GUARANTEE AGREEMENT
Merry Land Properties, Inc.
and
First Union National Bank
Relating to the Preferred Securities of
Merry Land Capital Trust
Dated as of _______________, 1999
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CROSS REFERENCE TABLE*
SECTION OF TRUST SECTION OF
INDENTURE ACT OF GUARANTEE
1939, AS AMENDED AGREEMENT
310(a)...............................................................4.1(a)
310(b)..........................................................4.1(c), 2.8
310(c).........................................................Inapplicable
311(a)...............................................................2.2(b)
311(b)...............................................................2.2(b)
311(c).........................................................Inapplicable
312(a)...............................................................2.2(a)
312(b)...............................................................2.2(b)
313.....................................................................2.3
314(a)..................................................................2.4
314(b).........................................................Inapplicable
314(c)..................................................................2.5
314(d).........................................................Inapplicable
314(e)........................................................1.1, 2.5, 3.2
314(f)..................................................................3.2
315(a)...............................................................3.1(d)
315(b)..................................................................2.7
315(c)..................................................................3.1
315(d)...............................................................3.1(d)
316(a)........................................................1.1, 2.6, 5.4
316(b)..................................................................5.3
317(a).........................................................Inapplicable
317(b).........................................................Inapplicable
318(a)...............................................................2.1(b)
318(b)..................................................................2.1
318(c)...............................................................2.1(a)
* This Cross-Reference Table does not constitute part of the Guarantee
Agreement and shall not affect the interpretation of any of its terms or
provisions.
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TABLE OF CONTENTS
ARTICLE 1 DEFINITIONS.............................................. 2
SECTION 1.1 DEFINITIONS........................................ 2
ARTICLE 2 TRUST INDENTURE ACT...................................... 4
SECTION 2.1 TRUST INDENTURE ACT; APPLICATION................... 4
SECTION 2.2 LIST OF HOLDERS.................................... 4
SECTION 2.3 REPORTS BY THE GUARANTEE TRUSTEE................... 4
SECTION 2.4 PERIODIC REPORTS TO GUARANTEE TRUSTEE.............. 5
SECTION 2.5 EVIDENCE OF COMPLIANCE WITH CONDITIONS PRECEDENT... 5
SECTION 2.6 EVENTS OF DEFAULT; WAIVER.......................... 5
SECTION 2.7 EVENT OF DEFAULT; NOTICE........................... 5
SECTION 2.8 CONFLICTING INTERESTS.............................. 5
ARTICLE 3 POWERS, DUTIES AND RIGHTS OF THE GUARANTEE TRUSTEE........ 6
SECTION 3.1 POWERS AND DUTIES OF THE GUARANTEE TRUSTEE......... 6
SECTION 3.2 CERTAIN RIGHTS OF GUARANTEE TRUSTEE................ 7
SECTION 3.3 INDEMNITY.......................................... 9
ARTICLE 4 GUARANTEE TRUSTEE .........................................9
SECTION 4.1 GUARANTEE TRUSTEE; ELIGIBILITY.................... 9
SECTION 4.2 APPOINTMENT, REMOVAL AND RESIGNATION OF THE GUARANTEE
TRUSTEE...................................................10
ARTICLE 5 GUARANTEE................................................ 11
SECTION 5.1 GUARANTEE......................................... 11
SECTION 5.2 WAIVER OF NOTICE AND DEMAND....................... 11
SECTION 5.3 OBLIGATIONS NOT AFFECTED...........................11
SECTION 5.4 RIGHTS OF HOLDERS................................. 12
SECTION 5.5 GUARANTEE OF PAYMENT.............................. 12
SECTION 5.6 SUBROGATION....................................... 12
SECTION 5.7 INDEPENDENT OBLIGATIONS........................... 12
ARTICLE 6 COVENANTS AND SUBORDINATION.............................. 13
SECTION 6.1 SUBORDINATION..................................... 13
SECTION 6.2 CERTAIN COVENANTS OF THE GUARANTOR................ 13
ARTICLE 7 TERMINATION.............................................. 14
SECTION 7.1 TERMINATION .......................................14
ARTICLE 8 MISCELLANEOUS............................................ 14
SECTION 8.1 SUCCESSORS AND ASSIGNS............................ 14
SECTION 8.2 AMENDMENTS........................................ 14
SECTION 8.3 NOTICES........................................... 15
SECTION 8.4 BENEFIT........................................... 15
SECTION 8.5 INTERPRETATION.................................... 15
SECTION 8.6 GOVERNING LAW..................................... 16
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GUARANTEE AGREEMENT
This GUARANTEE AGREEMENT, dated as of _____________, 1999, is executed
and delivered by MERRY LAND PROPERTIES, INC., a Georgia corporation (the
"Guarantor"), and FIRS UNION NATIONAL BANK, a national banking association,
as trustee (the "Guarantee Trustee"), for the benefit of the Holders (as
defined herein) from time to time of the Preferred Securities (as defined
herein) of Merry Land Capital Trust, a Delaware statutory business trust
(the "Issuer").
