Debt Securities of a series may be issued in whole or in part in the
form of one or more global securities ("Global Securities") that will be
deposited with, or on behalf of, a depository (the "Depository") identified in
the Prospectus Supplement relating to such series. Global Securities, if any,
issued in the United States are expected to be deposited with the Depository
Trust Company, as Depository. Global Securities may be issued in fully
registered form and may be issued in either temporary or permanent form. Unless
and until it is exchanged in whole or in part for the individual Debt Securities
represented thereby, a Global Security may not be transferred except as a whole
by the Depository for such Global Security to a nominee of such Depository or by
a nominee of such Depository to such Depository or another nominee of such
Depository or by such Depository or any nominee of such Depository to a
successor Depository or any nominee of such successor.
The specific terms of the depository arrangement with respect to a series
of Debt Securities will be described in the Prospectus Supplement relating to
such series. The Company expects that unless otherwise indicated in the
applicable Prospectus Supplement, the following provisions will apply to
depository arrangements.
Upon the issuance of a Global Security, the Depository for such Global
Security or its nominee will credit on its book-entry registration and transfer
system the respective principal amounts of the individual Debt Securities
represented by such Global Security to the accounts of persons that have
accounts with such Depository ("Participants"). Such accounts shall be
designated by the underwriters, dealers or agents with respect to such Debt
Securities or by the Company if such Debt Securities are offered directly by the
Company. Ownership of beneficial interests in such Global Security will be
limited to Participants or persons that may hold interests through Participants.
Ownership of beneficial interests in such Global Security will be shown on, and
the transfer of that ownership will be effected only through, records maintained
by the Depository for such Global Security or its nominee (with respect to
beneficial interests of Participants) and records of Participants (with respect
to beneficial interests of persons who hold through Participants). The laws of
some states require that certain purchasers of securities take physical delivery
of such securities in definitive form. Such limits and laws may impair the
ability to own, pledge or transfer beneficial interest in a Global Security.
So long as the Depository for a Global Security or its nominee is the
registered owner of such Global Security, such Depository or such nominee, as
the case may be, will be considered the sole owner or holder of the Debt
Securities represented by such Global Security for all purposes under the
applicable Indenture. Except as described below or in the applicable Prospectus
Supplement, owners of beneficial interest in a Global Security will not be
entitled to have any of the individual Debt Securities represented by such
Global Security registered in their names, will not receive or be entitled to
receive physical delivery of any such Debt Securities in definitive form and
will not be considered the owners or holders thereof under the applicable
Indenture.
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Payments of principal of, any premium or Make-Whole Amount and any interest
on, or any Additional Amounts payable with respect to, individual Debt
Securities represented by a Global Security registered in the name of a
Depository or its nominee will be made to the Depository or its nominee, as the
case may be, as the registered owner of the Global Security. None of the
Company, the Trustee, any Paying Agent or the Security Registrar for such Debt
Securities will have any responsibility or liability for any aspect of the
records relating to or payments made on account of beneficial ownership
interests in the Global Security for such Debt Securities or for maintaining,
supervising or reviewing any records relating to such beneficial ownership
interests.
The Company expects that the Depository for any Debt Securities or its
nominee, upon receipt of any payment of principal, premium, Make-Whole Amount,
interest or Additional Amounts in respect of the Global Security representing
such Debt Securities, will immediately credit Participants' accounts with
payments in amounts proportionate to their respective beneficial interests in
the principal amount of such Global Security as shown on the records of such
Depository or its nominee. The Company also expects that payments by
Participants to owners of beneficial interests in such Global Security held
through such Participants will be governed by standing instructions and
customary practices, as is the case with securities held for the account of
customers in bearer form or registered in street name. Such payments will be the
responsibility of such Participants.
If a Depository for any Debt Securities is at any time unwilling, unable or
ineligible to continue as depository and a successor depository is not appointed
by the Company within 90 days, the Company will issue individual Debt Securities
in exchange for the Global Security representing such Debt Securities. In
addition, the Company may at any time and in its sole discretion, subject to any
limitations described in the Prospectus Supplement relating to such Debt
Securities, determine not to have any of such Debt Securities represented by one
or more Global Securities and in such event will issue individual Debt
Securities in exchange for the Global Security or Securities representing such
Debt Securities. Individual Debt Securities so issued will be issued in
denominations of $1,000 and integral multiples thereof.
TRUSTEES
First Union National Bank of Georgia, the Senior Indenture Trustee and the
Subordinate Indenture Trustee, also provides the Company's revolving line of
credit facility and from time to time directly or through affiliates performs
other services for the Company in the normal course of business.
GOVERNING LAW
The Indentures are governed by and shall be construed in accordance with
the laws of the State of Georgia.
DESCRIPTION OF COMMON STOCK
This summary of certain terms and provisions of the Company's Common Stock
does not purport to be complete and is subject to, and qualified in its entirety
by reference to, the terms and provisions of the Company's Amended and Restated
Articles of Incorporation (the "Articles"), and By-laws, as amended, which are
filed as exhibits to the Registration Statement of which this Prospectus is a
part.
The Company has 100,000,000 shares of Common Stock authorized and
33,827,757 shares were outstanding at November 30, 1995. All outstanding shares
of Common Stock are fully paid and nonassessable.
The transfer agent and registrar for the Common Stock is First Union
National Bank of North Carolina, Charlotte, North Carolina. The Company's Common
Stock is traded on the New York Stock Exchange under the symbol "MRY".
The holders of Common Stock are entitled to receive such dividends as are
declared by the Board of Directors, after payment of, or provision for, full
cumulative dividends for outstanding Preferred Stock. Each share of Common Stock
is entitled to one vote on all matters submitted to a vote of shareholders,
including the
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election of directors. Cumulative voting for directors is not permitted, which
means that holders of more than 50% of all of the shares of Common Stock voting
can elect all of the directors if they choose to do so, and, in such event, the
holders of the remaining shares of Common Stock will not be able to elect any
directors. Holders of Common Stock and Preferred Stock, when outstanding and
when entitled to vote, vote as a class, except with respect to matters that
relate only to the rights, terms or conditions of the Preferred Stock, that
affect only the holders of the Preferred Stock, or that relate to the rights of
the holders of the Preferred Stock if the Company fails to fulfill any of its
obligations regarding the Preferred Stock. Upon any dissolution, liquidation or
winding-up of the Company, the holders of Common Stock are entitled to receive
pro rata all of the Company's assets and funds remaining after payment of, or
provision for, creditors and distribution of, or provision for, preferential
amounts and unpaid accumulated dividends to holders of Preferred Stock. Holders
of Common Stock have no preemptive right to purchase or subscribe for any shares
of capital stock of the Company.
DESCRIPTION OF PREFERRED STOCK
This summary of certain terms and provisions of the Company's Preferred
Stock does not purport to be complete and is subject to, and qualified in its
entirety by reference to, the terms and provisions of the Company's Articles and
By-laws, as amended, which are filed as exhibits to the Registration Statement
of which this Prospectus is a part.
The Articles authorize the issuance of 20,000,000 shares of Preferred
Stock, without par value, of which 677,470 shares of Series A Preferred Stock,
4,000,000 shares of Series B Preferred Stock and 4,599,800 shares of Series C
Preferred Stock were issued and outstanding at November 30, 1995. All
outstanding shares of the Series A Preferred Stock, the Series B Preferred Stock
and the Series C Preferred Stock are fully paid and nonassessable.
The transfer agent and registrar for the Series A Preferred Stock, the
Series B Preferred Stock and the Series C Preferred Stock is First Union
National Bank of North Carolina, Charlotte, North Carolina.
The following description of the terms of the Preferred Stock sets forth
certain general terms and provisions of the Preferred Stock to which a
Prospectus Supplement may relate. Specific terms of any series of Preferred
Stock offered by a Prospectus Supplement will be described in that Prospectus
Supplement. The description set forth below is subject to and qualified in its
entirety by reference to the Articles of Amendment to the Articles fixing the
preferences, limitations and relative rights of a particular series of Preferred
Stock.
GENERAL
Under the Articles, the Board of Directors of the Company is authorized,
without further shareholder action, to provide for the issuance of up to
20,000,000 shares of Preferred Stock, in one or more series, with such voting
powers and with such designations, preferences and relative, participating,
optional or other special rights, and qualifications, limitations or
restrictions, as the Board of Directors shall approve. At November 30, 1995 the
Company had 9,277,270 shares of Preferred Stock issued and outstanding of its
20,000,000 authorized shares of Preferred Stock.