WHEREAS, pursuant to an Amended and Restated Trust Agreement (the
"Trust Agreement"), dated as of ________, 1999, among the Trustees named
therein, the Guarantor, as Depositor, and the Holders from time to time of
undivided beneficial interests in the assets of the Issuer, the Issuer is
issuing up to ________ of its ___% Convertible Trust Preferred Securities
(liquidation preference $10 per preferred security) (the "Preferred
Securities") representing preferred undivided beneficial interests in the
assets of the Issuer and having the terms set forth in the Trust Agreement;
WHEREAS, the Preferred Securities will be issued by the Issuer and the
proceeds thereof, together with the proceeds from the issuance of the
Issuer's Common Securities (as defined herein), will be used to purchase
the Debentures (as defined in the Trust Agreement) of the Guarantor which
will be deposited with First Union National Bank, as Property Trustee under
the Trust Agreement, as trust assets;
WHEREAS, as incentive for the Holders to purchase Preferred
Securities, the Guarantor desires irrevocably and unconditionally to agree,
to the extent set forth herein, to pay to the Holders of the Preferred
Securities the Guarantee Payments (as defined herein) and to make certain
other payments on the terms and conditions set forth herein; and
WHEREAS, the Guarantor is also executing and delivering a guarantee
agreement (the "Common Securities Guarantee") in substantially identical
terms to this Guarantee for the benefit of the holders of the Common
Securities (as defined herein), except that if an event of default (as
defined in the Indenture (as defined herein)), has occurred and is
continuing, the rights of holders of the Common Securities to receive
Guarantee Payments (as defined in the Common Securities Guarantee) under
the Common Securities Guarantee shall be subordinated to the rights of
Holders of Preferred Securities to receive Guarantee Payments (as defined
herein) under this Guarantee.
NOW, THEREFORE, in consideration of the purchase by each Holder of
Preferred Securities, which purchase the Guarantor hereby agrees shall
benefit the Guarantor, the Guarantor executes and delivers this Guarantee
Agreement for the benefit of the Holders from time to time of the Preferred
Securities.
ARTICLE 1 DEFINITIONS
SECTION 1.1 DEFINITIONS. As used in this Guarantee Agreement, the terms set
forth below shall, unless the context otherwise requires, have the
following meanings. Capitalized or otherwise defined terms used but not
otherwise defined herein shall have the meanings assigned to such terms in
the Trust Agreement as in effect on the date hereof.
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct common control with
such specified Person, provided, however, that an Affiliate of the
Guarantor shall not be deemed to include the Issuer. For the purposes of
this definition, "control" when used with respect to any specified Person
means the power to direct the management and policies of such Person,
directly or indirectly, whether through the ownership of voting securities,
by contract or otherwise; and the terms "controlling" and "controlled" have
meanings correlative to the foregoing.
"Common Securities" means the securities representing common
beneficial interests in the assets of the Issuer.
"Common Shares" means the common shares of the Guarantor.
"Event of Default" means a default by the Guarantor on any of its
payment or other obligations under this Guarantee Agreement; provided,
however, that except with respect to a default in payment of any Guarantee
Payments, the Guarantor shall have received written notice of default and
shall not have cured such default within 60 days after receipt of such
notice.
"Guarantee Payments" means the following payments or distributions,
without duplication, with respect to the Preferred Securities, to the
extent not paid or made by or on behalf of the Issuer: (i) any accumulated
and unpaid Distributions (as defined in the Trust Agreement) required to be
paid on the Preferred Securities, to the extent the Issuer shall have funds
on hand available therefor at such time, (ii) the redemption price,
including all accrued and unpaid Distributions to the date of redemption
(the "Redemption Price"), with respect to the Preferred Securities called
for redemption by the Issuer to the extent the Issuer shall have funds on
hand available therefor, and (iii) upon a voluntary or involuntary
dissolution of the Issuer, unless Debentures are distributed to the
Holders, the lesser of (a) the aggregate of the liquidation preference of
$10 per Preferred Security plus accrued and unpaid Distributions on the
Preferred Securities to the date of payment to the extent the Issuer shall
have funds on hand available to make such payment or (b) the amount of
assets of the Issuer remaining available for distribution to Holders in
dissolution of the Issuer (in either case, the "Stockholder Distribution").
"Guarantee Trustee" means First Union National Bank, until a Successor
Guarantee Trustee has been appointed and has accepted such appointment
pursuant to the terms of this Guarantee Agreement and thereafter means each
such Successor Guarantee Trustee.
"Holder" means any holder, as registered on the books and records of
the Issuer, of any Preferred Securities; provided, however, that in
determining whether the holders of the requisite percentage of Preferred
Securities have given any request, notice, consent or waiver hereunder,
"Holder" shall not include the Guarantor, the Guarantee Trustee or any
Affiliate of the Guarantor or the Guarantee Trustee.
"Indenture" means the Junior Convertible Subordinated Indenture, dated
as of ________, 1999, as supplemented and amended between the Guarantor and
the First Union National Bank, as trustee.
"Issuer" means Merry Land Capital Trust.
"List of Holders" has the meaning specified in Section 2.2 (a).
"Majority in Liquidation Preference of the Securities" means, except as
provided by the Trust Indenture Act, a vote by the Holder(s), voting
separately as a class, of more than 50% of the liquidation preference of
all the outstanding Preferred Securities issued by the Issuer.
"Officers' Certificate" means, with respect to any Person, a certificate
signed by (i) the Chairman, Chief Executive Officer, President or a Vice
President, and by (ii) the Treasurer, an Assistant Treasurer, the
Controller, the Secretary or an Assistant Secretary of such Person, and
delivered to the Guarantee Trustee. Any Officers' Certificate delivered
with respect to compliance with a condition or covenant provided for in
this Guarantee Agreement shall include:
(a) a statement that each officer signing the Officers' Certificate has
read the covenant or condition and the definitions relating thereto;
(b) a brief statement of the nature and scope of the examination or
investigation undertaken by each officer in rendering the Officers'
Certificate;
(c) a statement that each such officer has made such examination or
investigation as, in such officer's opinion, is necessary to enable such
officer to express an informed opinion as to whether or not such covenant
or condition has been complied with; and
(d) a statement as to whether, in the opinion of each such officer, such
condition or covenant has been complied with.