The Preferred Stock will have the dividend, liquidation, redemption,
conversion and voting rights set forth below unless otherwise provided in the
Prospectus Supplement relating to a particular series of Preferred Stock.
Reference is made to the Prospectus Supplement relating to the particular series
of Preferred Stock offered thereby for specific terms, including: (i) the title
and liquidation preference per share of such Preferred Stock and the number of
shares offered; (ii) the price at which such series of Preferred Stock will be
issued; (iii) the dividend rate (or method of calculation), the dates on which
dividends shall be payable and the dates from which dividends shall commence to
accumulate; (iv) any redemption or sinking fund provisions of such series of
Preferred Stock; (v) any conversion provisions of such series of Preferred
Stock; and (vi) any additional dividend, liquidation, redemption, sinking fund
and other rights, preferences, privileges, limitations and restrictions of such
series of Preferred Stock.
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The Preferred Stock will, when issued, be fully paid and nonassessable.
Unless otherwise specified in the Prospectus Supplement relating to a particular
series of Preferred Stock, each series will rank on a parity as to dividends and
distributions in the event of a liquidation with each other series of Preferred
Stock and, in all cases, will be senior to the Common Stock.
DIVIDEND RIGHTS
Holders of Preferred Stock of each series will be entitled to receive, when
as and if declared by the Board of Directors, out of assets of the Company
legally available therefor, cash dividends at such rates and on such dates as
are set forth in the Prospectus Supplement relating to such series of Preferred
Stock. Such rate may be fixed or variable or both and may be cumulative,
noncumulative or partially cumulative.
If the applicable Prospectus Supplement so provides, as long as any shares
of Preferred Stock are outstanding, no dividends will be declared or paid or any
distributions be made on the Common Stock, other than a dividend payable in
Common Stock, unless the accrued dividends on each series of Preferred Stock
have been fully paid or declared and set apart for payment and the Company shall
have set apart all amounts, if any, required to be set apart for all sinking
funds, if any, for each series of Preferred Stock.
If the applicable Prospectus Supplement so provides, when dividends are not
paid in full upon any series of Preferred Stock and any other series of
Preferred Stock ranking on a parity as to dividends with such series of
Preferred Stock, all dividends declared upon such series of Preferred Stock and
any other series of Preferred Stock ranking on a parity as to dividends will be
declared pro rata so that the amount of dividends declared per share on such
series of Preferred Stock and such other series will in all cases bear to each
other the same ratio that accrued dividends per share on such series of
Preferred Stock and such other series bear to each other.
Each series of Preferred Stock will be entitled to dividends as described
in the Prospectus Supplement relating to such series, which may be based upon
one or more methods of determination. Different series of Preferred Stock may be
entitled to dividends at different dividend rates or based upon different
methods of determination. Except as provided in the applicable Prospectus
Supplement, no series of Preferred Stock will be entitled to participate in the
earnings or assets of the Company.
RIGHTS UPON LIQUIDATION
In the event of any voluntary or involuntary liquidation, dissolution or
winding-up of the Company, the holders of each series of Preferred Stock will be
entitled to receive out of the assets of the Company available for distribution
to shareholders, the amount stated or determined on the basis set forth in the
Prospectus Supplement relating to such series, which may include accrued
dividends, if such liquidation, dissolution or winding-up is involuntary or may
equal the current redemption price per share (otherwise than for the sinking
fund, if any, provided for such series) provided for such series set forth in
such Prospectus Supplement, if such liquidation, dissolution or winding-up is
voluntary, and on such preferential basis as is set forth in such Prospectus
Supplement. If, upon any voluntary or involuntary liquidation, dissolution or
winding-up of the Company, the amounts payable with respect to Preferred Stock
of any series and any other shares of stock of the Company ranking as to any
such distribution on a parity with such series of Preferred Stock are not paid
in full, the holders of Preferred Stock of such series and of such other shares
will share ratably in any such distribution of assets of the Company in
proportion to the full respective preferential amounts to which they are
entitled or on such other basis as is set forth in the applicable Prospectus
Supplement. The rights, if any, of the holders of any series of Preferred Stock
to participate in the assets of the Company remaining after the holders of other
series of Preferred Stock have been paid their respective specified liquidation
preferences upon any liquidation, dissolution or winding-up of the Company will
be described in the Prospectus Supplement relating to such series.