"Person" means a legal person, including any individual, corporation,
estate, partnership, joint venture, association, joint stock company,
limited liability company, trust, unincorporated association, or government
or any agency or political subdivision thereof, or any other entity of
whatever nature.
"Responsible Officer" means, with respect to the Guarantee Trustee, any
officer assigned to the Guarantee Trustee's Corporate Trust Office,
including any managing director, vice president, assistant vice president,
assistant treasurer, assistant secretary or any other officer of the
Guarantee Trustee customarily performing functions similar to those
performed by any of the above designated officers and having direct
responsibility for the administration of this Guarantee Agreement, and
also, with respect to a particular matter, any other officer, to whom such
matter is referred because of such officer's knowledge of and familiarity
with the particular subject.
"Successor Guarantee Trustee" means a successor Guarantee Trustee
possessing the qualifications to act as Guarantee Trustee under Section
4.1.
"Trust Indenture Act" means the Trust Indenture Act of 1939, as amended.
ARTICLE 2 TRUST INDENTURE ACT
SECTION 2.1 TRUST INDENTURE ACT; APPLICATION.
(a) This Guarantee Agreement is subject to the provisions of the Trust
Indenture Act that are required to be part of this Guarantee Agreement and
shall, to the extent applicable, be governed by such provisions.
(b) If and to the extent that any provision of this Guarantee Agreement
limits, qualifies or conflicts with the duties imposed by Sections 310 to
317, inclusive, of the Trust Indenture Act, such imposed duties shall
control.
SECTION 2.2 LIST OF HOLDERS.
(a) The Guarantor shall furnish or cause to be furnished to the Guarantee
Trustee (i) semi-annually, on or before January 15 and July 15 of each
year, a list, in such form as the Guarantee Trustee may reasonably
require, of the names and addresses of the Holders ("List of Holders") as
of a date not more than 15 days prior to the delivery thereof, and (ii) at
such other times as the Guarantee Trustee may request in writing, within
30 days after the receipt by the Guarantor of any such written request, a
List of Holders as of a date not more than 15 days prior to the time such
list is furnished, in each case to the extent such information is in the
possession or control of the Guarantor and is not identical to a
previously supplied list of Holders or has not otherwise been received by
the Guarantee Trustee. The Guarantee Trustee may destroy any List of
Holders previously given to it on receipt of a new List of Holders.
(b) The Guarantee Trustee shall comply with its obligations under Section
311(a), Section 311(b) and Section 312(b) of the Trust Indenture Act.
SECTION 2.3 REPORTS BY THE GUARANTEE TRUSTEE. Within 60 days after
___________, in each calendar year, commencing with ___________, 2000, the
Guarantee Trustee shall provide to the Holders such reports as are required
by Section 313 of the Trust Indenture Act, if any, in the form and in the
manner provided by Section 313 of the Trust Indenture Act. The Guarantee
Trustee shall also comply with the requirements of Section 313(d) of the
Trust Indenture Act.
SECTION 2.4 PERIODIC REPORTS TO GUARANTEE TRUSTEE. The Guarantor shall
provide to the Guarantee Trustee, the Securities and Exchange Commission
and the Holders such documents, reports and information, if any, as
required by Section 314 of the Trust Indenture Act and the compliance
certificate required by Section 314 of the Trust Indenture Act in the form,
in the manner and at the times required by Section 314 of the Trust
Indenture Act; and such compliance certificate of the Guarantor shall be
delivered on or before 120 days after the end of each calendar year.
SECTION 2.5 EVIDENCE OF COMPLIANCE WITH CONDITIONS PRECEDENT. The Guarantor
shall provide to the Guarantee Trustee such evidence of compliance with
such conditions precedent, if any, provided for in this Guarantee Agreement
that relate to any of the matters set forth in Section 314(c) of the Trust
Indenture Act. Any certificate or opinion required to be given by an
officer pursuant to Section 314(c)(1) may be given in the form of an
Officers' Certificate.
SECTION 2.6 EVENTS OF DEFAULT; WAIVER. The Holders of a Majority in
Liquidation Preference of the Securities may, by vote, on behalf of the
Holders, waive any past Event of Default and its consequences. Upon such
waiver, any such Event of Default shall cease to exist, and any Event of
Default arising therefrom shall be deemed to have been cured, for every
purpose of this Guarantee Agreement, but no such waiver shall extend to any
subsequent or other default or Event of Default or impair any right
consequent therefrom.
SECTION 2.7 EVENT OF DEFAULT; NOTICE.
(a) The Guarantee Trustee shall, within 90 days after the occurrence of an
Event of Default, transmit by mail, first class postage prepaid, to the
Holders, notices of all Events of Default actually known to a Responsible
Officer of the Guarantee Trustee, unless such defaults have been cured
before the giving of such notice, provided, that, except in the case of a
default in the payment of a Guarantee Payment, the Guarantee Trustee shall
be fully protected in withholding such notice if and so long as the Board
of Directors, the executive committee or a trust committee of directors
and/or Responsible Officers of the Guarantee Trustee in good faith
determines that the withholding of such notice is in the interests of the
Holders.
(b) The Guarantee Trustee shall not be deemed to have actual knowledge of
any Event of Default unless the Guarantee Trustee shall have received
written notice, or a Responsible Officer charged with the administration
of the Trust Agreement shall have obtained written notice, of such Event
of Default.
SECTION 2.8 CONFLICTING INTERESTS. The Trust Agreement and the Indenture
shall be deemed to be specifically described in this Guarantee Agreement
for the purposes of clause (i) of the first proviso contained in Section
310(b) of the Trust Indenture Act.
ARTICLE 3 POWERS, DUTIES AND RIGHTS OF THE GUARANTEE TRUSTEE
SECTION 3.1 POWERS AND DUTIES OF THE GUARANTEE TRUSTEE.
(a) This Guarantee Agreement shall be held by the Guarantee Trustee for
the benefit of the Holders, and the Guarantee Trustee shall not transfer
this Guarantee Agreement to any Person except a Holder exercising his or
her rights pursuant to Section 5.4(iv) or to a Successor Guarantee Trustee
on acceptance by such Successor Guarantee Trustee of its appointment to
act as Successor Guarantee Trustee. The right, title and interest of the
Guarantee Trustee shall automatically vest in any Successor Guarantee
Trustee, upon acceptance by such Successor Guarantee Trustee of its
appointment hereunder, and such vesting and cessation of title shall be
effective whether or not conveyancing documents have been executed and
delivered pursuant to the appointment of such Successor Guarantee Trustee.
(b) If an Event of Default actually known to a Responsible Officer of the
Guarantee Trustee has occurred and is continuing, the Guarantee Trustee
shall enforce this Guarantee Agreement for the benefit of the Holders.
(c) The Guarantee Trustee, before the occurrence of any Event of Default
and after the curing of all Events of Default that may have occurred,
shall undertake to perform only such duties as are specifically set forth
in this Guarantee Agreement, and no implied covenants shall be read into
this Guarantee Agreement against the Guarantee Trustee. In case an Event
of Default has occurred (that has not been cured or waived pursuant to
Section 2.6) and is actually known to the Responsible Officer of the
Guarantee Trustee, the Guarantee Trustee shall exercise such of the rights
and powers vested in it by this Guarantee Agreement, and use the same
degree of care and skill in its exercise thereof, as a prudent person
would exercise or use under the circumstances in the conduct of his or her
own affairs.
(d) No provision of this Guarantee Agreement shall be construed to relieve
the Guarantee Trustee from liability for its own negligent action, its own
negligent failure to act or its own willful misconduct, except that:
(i) prior to the occurrence of any Event of Default and after the
curing or waiving of all such Events of Default that may have
occurred; (A) the duties and obligations of the Guarantee Trustee
shall be determined solely by the express provisions of this Guarantee
Agreement, and the Guarantee Trustee shall not be liable except for
the performance of such duties and obligations as are specifically set
forth in this Guarantee Agreement, and no implied covenants or
obligations shall be read into this Guarantee Agreement against the
Guarantee Trustee; and (B) in the absence of bad faith on the part of
the Guarantee Trustee, the Guarantee Trustee may conclusively rely, as
to the truth of the statements and the correctness of the opinions
expressed therein, upon any certificates or opinions furnished to the
Guarantee Trustee and conforming to the requirements of this Guarantee
Agreement; but in the case of any such certificates or opinions that
by any provision hereof or of the Trust Indenture Act are specifically
required to be furnished to the Guarantee Trustee, the Guarantee
Trustee shall be under a duty to examine the same to determine whether
or not they conform to the requirements of this Guarantee Agreement;
(ii) the Guarantee Trustee shall not be liable for any error of
judgment made in good faith by a Responsible Officer of the Guarantee
Trustee, unless it shall be proved that the Guarantee Trustee was
negligent in ascertaining the pertinent facts upon which such judgment
was made;
(iii) the Guarantee Trustee shall not be liable with respect to any
action taken or omitted to be taken by it in good faith in accordance
with the direction of the Holders of not less than a Majority in
Liquidation Preference of the Securities relating to the time, method
and place of conducting any proceeding for any remedy available to the
Guarantee Trustee, or exercising any trust or power conferred upon the
Guarantee Trustee under this Guarantee Agreement; and
(iv) no provision of this Guarantee Agreement shall require the
Guarantee Trustee to expend or risk its own funds or otherwise incur
personal financial liability in the performance of any of its duties
or in the exercise of any of its rights or powers, if the Guarantee
Trustee shall have reasonable grounds for believing that the repayment
of such funds or liability is not reasonably assured to it under the
terms of this Guarantee Agreement or indemnity satisfactory to it
against such risk or liability is not reasonably assured to it.
SECTION 3.2 CERTAIN RIGHTS OF GUARANTEE TRUSTEE.
(a) Subject to the provisions of Section 3.1:
(i) The Guarantee Trustee may conclusively rely and shall be fully
protected in acting or refraining from acting upon any resolution,
certificate, statement, proxy, instrument, opinion, report, notice,
request, direction, consent, order, bond, debenture, note, other
evidence of indebtedness or other paper or document believed by it to
be genuine and to have been signed, sent or presented by the proper
party or parties.
(ii) Any direction or act of the Guarantor contemplated by this
Guarantee Agreement shall be sufficiently evidenced by an Officers'
Certificate unless otherwise prescribed herein.
(iii) Whenever, in the administration of this Guarantee Agreement, the
Guarantee Trustee shall deem it desirable that a matter be proved or
established before taking, suffering or omitting to take any action
hereunder, the Guarantee Trustee (unless other evidence is herein
specifically prescribed) may, in the absence of bad faith on its part,
request and conclusively rely upon an Officers' Certificate which,
upon receipt of such request from the Guarantee Trustee, shall be
promptly delivered by the Guarantor.