REDEMPTION
A series of Preferred Stock may be redeemable, in whole or in part, at the
option of the Company, and may be subject to mandatory redemption pursuant to a
sinking fund, in each case upon terms, at the times and the redemption prices
and for the types of consideration set forth in the Prospectus Supplement
relating to
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such series. The Prospectus Supplement relating to a series of Preferred Stock
which is subject to mandatory redemption shall specify the number of shares of
such series that shall be redeemed by the Company in each year commencing after
a date to be specified, at a redemption price per share to be specified,
together with an amount equal to any accrued and unpaid dividends thereon to the
date of redemption. Except as indicated in the applicable Prospectus Supplement,
the Preferred Stock is not subject to any mandatory redemption at the option of
the holder.
SINKING FUND
The Prospectus Supplement for any series of Preferred Stock will state the
terms, if any, of a sinking fund for the purchase or redemption of that series.
CONVERSION RIGHTS
The Prospectus Supplement for any series of Preferred Stock will state the
terms, if any, on which shares of that series are convertible into shares of
Common Stock or another series of Preferred Stock. The Preferred Stock will have
no preemptive rights.
VOTING RIGHTS
Except as indicated in the Prospectus Supplement relating to a particular
series of Preferred Stock, or except as expressly required by Georgia law, a
holder of Preferred Stock will not be entitled to vote. Except as indicated in
the Prospectus Supplement relating to a particular series of Preferred Stock, in
the event the Company issues full shares of any series of Preferred Stock, each
such share will be entitled to one vote on matters on which holders of such
series of Preferred Stock are entitled to vote.
TRANSFER AGENT AND REGISTRAR
The transfer agent, registrar and dividend disbursement agent for a series
of Preferred Stock will be selected by the Company and be described in the
applicable Prospectus Supplement. The registrar for shares of Preferred Stock
will send notices to shareholders of any meetings at which holders of Preferred
Stock have the right to vote on any matter.
OUTSTANDING PREFERRED STOCK
Series A Preferred Stock. The Series A Preferred Stock ranks senior to the
Common Stock, and pari passu with the Series B Preferred Stock and Series C
Preferred Stock, with respect to payment of dividends and amounts upon
liquidation, dissolution or winding-up. Holders of Series A Preferred Stock are
entitled to receive, when, as and if declared by the Board of Directors of the
Company, out of funds legally available for payment, cumulative cash dividends
at the rate per annum of $1.75 per share of Series A Preferred Stock. Dividends
on the Series A Preferred Stock are payable quarterly in arrears on the last
calendar day of March, June, September and December of each year.
Shares of Series A Preferred Stock are not redeemable by the Company prior
to June 30, 1998, and at no time are the shares of Series A Preferred Stock
redeemable for cash. On and after June 30, 1998, the shares of Series A
Preferred Stock are redeemable at the option of the Company, in whole or in
part, for such number of shares of Common Stock as equals the liquidation
preference of the Series A Preferred Stock to be redeemed divided by the
applicable conversion price as of the opening of business on the date set for
such redemption, subject to adjustment in certain circumstances. The Company may
exercise this option only if for 20 trading days, within any period of 30
consecutive trading days, including the last trading day of such period, the
closing price of the Common Stock on the New York Stock Exchange equals or
exceeds the conversion price per share, subject to adjustments in certain
circumstances.
The holders of Series A Preferred Stock are entitled to receive in the
event of any liquidation, dissolution or winding-up of the Company, whether
voluntary or involuntary, $25.00 per share of Series A Preferred Stock plus an
amount per share of Series A Preferred Stock equal to all dividends (whether or
not earned or
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declared) accrued and unpaid thereon to the date of final distribution to such
holders, and no more. Except under certain circumstances or except as otherwise
from time to time required by applicable law, the holders of Series A Preferred
Stock have no voting rights.