(iv) The Guarantee Trustee may consult with legal counsel, and the
written advice or opinion of such legal counsel with respect to legal
matters shall be full and complete authorization and protection in
respect of any action taken, suffered or omitted to be taken by it
hereunder in good faith and in accordance with such advice or opinion.
Such legal counsel may be legal counsel to the Guarantor or any of its
Affiliates and may be one of its employees. The Guarantee Trustee
shall have the right at any time to seek instructions concerning the
administration of this Guarantee Agreement from any court of competent
jurisdiction.
(v) The Guarantee Trustee shall be under no obligation to exercise any
of the rights or powers vested in it by this Guarantee Agreement at
the request or direction of any Holder, unless such Holder shall have
provided to the Guarantee Trustee and its officers, directors and
agents such adequate security and indemnity as would satisfy a
reasonable person in the position of the Guarantee Trustee, against
the costs, expenses (including attorneys' fees and expenses) and
liabilities that might be incurred by it in complying with such
request or direction, including such reasonable advances as may be
requested by the Guarantee Trustee; provided that, nothing contained
in this Section 3.2(a)(v) shall be taken to relieve the Guarantee
Trustee, upon the occurrence of an Event of Default, of its obligation
to exercise the rights and powers vested in it by this Guarantee
Agreement and use the same degree of care and skill in the exercise
thereof as a prudent person would exercise or use under the
circumstances in the conduct of his or her own affairs.
(vi) The Guarantee Trustee shall not be bound to make any
investigation into the facts or matters stated in any resolution,
certificate, statement, instrument, opinion, report, notice, request,
direction, consent, order, bond, debenture, note, other evidence of
indebtedness or other paper or document, but the Guarantee Trustee, in
its discretion, may make such further inquiry or investigation into
such facts or matters as it may see fit.
(vii) The Guarantee Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by or
through its agents, custodians, nominees or attorneys or any
Affiliate, and the Guarantee Trustee shall not be responsible for any
misconduct or negligence on the part of any such agent or attorney
appointed with due care by it hereunder.
(viii) Whenever in the administration of this Guarantee Agreement the
Guarantee Trustee shall deem it desirable to receive instructions with
respect to enforcing any remedy or right or taking any other action
hereunder, the Guarantee Trustee (A) may request written instructions
from the Holders of a Majority in Liquidation Preference of the
Securities, (B) may refrain from enforcing such remedy or right or
taking such other action until such instructions are received, and (C)
shall be fully protected in acting in accordance with such
instructions.
(b) No provision of this Guarantee Agreement shall be deemed to impose any
duty or obligation on the Guarantee Trustee to perform any act or acts or
exercise any right, power, duty or obligation conferred or imposed on it
in any jurisdiction in which it shall be illegal, or in which the
Guarantee Trustee shall be unqualified or incompetent in accordance with
applicable law, to perform any such act or acts or to exercise any such
right, power, duty or obligation. No permissive power or authority
available to the Guarantee Trustee shall be construed to be a duty to act
in accordance with such power and authority.
SECTION 3.3 INDEMNITY. The Guarantor agrees to indemnify the Guarantee
Trustee for, and to hold it harmless against, any loss, liability or
expense incurred without negligence or bad faith on the part of the
Guarantee Trustee, arising out of or in connection with the acceptance or
administration of this Guarantee Agreement, including the reasonable costs
and expenses of defending itself against any claim or liability in
connection with the exercise or performance of any of its powers or duties
hereunder. The Guarantee Trustee will not claim or exact any lien or charge
on any Guarantee Payment as a result of any amount due to it under this
Guarantee Agreement. Guarantor's indemnification obligations set forth in
this Section 3.3 shall survive termination of this Guarantee Agreement or
resignation or removal of the Guarantee Trustee.
ARTICLE 4 GUARANTEE TRUSTEE
SECTION 4.1 GUARANTEE TRUSTEE; ELIGIBILITY.
(a) There shall at all times be a Guarantee Trustee which shall:
(i) not be an Affiliate of the Guarantor; and
(ii) be a Person that is eligible pursuant to the Trust Indenture Act
to act as such and has a combined capital and surplus of at least
$50,000,000, and shall be a corporation meeting the requirements of
Section 310(a) of the Trust Indenture Act. If such corporation
publishes reports of condition at least annually, pursuant to law or
to the requirements of the supervising or examining authority, then,
for the purposes of this Section and to the extent permitted by the
Trust Indenture Act, the combined capital and surplus of such
corporation shall be deemed to be its combined capital and surplus as
set forth in its most recent report of condition so published.
(b) If at any time the Guarantee Trustee shall cease to be eligible to so
act under Section 4.1(a), the Guarantee Trustee shall immediately resign
in the manner and with the effect set out in Section 4.2(c).
(c) If the Guarantee Trustee has or shall acquire any "conflicting
interest" within the meaning of Section 310(b) of the Trust Indenture Act,
the Guarantee Trustee and Guarantor shall in all respects comply with the
provisions of Section 310(b) of the Trust Indenture Act.
SECTION 4.2 APPOINTMENT, REMOVAL AND RESIGNATION OF THE GUARANTEE TRUSTEE.
(a) Subject to Section 4.2(b), the Guarantee Trustee may be appointed or
removed without cause at any time by the Guarantor.
(b) The Guarantee Trustee shall not be removed until a Successor Guarantee
Trustee has been appointed and has accepted such appointment by written
instrument executed by such Successor Guarantee Trustee and delivered to
the Guarantor.
(c) The Guarantee Trustee appointed hereunder shall hold office until a
Successor Guarantee Trustee shall have been appointed or until its removal
or resignation. The Guarantee Trustee may resign from office (without need
for prior or subsequent accounting) by an instrument in writing executed
by the Guarantee Trustee and delivered to the Guarantor, which resignation
shall not take effect until a Successor Guarantee Trustee has been
appointed and has accepted such appointment by an instrument in writing
executed by such Successor Guarantee Trustee and delivered to the
Guarantor and the resigning Guarantee Trustee.
(d) If no Successor Guarantee Trustee shall have been appointed and
accepted appointment as provided in this Section 4.2 within 60 days after
delivery to the Guarantor of an instrument of resignation, the resigning
Guarantee Trustee may petition, at the expense of the Guarantor, any court
of competent jurisdiction for appointment of a Successor Guarantee
Trustee. Such court may thereupon, after prescribing such notice, if any,
as it may deem proper, appoint a Successor Guarantee Trustee.
(e) No Guarantee Trustee shall be liable for the acts or omissions of any
successor Guarantor Trustee.
(f) Upon the removal or resignation of the Guarantee Trustee, the
Guarantor shall pay all amounts due and owing to such Guarantee Trustee.
ARTICLE 5 GUARANTEE
SECTION 5.1 GUARANTEE. The Guarantor irrevocably and unconditionally agrees
to pay in full to the Holders the Guarantee Payments (without duplication
of amounts theretofore paid by or on behalf of the Issuer), as and when
due, regardless of any defense, right of set-off or counterclaim which the
Issuer may have or assert other than the defense of payment. The
Guarantor's obligation to make a Guarantee Payment may be satisfied by
direct payment of the required amounts by the Guarantor to the Holders or
by causing the Issuer to pay such amounts to the Holders.
SECTION 5.2 WAIVER OF NOTICE AND DEMAND. The Guarantor hereby waives notice
of acceptance of the Guarantee Agreement and of any liability to which it
applies or may apply, presentment, demand for payment, any right to require
a proceeding first against the Guarantee Trustee, Issuer or any other
Person before proceeding against the Guarantor, protest, notice of
nonpayment, notice of dishonor, notice of redemption and all other notices
and demands.
SECTION 5.3 OBLIGATIONS NOT AFFECTED. The obligations, covenants,
agreements and duties of the Guarantor under this Guarantee Agreement shall
in no way be affected or impaired by reason of the happening from time to
time of any of the following:
(a) the release or waiver, by operation of law or otherwise, of the
performance or observance by the Issuer of any express or implied
agreement, covenant, term or condition relating to the Preferred
Securities to be performed or observed by the Issuer;
(b) the extension of time for the payment by the Issuer of all or any
portion of the Distributions (other than an extension of time for payment
of Distributions that results from the extension of any interest payment
period on the Debentures as so provided in the Indenture), Redemption
Price, Liquidation Distribution or any other sums payable under the terms
of the Preferred Securities or the extension of time for the performance
of any other obligation under, arising out of, or in connection with, the
Preferred Securities;
(c) any failure, omission, delay or lack of diligence on the part of the
Holders to enforce, assert or exercise any right, privilege, power or
remedy conferred on the Holders pursuant to the terms of the Preferred
Securities, or any action on the part of the Issuer granting indulgence or
extension of any kind;
(d) the voluntary or involuntary liquidation, dissolution, sale of any
collateral, receivership, insolvency, bankruptcy, assignment for the
benefit of creditors, reorganization, arrangement, composition or
readjustment of debt of, or other similar proceedings affecting, the
Issuer or any of the assets of the Issuer;
(e) any invalidity of, or defect or deficiency in, the Preferred
Securities;
(f) the settlement or compromise of any obligation guaranteed hereby or
hereby incurred; or
(g) any other circumstance whatsoever that might otherwise constitute a
legal or equitable discharge or defense of a guarantor, it being the
intent of this Section 5.3 that the obligations of the Guarantor hereunder
shall be absolute and unconditional under any and all circumstances.
There shall be no obligation of the Holders or the Guarantee Trustee to
give notice to, or obtain the consent of, the Guarantor with respect to the
happening of any of the foregoing.
SECTION 5.4 RIGHTS OF HOLDERS. The Guarantor expressly acknowledges that:
(i) this Guarantee Agreement will be deposited with the Guarantee Trustee
to be held for the benefit of the Holders; (ii) the Guarantee Trustee has
the right to enforce this Guarantee Agreement on behalf of the Holders;
(iii) the Holders of a Majority in Liquidation Preference of the Securities
have the right to direct the time, method and place of conducting any
proceeding for any remedy available to the Guarantee Trustee in respect of
this Guarantee Agreement or to direct the exercise of any trust or power
conferred upon the Guarantee Trustee under this Guarantee Agreement; and
(iv) if the Guarantee Trustee fails to enforce the Guarantee, any Holder
may institute a legal proceeding directly against the Guarantor to enforce
its rights under this Guarantee Agreement, without first instituting a
legal proceeding against the Guarantee Trustee, the Issuer or any other
Person.
SECTION 5.5 GUARANTEE OF PAYMENT. This Guarantee Agreement creates a
guarantee of payment and not of collection. This Guarantee Agreement will
not be discharged except by payment of the Guarantee Payments in full
(without duplication of amounts theretofore paid by the Issuer) or upon
distribution of Debentures to Holders as provided in the Trust Agreement.