Series B Preferred Stock. The Series B Preferred Stock ranks senior to the
Common Stock, and pari passu with the Series A Preferred Stock and the Series C
Preferred Stock, with respect to payment of dividends and amounts upon
liquidation, dissolution or winding-up. Holders of Series B Preferred Stock are
entitled to receive, when, as and if declared by the Board of Directors of the
Company, out of funds legally available for payment, cumulative cash dividends
at the rate per annum of $2.205 per share of Series B Preferred Stock. Dividends
on the Series B Preferred Stock are payable quarterly in arrears on the last
calendar day of March, June, September and December of each year.
Shares of Series B Preferred Stock are not redeemable by the Company prior
to October 31, 1999, and at no time are the shares of Series B Preferred Stock
redeemable for cash. On and after October 31, 1999, the shares of Series B
Preferred Stock are redeemable at the option of the Company, in whole or in
part, for such number of shares of Common Stock as equals the liquidation
preference of the Series B Preferred Stock to be redeemed divided by the
applicable conversion price as of the opening of business on the date set for
such redemption, subject to adjustment in certain circumstances. The Company may
exercise this option only if for 20 trading days, within any period of 30
consecutive trading days, including the last trading day of such period, the
closing price of the Common Stock on the New York Stock Exchange equals or
exceeds the conversion price per share, subject to adjustments in certain
circumstances.
The holders of Series B Preferred Stock are entitled to receive in the
event of any liquidation, dissolution or winding-up of the Company, whether
voluntary or involuntary, $25.00 per share of Series B Preferred Stock plus an
amount per share of Series B Preferred Stock equal to all dividends (whether or
not earned or declared) accrued and unpaid thereon to the date of final
distribution to such holders, and no more. Except under certain circumstances or
except as otherwise from time to time required by applicable law, the holders of
Series B Preferred Stock have no voting rights.
Series C Preferred Stock. The Series C Preferred Stock ranks senior to the
Common Stock, and pari passu with the Series A Preferred Stock and the Series B
Preferred Stock, with respect to payment of dividends and amounts upon
liquidation, dissolution or winding-up. Holders of Series C Preferred Stock are
entitled to receive, when, as and if declared by the Board of Directors of the
Company, out of funds legally available for payment, cumulative cash dividends
at the rate per annum of $2.15 per share of Series C Preferred Stock. Dividends
on the Series C Preferred Stock are payable quarterly in arrears on the last
calendar day of March, June, September and December of each year.
Shares of Series C Preferred Stock are not redeemable by the Company prior
to March 31, 2000, and at no time are the shares of Series C Preferred Stock
redeemable for cash. On and after March 31, 2000, the shares of Series C
Preferred Stock are redeemable at the option of the Company, in whole or in
part, for such number of shares of Common Stock as equals the liquidation
preference of the Series C Preferred Stock to be redeemed divided by the
applicable conversion price as of the opening of business on the date set for
such redemption, subject to adjustment in certain circumstances. The Company may
exercise this option only if for 20 trading days, within any period of 30
consecutive trading days, including the last trading day of such period, the
closing price of the Common Stock on the New York Stock Exchange equals or
exceeds the conversion price per share, subject to adjustments in certain
circumstances.
The holders of Series C Preferred Stock are entitled to receive in the
event of any liquidation, dissolution or winding-up of the Company, whether
voluntary or involuntary, $25.00 per share of Series C Preferred Stock plus an
amount per share of Series C Preferred Stock equal to all dividends (whether or
not earned or declared) accrued and unpaid thereon to the date of final
distribution to such holders, and no more. Except under certain circumstances or
except as otherwise from time to time required by applicable law, the holders of
Series C Preferred Stock have no voting rights.
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DESCRIPTION OF COMMON STOCK WARRANTS
The Company may issue Common Stock Warrants for the purchase of Common
Stock. Common Stock Warrants may be issued independently or together with any
other Offered Securities offered by any Prospectus Supplement and may be
attached to or separate from such Offered Securities. Each series of Common
Stock Warrants will be issued under a separate warrant agreement (each, a
"Warrant Agreement") to be entered into between the Company and a warrant agent
specified in the applicable Prospectus Supplement (the "Warrant Agent"). The
Warrant Agent will act solely as an agent of the Company in connection with the
Common Stock Warrants of such series and will not assume any obligation or
relationship of agency or trust for or with any holders or beneficial owners of
Common Stock Warrants. The following sets forth certain general terms and
provisions of the Common Stock Warrants offered hereby. Further terms of the
Common Stock Warrants and the applicable Warrant Agreements will be set forth in
the applicable Prospectus Supplement.