SECTION 5.6 SUBROGATION. The Guarantor shall be subrogated to all (if any)
rights of the Holders against the Issuer in respect of any amounts paid to
the Holders by the Guarantor under this Guarantee Agreement and shall have
the right to waive payment by the Issuer pursuant to Section 5.1; provided,
however, that the Guarantor shall not (except to the extent required by
mandatory provisions of law) be entitled to enforce or exercise any rights
which it may acquire by way of subrogation or any indemnity, reimbursement
or other agreement, in all cases as a result of payment under this
Guarantee Agreement, if, at the time of any such payment, any amounts are
due and unpaid under this Guarantee Agreement. If any amount shall be paid
to the Guarantor in violation of the preceding sentence, the Guarantor
agrees to hold such amount in trust for the Holders and to pay over such
amount to the Holders.
SECTION 5.7 INDEPENDENT OBLIGATIONS. The Guarantor acknowledges that its
obligations hereunder are independent of the obligations of the Issuer with
respect to the Preferred Securities and that the Guarantor shall be liable
as principal and as debtor hereunder to make Guarantee Payments pursuant to
the terms of this Guarantee Agreement notwithstanding the occurrence of any
event referred to in subsections (a) through (g), inclusive, of Section 5.3
hereof.
ARTICLE 6 COVENANTS AND SUBORDINATION
SECTION 6.1 SUBORDINATION. The Guarantee Agreement will constitute an
unsecured obligation of the Guarantor and will rank subordinate and junior
in right of payment to all liabilities of the Guarantor and PARI PASSU with
the most senior preferred stock of the Guarantor, if any, now or hereafter
issued by the Company and with any guarantee now or hereafter entered into
by the Company in respect of any preferred or preference stock of any
affiliate of the Guarantor.
SECTION 6.2 CERTAIN COVENANTS OF THE GUARANTOR.
(a) Guarantor covenants and agrees that if and so long as (i) the Issuer
is the holder of all the Debentures, (ii) a Tax Event (as defined in the
Trust Agreement) in respect of the Issuer has occurred and is continuing
and (iii) the Guarantor has elected, and has not revoked such election, to
pay Additional Sums (as defined in the Trust Agreement) in respect of the
Preferred Securities and Common Securities, the Guarantor will pay to the
Issuer such Additional Sums.
(b) The Guarantor covenants and agrees that it will not, and will not
cause any subsidiary of the Guarantor to, (i) declare or pay any dividends
or distributions on, or redeem, purchase, acquire, or make a liquidation
payment with respect to, any of the Guarantor's capital stock or (ii) make
any payment of principal, interest or premium, if any, on or repay or
repurchase or redeem any debt securities (including guarantees of
indebtedness for money borrowed) of the Guarantor that rank PARI PASSU
with or junior to the Debentures (other than (a) any dividend, redemption,
liquidation, interest, principal or guarantee payment by the Guarantor
where the payment is made by way of securities (including capital stock)
that rank PARI PASSU with or junior to the securities on which such
dividend, redemption, interest, principal or guarantee payment is being
made, (b) redemptions or purchases of any rights pursuant to a stockholder
rights agreement, and the declaration of a dividend of such rights or the
issuance of preferred stock under such a plan in the future, (c) payments
under this Agreement, (d) purchases of Common Shares related to the
issuance of Common Shares under any of the Guarantor's benefit plans for
its directors, officers or employees, (e) as a result of a
reclassification of the Guarantor's capital stock or the exchange or
conversion of one series or class of the Guarantor's capital stock for
another series or class of the Guarantor's capital stock and (f) the
purchase of fractional interests in shares of the Guarantor's capital
stock pursuant to the conversion or exchange provisions of such capital
stock or the security being converted or exchanged) if at such time (i)
there shall have occurred any event of which the Guarantor has actual
knowledge that (a) with the giving of notice or the lapse of time, or
both, would constitute an "Event of Default" under the Indenture with
respect to the Debentures and (b) in respect of which the Guarantor shall
not have taken reasonable steps to cure, (ii) the Guarantor shall be in
default with respect to its payment of any obligations under the Guarantee
or (iii) the Guarantor shall have given notice of its selection of an
Extension Period (as defined in the Indenture) with respect to the
Debentures and shall not have rescinded such notice, or such Extension
Period, or any extension thereof, shall be continuing.
(c) The Guarantor covenants and agrees (i) to maintain directly or
indirectly 100% ownership of the Common Securities, provided that certain
successors which are permitted by the Indenture may succeed to the
Guarantor's ownership of the Common Securities, (ii) not to voluntarily
dissolve the Issuer, except (a) in connection with a distribution of the
Debentures to the holders of the Preferred Securities in dissolution of
the Issuer or (b) in connection with certain mergers, consolidations or
amalgamations permitted by the Trust Agreement, (iii) to use its
reasonable efforts, consistent with the terms and provisions of the Trust
Agreement, to cause the Issuer to remain classified as a grantor trust and
not as an association taxable as a corporation or a partnership for United
States Federal income tax purposes, (iv) for so long as Preferred
Securities are outstanding, not to convert Debentures except pursuant to a
notice of conversion delivered to the Conversion Agent (as defined in the
Trust Agreement) by a Holder, (v) to maintain the reservation for issuance
of the number of Common Shares that would be required from time to time
upon the conversion of all the Debentures then outstanding, (vi) to
deliver shares of Common Shares upon an election by the Holders to convert
such Preferred Securities into Common Shares and (vii) to honor all
obligations described herein relating to the conversion or exchange of the
Preferred Securities into or for Common Shares or Debentures.