The applicable Prospectus Supplement will describe the terms of the Common
Stock Warrants in respect of which this Prospectus is being delivered,
including, where applicable, the following: (1) the title of such Common Stock
Warrants; (2) the aggregate number of such Common Stock Warrants: (3) the price
or prices at which such Common Stock Warrants will be issued; (4) the
designation, number and terms of the shares of Common Stock purchasable upon
exercise of such Common Stock Warrants; (5) the designation and terms of the
other Offered Securities with which such Common Stock Warrants are issued and
the number of such Common Stock Warrants issued with each such Offered Security;
(6) the date, if any, on and after which such Common Stock Warrants and the
related Common Stock will be separately transferable; (7) the price at which
each share of Common Stock purchasable upon exercise of such Common Stock
Warrants may be purchased; (8) the date on which the right to exercise such
Common Stock Warrants shall commence and the date on which such right shall
expire; (9) the minimum or maximum amount of such Common Stock Warrants which
may be exercised at any one time; (10) information with respect to book-entry
procedures, if any; (11) a discussion of certain federal income tax
considerations; and (12) any other terms of such Common Stock Warrants,
including terms, procedures and limitations relating to the exchange and
exercise of such Common Stock Warrants.
DESCRIPTION OF DEPOSITARY SHARES
The Company may, at its option, elect to offer receipts for fractional
interests ("Depositary Shares") in Preferred Stock. In such event, receipts
("Depositary Receipts") for Depositary Shares, each of which will represent a
fraction (to be set forth in the Prospectus Supplement relating to a particular
series of Preferred Stock) of a share of a particular series of Preferred Stock,
will be issued as described below.
The shares of any series of Preferred Stock represented by Depositary
Shares will be deposited under a Deposit Agreement (the "Deposit Agreement")
between the Company and the depositary named in the Prospectus Supplement
relating to such shares (the "Preferred Stock Depositary"). Subject to the terms
of the Deposit Agreement, each owner of a Depositary Share will be entitled, in
proportion to the applicable fraction of a share of Preferred Stock represented
by such Depositary Share, to all the rights and preferences of the Preferred
Stock represented thereby (including dividend, voting, redemption, subscription
and liquidation rights). The following summary of certain provisions of the
Deposit Agreement does not purport to be complete and is subject to, and is
qualified in its entirety by reference to, all the provisions of the Deposit
Agreement, including the definitions therein of certain terms. Whenever
particular sections of the Deposit Agreement are referred to, it is intended
that such sections shall be incorporated herein by reference. The form of
Deposit Agreement is filed as an exhibit to the Registration Statement of which
this Prospectus is a part, and the following summary is qualified in its
entirety by reference to such exhibit.
The Preferred Stock Depositary will distribute all cash dividends or other
cash distributions received in respect of the Preferred Stock to the record
holders of Depositary Shares relating to such Preferred Stock in proportion to
the numbers of such Depositary Shares owned by such holders. (Deposit Agreement,
Section 4.01)
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In the event of a distribution other than in cash, the Preferred Stock
Depositary will distribute property received by it to the record holders of
Depositary Shares in an equitable manner, unless the Preferred Stock Depositary
determines that it is not feasible to make such distribution, in which case the
Preferred Stock Depositary may sell such property and distribute the net
proceeds from such sale to such holders. (Deposit Agreement, Section 4.02)
Upon surrender of the Depositary Receipts at the corporate trust office of
the Preferred Stock Depositary and upon payment of the taxes, charges and fees
provided for in the Deposit Agreement and subject to the terms thereof, the
holder of the Depositary Shares evidenced thereby is entitled to delivery at
such office, to or upon his or her order, of the number of whole shares of the
related series of Preferred Stock and any money or other property, if any,
represented by such Depositary Shares.
If a series of Preferred Stock represented by Depositary Shares is subject
to redemption, the Depositary Shares will be redeemed from the proceeds received
by the Preferred Stock Depositary resulting from the redemption, in whole or in
part, of such series of Preferred Stock held by the Preferred Stock Depositary.
The redemption price per Depositary Share will be equal to the applicable
fraction of the redemption price per share payable with respect to such series
of the Preferred Stock. Whenever the Company redeems shares of Preferred Stock
held by the Preferred Stock Depositary, the Preferred Stock Depositary will
redeem as of the same redemption date the number of Depositary Shares
representing shares of Preferred Stock so redeemed. If fewer than all the
Depositary Shares are to be redeemed, the Depositary Shares to be redeemed will
be selected by lot, pro rata or by any other equitable method as may be
determined by the Preferred Stock Depositary. (Deposit Agreement, Section 2.08)
Upon receipt of notice of any meeting at which the holders of the Preferred
Stock are entitled to vote, the Preferred Stock Depositary will mail the
information contained in such notice of meeting to the record holders of the
Depositary Shares relating to such Preferred Stock. Each record holder of such
Depositary Shares on the record date (which will be the same date as the record
date for the Preferred Stock) will be entitled to instruct the Preferred Stock
Depositary as to the exercise of the voting rights pertaining to the amount of
the Preferred Stock represented by such holder's Depositary Shares. The
Preferred Stock Depositary will endeavor, insofar as practicable, to vote the
amount of the Preferred Stock represented by such Depositary Shares in
accordance with such instructions, and the Company will agree to take all
reasonable action which may be deemed necessary by the Preferred Stock
Depositary in order to enable the Preferred Stock Depositary to do so. The
Preferred Stock Depositary will abstain from voting shares of the Preferred
Stock to the extent it does not receive specific instructions from the holder of
Depositary Shares representing such Preferred Stock. (Deposit Agreement, Section
4.05)
The form of Depositary Receipt evidencing the Depositary Shares and any
provision of the Deposit Agreement may at any time be amended by agreement
between the Company and the Preferred Stock Depositary. However, any amendment
which materially and adversely alters the rights of the holders of Depositary
Shares will not be effective unless such amendment has been approved by the
holders of at least a majority of the Depositary Shares then outstanding.
(Deposit Agreement, Section 6.01) The Deposit Agreement will only terminate if
(i) all outstanding Depositary Shares have been redeemed or (ii) there has been
a final distribution in respect of the Preferred Stock in connection with any
liquidation, dissolution or winding-up of the Company and such distribution has
been distributed to the holders of Depositary Receipts. (Deposit Agreement,
Section 6.02)
The Company will pay all transfer and other taxes and governmental charges
arising solely from the existence of the depositary arrangements. The Company
will pay charges of the Preferred Stock Depositary in connection with the
initial deposit of the Preferred Stock and issuance of Depositary Receipts, all
withdrawals of shares of Preferred Stock by owners of Depositary Shares and any
redemption of the Preferred Stock. Holders of Depositary Receipts will pay other
transfer and other taxes and governmental charges and such other charges as are
expressly provided in the Deposit Agreement to be for their accounts. (Deposit
Agreement, Section 5.07)
The Preferred Stock Depositary may resign at any time by delivering to the
Company notice of its election to do so, and the Company may at any time remove
the Preferred Stock Depositary, any such
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resignation or removal to take effect upon the appointment of a successor
Preferred Stock Depositary and its acceptance of such appointment. Such
successor Preferred Stock Depositary must be appointed within 60 days after
delivery of the notice of resignation or removal and must be a bank or trust
company having its principal office in the United States and having a combined
capital and surplus of at least $50,000,000. (Deposit Agreement, Section 5.04)
The Preferred Stock Depositary will forward to the holders of the Preferred
Stock all reports and communications from the Company which are delivered to the
Preferred Stock Depositary and which the Company is required or otherwise
determines to furnish to such holders. (Deposit Agreement, Section 4.07)
Neither the Preferred Stock Depositary nor the Company will be liable under
the Deposit Agreement to holders of Depositary Receipts other than for its
negligence, willful misconduct or bad faith. Neither the Company nor the
Preferred Stock Depositary will be obligated to prosecute or defend any legal
proceeding in respect of any Depositary Shares or Preferred Stock unless
satisfactory indemnity is furnished. The Company and the Preferred Stock
Depositary may rely upon written advice of counsel or accountants, or upon
information provided by persons presenting Preferred Stock for deposit, holders
of Depositary Receipts or other persons believed to be competent and on
documents believed to be genuine. (Deposit Agreement, Section 5.03)
PLAN OF DISTRIBUTION
The Company may sell the Offered Securities to or through underwriters or
may sell the Offered Securities to investors directly or through designated
agents. Any such underwriter or agent involved in the offer and sale of the
Offered Securities will be named in the applicable Prospectus Supplement.