ARTICLE 7 TERMINATION
SECTION 7.1 TERMINATION. This Guarantee Agreement shall terminate and be of
no further force and effect upon (i) full payment of the Redemption Price
of all Preferred Securities, (ii) the distribution of Debentures to the
Holders in exchange for all of the Preferred Securities, (iii) full payment
of the amounts payable in accordance with the Trust Agreement upon
dissolution of the Issuer or (iv) upon the distribution, if any, of Common
Shares to the holders of the Preferred Securities in respect of the
conversion of all such holders' Preferred Securities into Common Shares.
Notwithstanding the foregoing, this Guarantee Agreement will continue to be
effective or will be reinstated, as the case may be, if at any time any
Holder must restore payment of any sums paid with respect to Preferred
Securities or this Guarantee Agreement.
ARTICLE 8 MISCELLANEOUS
SECTION 8.1 SUCCESSORS AND ASSIGNS. All guarantees and agreements contained
in this Guarantee Agreement shall bind the successors, assigns, receivers,
trustees and representatives of the Guarantor and shall inure to the
benefit of the Holders of the Preferred Securities then outstanding. Except
in connection with a consolidation, merger or sale involving the Guarantor
that is permitted under Article 8 of the Indenture and pursuant to which
the assignee agrees in writing to perform the Guarantor's obligations
hereunder, the Guarantor shall not assign its obligations hereunder.
SECTION 8.2 AMENDMENTS. Except with respect to any changes which do not
adversely affect the rights of the Holders in any material respect (in
which case no consent of the Holders will be required), this Guarantee
Agreement may only be amended with the prior approval of the Holders of not
less than a Majority in Liquidation Preference of the Securities. The
provisions of Article 6 of the Trust Agreement concerning meetings of the
Holders shall apply to the giving of such approval. The Guarantor shall
furnish the Guarantee Trustee with an Officers' Certificate and an Opinion
of Counsel to the effect that any amendment of this Agreement is authorized
and permitted.
SECTION 8.3 NOTICES. Any notice, request or other communication required or
permitted to be given hereunder shall be in writing, duly signed by the
party giving such notice, and delivered, telecopied or mailed by first
class mail as follows:
(a) if given to the Guarantor, to the address set forth below or such
other address as the Guarantor may give notice of to the Holders: Merry
Land Properties, Inc., 000 Xxxxx Xxxxxx, Xxxxxxx, Xxxxxxx 00000 Phone No.:
(000) 000-0000 Facsimile No.: (000) 000-0000 Attention: Xx. Xxxxxx X.
Xxxxx
(b) if given to the Issuer, in care of the Guarantee Trustee, at the
Issuer's (and the Guarantee Trustee's) address set forth below or such
other address as the Guarantee Trustee on behalf of the Issuer may give
notice of to the Holders:
Merry Land Capital Trust, 000 Xxxxx Xxxxxx, Xxxxxxx, Xxxxxxx 00000 Phone
No.: (000) 000-0000 Facsimile No.: (000) 000-0000 Attention: Xx. Xxxxxx X.
Xxxxx
with a copy to:
First Union National Bank, 000 Xxxxxxxxx Xxxxxx, X.X., Xxxxxxx, Xxxxxxx
00000 Phone No.: (000) 000-0000 Facsimile No.: (000) 000-0000 Attention:
Ms. Xxxxxx Xxxxx
(c) if given to any Holder, at the address set forth on the books and
records of the Issuer.
All notices hereunder shall be deemed to have been given when received in
person, telecopied with receipt confirmed, or mailed by first class mail,
postage prepaid, except that if a notice or other document is refused
delivery or cannot be delivered because of a changed address of which no
notice was given, such notice or other document shall be deemed to have
been delivered on the date of such refusal or inability to deliver.
SECTION 8.4 BENEFIT. This Guarantee Agreement is solely for the benefit of
the Holders and is not separately transferable from the Preferred
Securities.
SECTION 8.5 INTERPRETATION. In this Guarantee Agreement, unless the context
otherwise requires:
(a) capitalized terms used in this Guarantee Agreement but not defined in
the preamble hereto have the respective meanings assigned to them in
Section 1.1;
(b) a term defined anywhere in this Guarantee Agreement has the same
meaning throughout;
(c) all references to "the Guarantee Agreement" or "this Guarantee
Agreement" are to this Guarantee Agreement as modified, supplemented or
amended from time to time;
(d) all references in this Guarantee Agreement to Articles and Sections
are to Articles and Sections of this Guarantee Agreement unless otherwise
specified;
(e) a term defined in the Trust Indenture Act has the same meaning when
used in this Guarantee Agreement unless otherwise defined in this
Guarantee Agreement or unless the context otherwise requires;
(f) a reference to the singular includes the plural and vice versa; and
(g) the masculine, feminine or neuter genders used herein shall include
the masculine, feminine and neuter genders.
SECTION 8.6 GOVERNING LAW. THIS GUARANTEE AGREEMENT SHALL BE GOVERNED BY
AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
GEORGIA WITHOUT REGARD TO THE CONFLICT OF LAW PRINCIPLES THEREOF.
This instrument may be executed in any number of counterparts, each of
which so executed shall be deemed to be an original, but all such
counterparts shall together constitute but one and the same instrument.
C:\MyFiles\#208 MLP - Rights Offering\Guaranty #1.wpd
THIS GUARANTEE AGREEMENT is executed as of the day and year first above
written.
MERRY LAND PROPERTIES, INC.
By:_____________________________________
Name:
Title:
FIRST UNION NATIONAL BANK,
as Guarantee Trustee
By:_____________________________________
Name:
Title:
C:\MyFiles\#208 MLP - Rights Offering\Guaranty #1.wpd