Underwriters may offer and sell the Offered Securities at a fixed price or
prices, which may be changed, or from time to time at market prices prevailing
at the time of sale, at prices related to such prevailing market prices or at
negotiated prices. The Company also may, from time to time, authorize
underwriters acting as agents to offer and sell the Offered Securities upon the
terms and conditions set forth in any Prospectus Supplement. In connection with
the sale of Offered Securities, underwriters may be deemed to have received
compensation from the Company in the form of underwriting discounts or
commissions and may also receive commissions from purchasers of Offered
Securities for whom they may act as agent. Underwriters may sell Offered
Securities to or through dealers, and such dealers may receive compensation in
the form of discounts, concessions or commissions (which may be changed from
time to time) from the underwriters and from the purchasers for whom they may
act as agent.
Any underwriting compensation paid by the Company to underwriters or agents
in connection with the offering of Offered Securities and any discounts,
concessions or commissions allowed by underwriters to participating dealers will
be set forth in the applicable Prospectus Supplement. Underwriters, dealers and
agents participating in the distribution of the Offered Securities may be deemed
to be underwriters, and any discounts and commissions received by them and any
profit realized by them on resale of the Offered Securities may be deemed to be
underwriting discounts and commissions, under the Securities Act. Underwriters,
dealers and agents may be entitled, under agreements entered into with the
Company, to indemnification against and contribution toward certain civil
liabilities, including liabilities under the Securities Act.
If so indicated in the applicable Prospectus Supplement, the Company will
authorize dealers acting as the Company's agents to solicit offers by certain
institutions to purchase Offered Securities from the Company at the public
offering price set forth in such Prospectus Supplement pursuant to Delayed
Delivery Contracts ("Contracts") providing for payment and delivery on the date
or dates stated in such Prospectus Supplement. Each Contract will be for an
amount not less than, and the principal amount of Offered Securities sold
pursuant to Contracts shall not be less nor more than, the respective amounts
stated in such Prospectus Supplement. Institutions with which Contracts, when
authorized, may be made include commercial and savings banks, insurance
companies, pension funds, investment companies, educational and charitable
institutions and other institutions, but will in all cases be subject to the
approval of the Company. Contracts
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will not be subject to any conditions except (i) the purchase by an institution
of the Offered Securities covered by its Contract shall not at the time of
delivery be prohibited under the laws of any jurisdiction in the United States
to which such institution is subject and (ii) the Company shall have sold to
such underwriters the total principal amount of the Offered Securities less the
principal amount thereof covered by Contracts. A commission indicated in the
Prospectus Supplement will be paid to agents and underwriters soliciting
purchases of Offered Securities pursuant to Contracts accepted by the Company.
Agents and underwriters shall have no responsibility in respect of the delivery
or performance of Contracts.
Certain of the underwriters and their affiliates may be customers of,
engage in transactions with, and perform services for, the Company in the
ordinary course of business.
EXPERTS
The audited financial statements and schedules of the Company incorporated
by reference in this Prospectus and elsewhere in the registration statement of
which this Prospectus is a part, have been audited by Arthur Andersen LLP,
independent public accountants, as indicated in their reports with respect
thereto, and are incorporated herein in reliance upon the authority of said firm
as experts in giving said reports.
LEGAL OPINIONS
Certain legal opinions relating to tax matters and the Offered Securities
will be passed upon for the Company by Hull, Towill, Norman & Barrett, P.C.,
Augusta, Georgia. Certain legal matters relating to the validity of the Offered
Securities will be passed upon for the Underwriters by Piper & Marbury L.L.P.,
Baltimore, Maryland. W. Hale Barrett, a member of the firm of Hull, Towill,
Norman & Barrett, P.C., is a director and secretary of the Company. He and
members of his firm own 26,141 shares of the Company's Common Stock.
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(MERRY LAND & INVESTMENT COMPANY, INC. LOGO)
